Coupons have come a long way since they were pushed through letter
boxes with ’fingers-crossed’ optimism, generating poor redemption
Now, as with every other aspect of marketing, targeting is
Lifestyle data started the ball rolling. Detailed questionnaires -
asking everything from what soap powder you purchase and how often, to
when your home contents policy comes up for renewal - were sent out by
post and the answers sold to third parties who used the data as leads to
Coupons distributed using this type of targeted, data-driven approach
generate up to four times the redemption rate of the old blanket
door-drop method, according to Ian Elwes, ICD’s managing director.
Maybe because of their humble beginnings coupons have always been seen
as rather down-market in the UK, in contrast with their huge popularity
in the US.
In the UK, customer loyalty schemes have proved more popular, but since
most UK supermarkets now run programmes, creating a level playing field,
there is a gap in the market for coupons to fill.
The Catalina electronic marketing system has been used by Asda for some
time, and Somerfield has recently followed suit and can now use this
system in conjunction with its own loyalty scheme.
The Catalina system works by acting as a passive loop between the
checkout and the electronic point of sale (EPOS) controller in every
The checkout talks to the EPOS mainframe, which relays information back,
while the Catalina system takes in all the messages, and when something
crops up on the scanner which has a trigger, it sends a message to the
printer to generate customised incentives along with the till
These triggers could be related to a credit card, cash value or
If someone spends over pounds 50 without a customer loyalty card, a
coupon will be handed over to encourage the customer to join the scheme,
or a discount voucher on gin or whisky could be printed for a person
known to spend a lot on wine but never on spirits.
The beauty of the Catalina system, according to Stuart Isbister, retail
director of Catalina Marketing, is that the vouchers are generated at
the till, which saves millions in terms of postage. ’It must cost Tesco
a frightening amount to send out its quarterly statements to its six to
seven million customers.’
He points out that to work, a voucher-generating system must collect
data on an item-level basis. ’Where our system fits in well with a
loyalty scheme is that geodemographic data on an individual can change
Dispensing customer savings
Isbister believes that handing out vouchers at the end of a shop is
particularly effective because it influences purchasing behaviour for
the next shop.
Not everyone agrees. Some believe that if you hand out vouchers when a
shopper is leaving the store, the only place they will go is in the bin.
For this reason, some stores prefer to dispense instantly redeemable
coupons at the point of purchase.
Sainsbury’s and Savacentre have recently installed in-store coupon
dispensing machines at all 13 Savacentres and 52 branches of Sainsbury’s
in the south-west, after trials proved the idea was viable. The trials
were conducted in ten market-matched control stores, using the
dispensers in two four-week cycles.
Success was measured in uplift in sales, which averaged out at an 80%
increase, according to Malcolm Preston, managing director of Aspen
Specialist Media - the agency which markets the system with Actmedia,
its US inventor.
The size of a camcorder, the dispenser sits on the shelf next to the
product, offering money-off coupons to consumers, who can act
immediately on the offer.
’It has proved so successful because it is simple to use, immediate
(allowing impulse decisions) and it gives a reason for buying a product,
which perhaps people wouldn’t ordinarily buy,’ says Preston.
Aspen Specialist Media is continuing to carry out research on the impact
of the system, but if it proves as successful as the trials, the aim is
to roll it out to all Sainsbury’s and Savacentres nationally.
A new coupon system yet to hit the UK, but already a top-seller in the
US, is Retail Targeted Marketing Systems (RTMS) Archer.
Unlike the Catalina system and the in-store coupon dispenser, Archer
coupons are posted to existing database customers based on information
drawn from a customer loyalty scheme, which works on an automatic
trigger and alert system.
According to Brian Gormley, managing director of Crawford Computing, it
is only a matter of time until this system becomes indispensable to the
It can be used on an ongoing basis by retailers under licence from RTMS
and in conjunction with loyalty schemes where members have membership
A brand manager wanting to promote a particular line can trigger a
mechanism in the software to isolate the product, either by region or by
store, to send coupons to relevant individuals from the database. The
coupons are then mailed to customers’ homes and when they are used,
details are gathered from the loyalty card and linked electronically to
The transaction amount, coupon and membership number, are loaded onto
the Archer database as part of its daily update load. So, if the brand
manager wants to, he can see instantly how the promotion is going.
When the trigger mechanism is set up, various response limits can be
input, based on response rates, pounds sales per name mailed or average
pounds value per response. If levels fall outside these parameters, the
system alerts the brand manager.
Knowing customer lifestyles
Gormley explains: ’This trigger and alert mechanism is unique - not only
can coupons be generated directly to a key audience, based on known
lifestyle and purchasing habits, but response levels can be monitored
accurately and quickly, leaving the brand manager in control of the
To entice browsers to register with their Web sites, companies often
offer vouchers or coupons, which can be printed out in exchange for the
browser’s name and address.
The US is more advanced in this area. Even several years ago, a
satellite-based electronic direct marketing network was testing a system
- VisionValue Network - which could deliver product promotions,
advertising and financial services to shoppers at supermarket checkouts
using print, video and voice media.
Its creator, Florida-based Advanced Promotion Technologies, receives a
fee for each transaction. The system recognises product bar-codes, which
can trigger the creation of a repeat purchase coupon and if the consumer
presses the ’yes’ button, it is printed there and then at the till.
The company also launched the ’Coupon Eater’ system, which reads,
validates, cancels and clears bar-coded paper coupons at the point of
sale. It then converts the information into an electronic signal, which
is transmitted out of the store by satellite.
No doubt these systems will make their way across the Atlantic before