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Posts by Ken Fenyo

Ken is CEO of YOU Technology, a leading provider of digital coupons and promotions. Prior to joining YOU Technology, Ken was VP of Loyalty for Kroger, a $70B Fortune 25 grocery retailer with 2,500 stores and 45 million customers. While at Kroger, Ken led loyalty marketing, interactive marketing, pricing, and consumer insights and analytics. Earlier in his career, he started a venture-funded e-commerce technology provider and served as a senior consultant with McKinsey & Company and Prophet Brand Strategy, where his clients included Harrah’s Entertainment, Time Warner, Dell, and HP. Ken has degrees from Harvard Law School and Stanford University.

December 31st, 2011

3 digital coupon trends that will impact 2012

I am amazed at how rapidly the digital coupon market is evolving.  I recently was invited to speak at the Shopper Marketing Expo sponsored by the Path to Purchase Institute where I discussed what some of our customers and the market is doing.  The topic?  What’s New in Digital Coupons and the Path to Purchase.  I thought I’d share some of my presentation in this post.  You can also replay an audio version of the presentation by clicking here.

Digital coupons are growing rapidly, with total downloads across our network more than doubling this year from 2010.  Digital coupons are growing because they deliver results by increasing reach, trial, and most importantly, incremental sales beyond what retailers and CPGs can achieve with paper coupons.

Here are the three key areas we believe will continue to create impact through 2012:

  • Retailer websites becoming the primary destination. Retail websites are emerging as the go-to destination for digital coupon downloads.  Indeed, across our retailer network, well over 80% of all digital coupons are downloaded from retailer websites (the rest are from consumer destination sites like AOL Shortcuts, Cellfire, or P&G eSAVER).  By aggregating digital coupons from multiple coupon providers, retailers are able to offer shoppers a “best of the web” source for coupons.  More importantly, retailers and their CPG partners are using digital coupons to enhance and extend the sales plan online by, for example, featuring digital coupon call outs in the print circular, creating exclusive digital merchandising events tied to in-store promotions such as March Madness or Feeding America, and delivering personalized offers.
  • Social networking is evolving to be a powerful sales tool. Social networking sites provide a vast new opportunity for retailers and CPGs to reach and engage shoppers.  Indeed, according to recent research, 25% of shoppers visit a retailer or CPG Facebook page at least once a month, primarily to find sales information and coupons.   That’s a staggering number and far beyond what it was at time last year.  Kroger has had particular success using digital coupons to engage its shoppers on Facebook.  For example, it regularly features a Deal of the Day coupon tied to its Cart Buster in-store event.  More recently, Giant Eagle launched a holiday-themed Facebook app that included recipes, digital coupons, and a sweepstakes promotion.
  • Mobile couponing provides an always-on channel. Although it is still in its infancy, the mobile phone has an unparalleled opportunity to transform couponing in particular and the in-store experience more broadly.  Already today, more than one-third of smart phone users say they have used their phones to research food prices or product information while in the grocery store.   ShopRite, for example, has added digital coupons to its existing mobile apps and mobile Internet sites.  Shoppers can access all of the digital coupons available at ShopRite’s online digital coupon center and add them to their cards in real time.   Shoppers can also use the app to see what coupons they have already downloaded.  Longer term, the opportunity is to use mobile to create a richer shopping experience by incorporating such things as QR codes, health and wellness data, in-store mapping and product search, and personalized offers.

Digital coupons are already playing a key role along the path to purchase.  Their impact will only grow as more retailers, brand manufacturers, and ultimately shoppers adopt this new technology.

November 7th, 2011

Recognizing the shopper at checkout

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.

November 2nd, 2011

Mobile in the store

Smartphones are starting to fundamentally change the way people shop—and how retailers market to them.

According to the Wall Street Journal, supermarkets have begun to experiment with smartphone-related technology although usage is small and below the levels other retail segments such as consumer electronics are experiencing.  For example, one recent study from Deloitte suggested that about one third of shoppers have used their smartphone while grocery shopping, well below the 50% of people who say they have used their phone while shopping for consumer electronics.   Not surprisingly, the shoppers who do use their phone in the store use them primarily to manage shopping lists and find coupons and other savings.

