Burning Questions: Seeking the best in digital coupons

MobileXCo's Peter Pinfold talks about the challenges and rewards of developing a digital coupon program.

One of the goals of our technology and innovation coverage is to answer the questions our readers have about what is changing in that space. We’ve asked marketers from across Canada to pose their burning tech questions directly to us, which we have in turn posed to experts from the industry for answers.

“How influential is digital couponing in driving repeat purchase or new trial? Has purchase consideration increased in specific target groups? Are more brands using it to drive new trials, or is it simply rewarding those with savings who already would have purchased product?”

- Tonia Coletta, senior manager of digital marketing, Molson Coors Canada

Peter-Pinfold-e1432828923170Our expert: Peter Pinfold, co-founder of MobileXCo, a mobile tech and solutions provider. The company is focused on a range of marketing services, including contests, proximity marketing, SMS marketing and – most relevant to today’s topic – mobile coupons.

strategy: We have a multi-part question today, so let’s start with the first part: How influential is digital couponing in driving repeat purchase or new trial?

Pinfold: As far as coupons go, whether it’s digital or paper, they remain the top tactic for influencing purchase decisions. That’s been the case since Coke did the first coupon in the 1800s, and it’s still the case, according to Nielsen. As far as digital coupons apply, they tend to have upwards of 10 times the redemption rate versus a paper coupon.

What challenges are there in the space right now?

The biggest challenge is the ability to easily manage digital and paperless coupons. There are still standards in place for paper coupons, on how to handle them and make sure the manufacturers pay the retailers. That doesn’t exist for digital coupons, so the validation process is different across every retailer.

How does that complicate things if I’m a brand looking to use digital coupons?

A lot of retailers have tried to manage them themselves with apps, and there’s third-party vendors that remove the retailer from the process entirely. There’s all these siloed approaches to the validation process. What Canada needs is to revisit our guidelines around paperless coupons. It’s a huge challenge that everyone is trying to crack.

So until that time comes, if I’m interested in using coupons, which approach would be the best for me?

If I were a brand, short of approaching every retailer, I would have to say you probably want to avoid barcode-based ones, because there’s no industry standard to make sure every point-of-sale system can read them off a phone. The easiest way would be using a third-party vendor to cut out the retailer, at least for the time being.

Are there any target groups where digital coupons have been particularly influential?

Millennials are just as coupon-savvy as boomers. With smartphones, it’s easier than ever for anyone to search and find offers where and how they want it. But for millennials, it’s part of their regular behaviour to search for convenience and savings.

You kind of have two generational stereotypes butting against each other. On the one hand, there’s the tech-savvy millennial who is good at finding offers online, but on the other you have the image of an older person, flipping through flyers and clipping coupons.

Well, 90% of all coupons are still paper being distributed as inserts. Digital is growing, and really quickly, but it’s still a drop compared to paper. And it probably will be until we crack the validation challenge, because it’s a huge barrier.

Is there anything that someone running a digital coupon program could do to optimize it? Should they focus on price, or convenience, or a unique offer they might not get somewhere else?

It depends on the category and your goals, but the best practice is ease of distribution. Being creative and smart about how you use your media to actually deliver a coupon at the right time, at the right place, to the right consumer is going to give you better results every time.

Do you see brands being more successful using coupons to drive new trial, or just to reward people who are already buying the brand?

I would say, if you’re being strategic with your data, you’ll do a much better job of influencing a new consumer. You don’t have the control to do that with paper, so you are more likely to just reward the consumer who purchases your products anyway. If you use the data that comes with digital coupons, you can target it better, and control and measure redemption at the user level.