Promotion Trumps Branding: How Digital Coupons are Changing the Face of Marketing
By Walter Rogers
Building, managing, and protecting the brand has always been a high priority with corporations. Branding says value; branding says market segmentation; branding says "buy me!" Historically, superior brand strength has been the Holy Grail of marketing. But in 2010, the power of branding began to give way to a powerful new marketing strategy. Going forward, get ready to experience the power of … the coupon.
Coupons. (Blink, blink.) Really?
Absolutely. After most of us thought coupons had gone the way of newspapers and the dodo bird, coupons came roaring back in 2010, when marketing strategists realized the power of "clicking" coupons instead of clipping coupons.
According to CouponSherpa, a website that provides consumers with news and advice about couponing trends and deals, "What began slowly with printable online coupons blossomed this year [2010] into a multi-platform phenomenom, spearheaded by the popularity of smartphone-compatible coupons. Scannable barcodes, in-store access, social media rewards and more brought the former stalwarts of Sunday newspapers to a younger, hipper crowd."
Consider these statistics:
- The value of coupons distributed through Coupons.com and its network of affiliated sites reached more than $1 billion in the first half of 2010, up from $529 million in the same period in 2009.
- The number of searches on Google.com for "printable coupons" in 2010 increased by 67% from the previous year, according to Google.
- The number one reason why consumers follow a brand on Twitter or Like a brand on Facebook is access to exclusive deals or offers, according to interactive marketing firm Razorfish.
- Eight out of 10 U.S. adults plan to continue using coupons even if economic conditions improve, according to a study conducted for Coupons.com by research firm Harris Interactive.
- According to CouponSherpa, through the first nine months of the 2010, 2.5 billion coupons were redeemed, up 5.3 percent over last year.
- Harris Interactive notes that consumers who print digital coupons have an estimated average household income of $96,000, and Experience Simmons finds that adults with a household income of more than $100,000 are twice as likely to have redeemed coupons printed from an online source than adults with household incomes of less than $35,000.
- Finally, consider this; last fall Forbes Magazine reported that Chicago-based Groupon, the wildly successful distributor of digital, locally sourced discount coupons, was on track to reach $1 billion in revenue faster than any other company in US history. In a January 2011 Groupon internal memo obtained by the Wall Street Journal, Groupon CEO Andrew Mason told Groupon staffers that company revenues hit $760 million in 2010, up from $33 million the previous year. Mason stated that he expected the company to make "billions" in revenue in 2011.
- From coupons.
- Email, the Internet, social media, and the dramatic increase in the number of people who are now using smart phones have all converged to create a digital critical mass for the rebirth of couponing as a powerful marketing revolution. Retailers now routinely collect customer email addresses with other customer information, and then push out discounted offers on a regular basis. However, the real genius comes from the ability of a generic (not reserved for an existing customer base) digital promotion to go viral, that is, to be rapidly distributed from one user email list to another in ways that exponentially increase the number of people who can view and take advantage of the offer. These offers are also heavily shared and promoted on Facebook and Twitter pages, an even more efficient way to share great coupon offers with an incredible number of people in a very short time.
- Clicking is definitely easier than clipping. Consumers simply print out the coupon and take it with them to the retailer. If they downloaded the coupon on their smart phone, they can usually just show the retailer the message saved on the phone. And, of course, many of these coupons can be instantly redeemed online.
- In a new twist, many businesses are also now using location-based services (LBS) to reach a wider customer base. LBS leverages GPS or other similar technologies to broadcast text message ads or coupons to people in reasonable proximity to their place of business. For instance, people arriving at a movie theater might receive a text message from a nearby restaurant offering a discount on certain menu items purchased for that evening.
- The couponing strategy has turned brand-based marketing upside down. In the past, strong branding could ensure customer loyalty; you could expect the customer to come to you because they recognized your brand as having intrinsic value. With digital coupons, customers are practically inundated with a variety of very attractive promotions from multiple vendors. The fact that the offer simply appears in their inbox and provides generous discounts that are easy to redeem and share with others creates a very powerful alternative to the old branding model. Even though the trend has been around a very short time, both Apple and Android have smart phone apps on the way that will allow users to pick and sort their preferred types of promotional offers. Soon consumers will use the frequency and value of the promotional offers they receive as the basis for identifying their preferred vendors, putting an entirely new face on what branding means going forward.
- Without a doubt, the digital coupon revolution is a powerful tool for driving new business for retailers in the B2C space, but does it offer value for B2B sales? The answer is a qualified yes; if you have a good strategy, identify your target market, and define and develop the process you need to measure ROI before you launch any kind of digital marketing campaign, digital promotions might be worth a try.
The truth is, for B2B sales, ROI from digital promotions can be hard to clarify. On one hand, everyone loves to "get a deal," so some forms of digital promotions can work with B2B customers. However, since growing B2B revenues are predicated on building strong long-term relationships based on trust and service, there is no ROI associated with getting customers addicted to a regular flow of discounts.
For that reason, digital promotions are best when targeting a particular type of customer – for instance, new customers. An email blast aimed at new customers, offering a limited time discount or bundle of services, could lead to uncovering new business which could then be converted to standard pricing in the future, after customers learn to appreciate the exceptional value you offer. Digital promotions could also be effective when trying to win back inactive customers and revive dormant accounts. The terms and benefits of these offers should be clearly defined. Most of all, the discounts or benefits available must work for the seller as well as for the buyer. If you, as the seller, offer a promotion that is too generous or too widely distributed, it can ruin a whole quarter of sales figures. And, of course, you must have a system in place to measure results and evaluate the value, if any, of the digital promotion creates for you.
Keeping that in mind, most B2B sellers should at least explore the potential of digital promotion, if for no other reason than the fact that customers from all markets and segments will soon expect these kinds of options to be available to them. If you don‘t offer them, they may move on to someone who does.
Action Items- Have you investigated the use of digital promotions or coupons to grow your business?
- Have you clearly identified the target audience for this kind of promotion?
- Explain the strategy you will use to roll out your digital promotion to this audience.
- How will you monitor and measure this promotion?
Walter Rogers is the President and CEO of Baker Communications. Baker Communications is a sales training and development company specializing in helping client companies increase their sales and management effectiveness. He can be reached at 713-627-7700. - Have you investigated the use of digital promotions or coupons to grow your business?