The mobile phone is positioned to fundamentally transform the grocery shopping experience by providing shoppers with an always on, always present shopping tool.  For brick-and-mortar retailers seeking to grow sales and loyalty using this omnipresent new channel, there are significant opportunities — and risks.

The risk for retailers is that they could eventually lose control of their store floors as shoppers check prices, get coupons, and engage in promotions that are driven by CPGs or third party service providers in ways that are not aligned and perhaps even in competition with retailer’s own sales programs.  To turn this risk into an opportunity, retailers must provide mobile experiences that are unique and relevant, and work with savvy partners that make it easier to shop and save by:

  • Delivering value not gimmicks.  The best mobile apps will provide real value – for example by saving shoppers money, getting them out of the store quicker, helping them find products that fit their health needs, or providing last minute meal ideas at 5 pm with the family at home as dinner time nears.   ShopRite for example is already seeing significant engagement with its shoppers by adding digital coupons to its mobile app.  Other mobile services that provide interesting stand alone ideas that could be integrated into a broader retailer solution include Modiv Media (self-check out), Pushpins (coupon search at the shelf), HarvestMark (trace where food is grown) and Fooducate (health ratings for broad range of CPG products).
  • Engaging shoppers in real-time.  Shoppers expect mobile (and really all digital) services to work in real-time – if they download a coupon in the store, for example, they expect it to provide them savings when they check out, even if it’s only a few seconds later.  To meet these expectations retailers must provide: 1) real-time connections to their POS in order for shoppers to redeem coupons and promotions (no one wants to be stuck having to print a coupon when they are trying to pay for their groceries); 2) Wi-Fi or other technical solutions to improve typically weak in-store mobile reception.  Mobile also provides retailers with the opportunity to engage shoppers beyond the four walls of the store.   For example, Tesco has created a virtual store in a subway station in South Korea that lets shoppers use QR codes to order food for home delivery (if you haven’t seen it yet, it’s worth watching the YouTube video).
  • Personalizing the shopping experience.  Even with newer models, it can be frustrating for shoppers to review a long list of offers or information on their mobile phones.  By incorporating purchase, demographic, location, and perhaps even social data, retailers can create uniquely relevant shopping experiences that provide just the right offer or information to reward loyal behavior and deliver incentives to increase share of wallet by buying more of preferred brands and trying new categories, brands, or products.  For example, a retailer could provide offers that vary widely based on factors such as whether the shopper is loyal, the time of the day, the location in the store, whether the shopper has children or not, whether they regularly shop the store, etc.

For most grocers, mobile may still be in the experimentation stage.  By testing new solutions now, however, retailers can start down mobile’s inevitable growth path, improve the experience for their shoppers, and avoid losing control in the store longer term.

September 14th, 2011

Social Media: No Longer Kid’s Stuff

Facebook and Twitter have gone mainstream.  When even my own parents are sending me requests to connect on Facebook, it’s clear that social media isn’t just for kids anymore.  And, as social networking sites fast become deal and shopping services as well as places to share photos and chat with friends, retailers must up their own investments in this space to stay relevant.

Consider this:According to recent research, almost two-thirds of U.S. adults use social networking sites, up to 61% a year ago compared to just 5% in 2005.  It’s no surprise that over 80% of Millennials (ages 18-29) use social networks; what is striking is how many older shoppers are actively using social networks, including 62% of Gen X adults (34-45), 50% of Younger Boomers (46-55) and 43% of Older Boomers (56-64).

More and more shoppers are using social media to follow retailers.  In fact almost one-third of online consumers in a recent survey said they visit official retail or consumer product company Facebook pages at least once a month, up over 12% from last year.  Why?  They’re searching for sales and promotions (mentioned by 56% of those surveyed) followed by seeking more information about a specific retailer or products (29%).

