To redeem digital coupons (truly paperless ones) at checkout, retailers must be able to identify individual shoppers in real time, in the lane.  Although the solutions and choices may seem abundant (and even complex), there are in reality only a few options available to retailers looking to deliver digital coupons to their shoppers.

With digital coupons, shoppers can find and download offers via the Internet, email, mobile phones, or in-store devices and automatically receive their savings at checkout without having to clip or print offers.  Unlike paper or print-at-home coupons, digital coupons are personally connected to the individual shopper.  Because of this, the retailer has to have a way to identify the shopper when she reaches the checkout.  Or, said another way, the shopper has to be able to say, “Hi.  I’m in the lane now.  Please give me the savings you promised me by redeeming my coupons for me.”

Because lane efficiency and shopper ease are critical to every retailer, processing speed and scale are essential.  There are two options available today that deliver these benefits:

• Load to card.  Most retailers that are driving digital coupon usage today, including Kroger, Safeway, Giant Eagle, and ShopRite, link digital coupons to their shopper cards.  Digital coupons increase the value of the retailer’s loyalty program to the consumer by connecting shoppers and offers in a more timely, relevant way.  They also extend the ROI of the retailer’s loyalty program by taking advantage of their existing loyalty technology infrastructure.  For shoppers, downloading offers to the card makes it very easy to use digital coupons.  Once a shopper downloads a coupon, she can redeem it by doing what she typically does every time she is in the lane – swipe her card to get savings.   Interestingly I have spoken to many retailers over the past several months that are thinking about launching loyalty programs specifically to make it easier to deliver digital coupons and other incentives.
• Using PIN pads.  This option is for retailers without a loyalty card program.  For these retailers, shoppers redeem digital coupons by punching their mobile phone number (or other code) into the PIN pad during check out much like shoppers use alt IDs in card retailers.  In this scenario, the shopper easily creates a personal account number (usually a mobile phone number) the first time she downloads an offer.  Shoppers can use their personal account numbers not only at the retailer’s own site and mobile apps but also with third-party coupon providers such as AOL Shortcuts and Cellfire.  Harps Food Stores (using our technology) and Meijer are two retailers using this approach.

Two additional options for identifying shoppers in the lane are just beginning to emerge:

• Scan a mobile barcode.  Target has been experimenting with a mobile couponing program that lets shoppers redeem coupons by scanning a barcode from their mobile phones in the lane.  Here, the shopper uses a single barcode to redeem multiple coupons.  In effect, the mobile barcode plays the same role as a loyalty card by providing a trigger that calls the retailer’s back-end systems to retrieve and redeem digital coupons and promotions.  The challenge is that most retailers do not have the optical scanners required to accurately read mobile barcodes in a consistent manner.  In my experience, even at Target, which has invested in advanced optical scanners, I have had significant trouble getting the mobile barcodes to scan (this is probably a big reason why Target has not actively marketed the program since it launched over a year ago).   Although it is possible that new technologies will make it easier to scan mobile barcodes it seems that alternative solutions such as near-field communication (see below) will be a better and more scalable long-term solution to delivering digital incentives.
• Near-field communication (NFC).  Perhaps the most promising long-term option for identifying the shopper in the lane is near-field communication.  Google recently generated a lot of press for its Google Wallet product that leverages NFC chips in its Android phones.  Apple has long been rumored to be working on its own NFC solution.  The value of NFC is that it doesn’t require any special action by the shopper to redeem offers, such as scanning a mobile barcode or entering the mobile number into the PIN pad.  All the shopper has to do is to have their phone in the lane and the technology can do the rest.  Several prominent retailers are getting behind NFC payment include Pete’s Coffee, CVS, and Walgreens.  Contrary to some of the hype surrounding the launch of Google Wallet, however, NFC alone cannot redeem digital coupons on specific items in the store (such as $1.00 off Tide or 50 cents off a box of Cheerios).  Google Wallet is integrated with the financial gateway and as a result can only provide discounts at the basket level; the retailer must still create a separate connection to the POS as well as a digital couponing platform (such as the one we provide to deliver item-level digital coupons and promotions).

Though some of the latter options seem futuristic, there are viable solutions available today that have been tested, refined and in high-volume use for years.  My advice:  Stick to the basics and re-engage with your customer to grow sales and loyalty now.  But keep your eye on horizon.  The growing popularity of digital coupons will push technology innovation and investment quickly, which ultimately increases choice and reduces risk for the retailer.