Retailers must up their investments in social media to stay relevant.  The good news is that social media provides a number of opportunities to engage loyal shoppers and grow sales—in a way and at a lower cost than is possible with traditional media.  Here are a few ways can use social media to drive loyalty and sales:

  • Engaging shoppers with special offers.  Even with purchase data, the best a retailer can know about a shopper is how much she spends and how frequently she shops.  Facebook and other social networking services allow retailers to engage shoppers who identify themselves as fans with promotions and special offers.  For example, Kroger has run several successful Deal of the Day promotions tied to its Cart Buster in-store sales event.  The offers are featured prominently on Kroger’s Facebook page and provide extra savings or free items.  In many cases, the CPGs partnering with Kroger have also featured the Cart Buster deals on their own Facebook and social media properties, driving incremental traffic.  In addition, we are also working with several retailers who are building the capability to deliver digital coupons directly from their Facebook pages.
  • Spreading the word.  By its nature, social media encourage users to share information with their friends. Retailers can take advantage of this behavior both to drive word of mouth on both social networking and their own sites.  For example, Hunt’s and Kroger recently ran a social media promotion that drove significant word of mouth.  Shoppers were given the choice of downloading a digital coupon for $1 off on three cans of select Hunt’s products.  If the shopper shared the offer with three friends, however, she could save even more with a Buy One, Gen One Free coupon.  Over the 6 weeks of the program, the program attracted over 16,000 participants and nearly 30,000 referrals with high click through and redemption rates.
  • Resolving customer service issues.  People are quick to stop shopping at your store when they have a bad experience.  In the past, retailers didn’t usually know why a customer stopped coming.  Now, with social media, shoppers frequently post negative feedback on social networks or ratings/review sites.  Retailers need to track this feedback to not only identify opportunities to improve the shopping experience but also proactively to resolve customer service issues.  Indeed, according to recent research, over one-quarter of shoppers who posted a negative review and got a response from the retailer turned around and became loyal customers and bought more.  In many cases, customer themselves will jump into the conversation to provide guidance, add insight, or otherwise support the retailer.

Retailers can’t afford to ignore social media because it is “just for kids”.  With many retailers increasing their investments in social media, the time to get started is now.

July 29th, 2011

250 million digital coupon clips & counting

Across the spectrum of providers, digital coupons grew rapidly in the first half of 2011, as retailers and CPGs continue to invest in this new medium.

Digital coupon downloads increased over 700% between the first half of 2010 and the first half of this year across our retail network.  We have now delivered over 5,000 unique digital coupon offers and over 250 million downloads over the past 2 years, far outpacing the rest of the market.

So, what’s driving the growth?  According to our customers, a few things:

  • Value-seeking shoppers.  Shoppers are using digital coupons to save money on their groceries.   In the first half of the year, shoppers downloaded coupons with nearly $125 million in savings across our network.
  • No longer an optional ingredient for Retailers and CPGs.  Retailers and CPGs are increasingly using digital coupons to drive sales and loyalty by integrating coupons into the circular, creating digital merchandising events tied to the sales plan, and developing co-branded digital shopper marketing programs.
  • Greater reach.  Retailers and CPGs are also using digital coupons to fuel social and mobile marketing initiatives that would be difficult if not impossible to execute with paper or print at home coupons.

What categories are most popular?

Shoppers are using digital coupons across a broad range of categories.  Across our network, the most popular category is personal care followed by paper, cleaning & home, frozen foods, and breakfast & cereal (see top 10 list below):

Total digital coupon downloads– top 10 categories

  1. Personal Care
  2. Paper Cleaning & Household
  3. Frozen Foods
  4. Breakfast & Cereal
  5. Cookies Snacks & Candy
  6. Condiments Spices & Baking
  7. Dairy Eggs & Cheese
  8. Beverages
  9. Baby
  10. Bread & Bakery

Although redemption rates vary by category, deli, meats & cheese, dairy, eggs & cheese, and bread & bakery all redeem well, suggesting retailers have a big opportunity in using digital coupons to promote the perimeter of the store and to deliver meal solutions.  The data also shows how more niche brands and categories, such as international cuisine and organic, can use digital coupons to stand out online and at the shelf.

Average Redemption Rates– top 10 categories (min 10 coupons)

  1. International Cuisine & Kosher
  2. Snacks
  3. Canned Goods & Soup
  4. Deli Meats & Cheese
  5. Household Needs
  6. Dairy Eggs & Cheese
  7. Beverages
  8. Bread & Bakery
  9. Organic
  10. Frozen Foods
June 8th, 2011

Retail Media Expands Reach

Retail media is going digital, which is creating significant opportunities for retailers and CPGs to expand their marketing reach and drive incremental sales.

Although circulars, FSIs, and in-store ads have long been an important part of the marketing mix, most retailers have lagged behind when it comes to digital media.  This is starting to change as several large retailers have rolled out new digital tools.  In particular, Kroger, Safeway, and Target have all launched prominent digital couponing programs both online and via mobile devices.  Other retailers such as Giant Eagle have recently launched or revamped their digital coupon and mobile platforms to better engage shoppers.

Retail media is quickly becoming an important source of coupons for shoppers.  Retailers are providing shoppers a one-stop destination for digital coupons by aggregating digital coupons from a range of third party coupon providers such as AOL Shortcuts, Cellfire, and and sourcing retailer-specific coupons from their key CPG partners.   As a result, shoppers are increasingly looking to retailer-owned media to plan their shopping trips and find deals and savings.

According to recent research from Integer Group, over a third of shoppers now go to retailer websites to find coupons, nearly as many who look to coupon websites.  While a majority of shoppers still look to circulars and the newspaper for their coupons, retailer websites are the second fastest growing destination for coupons, up over 40% from last year (the only faster growing media was via mobile phone apps although overall usage is still small).

These finding are backed up by actual web traffic data.  For example, in the year since it launched its digital coupon center, Kroger’s traffic as measured by unique visitors has nearly doubled while Safeway’s has grown by over 50% since it launched its Just For You digital coupon program late last year.

Top retailers are integrating their full range of media – both online and offline – to drive traffic to their digital properties.  For example, Kroger has added a digital overlay to its long-running Bringing Hope to the Table in-store event to fight hunger.  The online site provides exclusive digital coupons, highlights efforts to find hunger in local Kroger communities, provides information on how to get involved, and allows shoppers to make additional donations.  As it has done in other recent digital promotions, Kroger is using an integrated marketing approach to support the program by featuring digital coupons in its circular, on its website and mobile apps, on its Facebook page, and in-store.

Retailers must invest in digital media to stay relevant with shoppers, who are increasingly using the Internet, mobile and other digital tools to plan their shopping trips and find savings.  By building traffic and engagement on their own media, retailers can also reduce marketing costs and build a platform to collaborate with key CPG partners.

May 3rd, 2011

To Groupon or Not to Groupon

General Mills recently became the first major CPG to test a deal on Groupon.  Although the test was by all accounts successful, I don’t believe Groupon and its many competitors will prove to be as effective as other social media options for large CPGs and retailers.

In its Groupon deal, General Mills offered a sampler pack of 12 General Mills products (including Fiber One bars, Cinnamon Toast Crunch cereal, and Fruit Roll-Ups), a $15 coupon book, and shipping for $20, a discount of over 50%. The company quickly sold through the 5,000 packages it had for sale in its two test markets of San Francisco and Minneapolis.

Given its huge popularity, Groupon is certainly a service worth testing.  However, deal of the day services are not a great fit for CPGs and their retailers for a few reasons:

  • Acquisition vs. Loyalty.  As many pundits have pointed out, Groupon attracts a large number of extreme deal seekers who are searching for huge discounts but aren’t likely to buy again without another big incentive.   As a result, Groupon is a much better tool for acquiring new customers than building loyalty.  Additionally, at this point there aren’t good ways to send different offers to consumers based on purchase history or other factors to develop purchase continuity.  Groupon could be an interesting vehicle for supporting a new product launch or as a turbo charged sampling tool (as General Mills did here) but the vast majority of CPG sales are for everyday items where the key driver of growth is to get existing consumers to buy more of the product.
  • Retail Collaboration.  Although many CPGs are experimenting with direct sales, most sales will continue to flow through retail partners.  CPGs will need to partner with their retailers on future Groupons if they want to see the vehicle deliver meaningful sales results (indeed, General Mills said that it will look to team up with retailers if it does future Groupon offers).  While it is relatively simple to offer dollars off a restaurant meal, for example, it gets much more complex when the offer includes multiple CPG products and different price points.  The financial, risk management, and operational issues alone could well overwhelm the incremental sales result it could generate.
  • Fit.   It is not clear consumers will respond to CPG deals in the same way they do for skydiving lessons, spa days, or a half priced entre at your local restaurant.  Most Groupon deals are for local products and services with high prices, infrequent purchase, and reasonable profit margins.  To put it mildly, that is not the case with most CPG items.    For its part, Groupon does see the challenges in becoming more relevant to CPGs.  As a Groupon spokesperson told Ad Age, “Packaged goods – that’s not why people look to us.”

If you think about Groupon as really just another social media channel, there are a wide range of broader social media and tools – including Facebook, Twitter, and mobile apps such as Foresquare -that allow CPGs and retailers to more directly engage shoppers and build long-term loyalty and sales. Done right, even deals of the day can drive sales and enhance collaborative marketing programs.  For example, Kroger and key CPG partners such as P&G, General Mills, Pepsi, and Nestle, recently ran a Cart Buster digital and in-store event.  In addition to strong in-store pricing, shoppers could find and download additional coupon savings right to their Kroger card.  Kroger also featured a digital deal of the day on Facebook that let the first 1,000 shoppers who responded download a coupon for a free product featured in the promotion, such as Charmin, Coffee-mate, Chex Snack Mix, or Pepsi Max.  Kroger and its CPG partners leveraged a wide range of media to promote the program, including social media, blogs, emails, display advertising, Kroger’s circular, and in-store marketing.

Groupon might get new feet in the door, but the real opportunity from social media is to build loyalty and sales throughout the path to purchase.

April 13th, 2011

Digital couponing picking up steam

34% growth in digital coupon distribution in one year.

5% to 20% digital coupon redemption rates vs. 0.9% for traditional coupons.

Those are a few of the recently released numbers that underscore the rapid growth and strong value provided by digital coupons.

New reports from Supermarket News (see Poised for Growth) and Shopper Marketing magazine (see Digital Delivery on page 16) provide in-depth looks at the pivotal role digital coupons are playing as retailers and CPG companies shift budgets from traditional to digital media.  With digital coupons, shoppers can automatically redeem coupons and other offers in lane without having to print or clip.  Unlike print at home and paper coupons, digital coupons seamlessly integrate into online, email, mobile, and in-store marketing campaigns making them easier to use and more convenient for shoppers and providing better reach and results for retailers and brands.

Although experts estimate digital coupons make up roughly 1% of the total coupon market today, they already account for 3-5% of redemptions at retailers with active digital coupon programs.  For a technology that just launched three years ago, that is remarkable growth.  These results are consistent with our own experience.  For example, YOU Technology recently announced that we have delivered more than 150 million digital coupons (providing more than $160 million in value) to shopper cards through our retail network —a significant milestone in the growth of digital coupons in general and our solution in particular.

The reports from Supermarket News and Shopper Marketing point to a number of factors driving digital coupons forward:

  • More relevant for shoppers. Digital coupons can reach younger shoppers who don’t use paper coupons and are proving to be an effective tool to drive sales and loyalty.  In addition, strong consumer demand for mobile and social coupons will further fuel digital coupon growth.  By delivering offers in a relevant way, at a relevant time, and in a relevant place, retailers and CPGs can better engage shoppers in and around the moment of truth.  This relevance, along with the ease and convenience of using digital coupons, is an important driver of digital coupons’ strong redemption rates (5% to 20% vs. 0.9% for paper coupons).
  • More offers and better values. Over the past year, the number of digital coupons has increased by 34%.  In addition, the number of CPGs participating in digital coupon events has jumped by 17% with over 150 brands actively participating in direct-to-card programs last year.
  • More retailers. Kroger has played the leading role in driving the growth of digital coupons.  More recently, Safeway and Target have launched prominent digital coupon programs and industry experts predict that several other large retailers will jump on board this year.  Retailers are also integrating digital coupons into their in-store merchandising and marketing initiatives, which in our experience drives an order of magnitude increase in shopper engagement.

Just as with online shopping vs. the mall, CDs vs. iTunes, and now the books vs. the Kindle, it will be consumers that drive the additional use of digital as an alternative method of accessing content—at a time and the way they prefer.   The digital coupon market is just getting started.

March 19th, 2011

To drive sales, think digital not print-at-home

Digital coupons can drive significantly more sales and loyalty than print-at-home or other paper coupons, underscoring the need for retailers and CPG companies to invest in this fast-growing promotional vehicle.  The reasons seem fairly logical.  They are more convenient for shoppers to use.  They are easy to access with mobile phones and in-store devices.  And they enhance and extend in-store merchandising and shopper marketing events.

According to recent research, digital coupons have a much greater impact on spending than print-at-home or paper coupons.  In particular, shoppers confirmed spending far more than planned with mobile and load to card coupons than they do with print-at-home coupons (49% said they spend more than they planned with mobile coupons, 36% spend more with load to card coupons, and only 25% spend more with print-at-home coupons, about the same as store emails).  These findings are consistent with our own analysis and third-party research results: digital coupons drive increased trips, trial, and sales when compared with other coupons.

Online coupons, including both print-at-home and digital coupons, continued their strong growth in 2010.  The number of online offers available increased by 37%, the largest across all types of coupon media.  The data masks an important fact – while digital coupons are still small as a percent of the total, they are growing faster than any other coupon type.  This trend will only continue as more retailers follow the lead of Kroger, Safeway, and Target, all of which are aggressively expanding their digital coupon programs because of the impact they are starting to see.

Print-at-home and digital coupons are sometimes lumped together into a single bucket.  Although they are available online, print-at-home coupons are not digital in any meaningful sense of the word since a shopper still has to print them out, remember to bring them into the store, and scan them at checkout just like any other paper coupon cut out from a FSI.  Digital coupons (as provided by YOU Technology) are fully paperless and integrate with a retailer’s point of sale system to let shoppers not only find offers online and via mobile phones and in-store devices, but also redeem them automatically at checkout, without ever having to print or clip.

In addition to driving more sales, digital coupons offer significant benefits over print at home and other paper coupons by:

  • Driving shoppers into the store. Because they are redeemed in the store, digital coupons let retailers and CPGs drive shoppers into the store to try new brands, stock up on existing brands, and cross-shop new categories.  Print at home coupons can be used at any retailer, even if they are printed from the retailer’s own website.
  • Providing more convenient, relevant and real-time communications. Digital coupons are more convenient for shoppers to find and use than paper coupons.   In addition, digital coupons allow retailers and brands to tap into fast growing media channels such as mobile (including both apps and text messaging) and in-store digital signage where it would be difficult if not impossible to incorporate a print at home or paper coupon.
  • Enhancing collaboration.  Digital coupons provide an ideal platform for collaborative marketing because of their ability to tightly integrate with a retailer’s existing loyalty program(s) and merchandising initiatives.  For example, Kroger and key CPG partners such as P&G, General Mills, Pepsi, and Nestle, recently ran a Cart Buster digital and in-store event.  In addition to strong in-store pricing, shoppers could find and download additional coupon savings right to their Kroger card.  Kroger also featured a digital deal of the day on Facebook that let the first 1,000 shoppers who responded download a coupon for a free product featured in the promotion, such as Charmin, Coffee-mate, Chex Snack Mix, and Pepsi Max.  Kroger and its CPG partners leveraged a wide range of media to promote the program, including social media, blogs, emails, display advertising, Kroger’s circular, and in-store marketing.

As the market continues to grow, retailers and brands need to launch their own digital coupons programs to take advantage of the opportunity and avoid getting left behind by more innovative competitors. 

March 10th, 2011

A Tribute to Don Becker

Kroger lost a legend with the unexpected death of Don Becker, EVP of Merchandising, on February 16.  I worked for Don for several years starting in 2006 and he was one of the best bosses and people with whom I have had the good fortune to work.

Don worked for Kroger for over 40 years.  He ran Kroger’s merchandising, marketing and procurement in 2004 and was a key reason why Kroger has emerged as one of the leading and most innovative retailers in the country.

Don was “Old School” in the best sense of the phrase – a seasoned merchandiser who understood the importance of delivering a compelling variety of products at a good price and with superior customer service.

Although Don had been at Kroger for over 40 years, he never lost the desire to do things better.  He did not have a background in interactive marketing or customer analysis (I remember one time having to show him how to get to the Internet from his office computer).  But he understood these initiatives were critical for Kroger’s long-term growth and he made sure Kroger brought in the people and resources it needed to succeed.   In my mind this is the mark of great leader and a great man.

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