Enhanced Personalization Will Enable Digital Success in New Year
By John Karolefski
Better targeting and personalization will improve the effectiveness of coupons in 2018. A key demographic to focus on will be Millennials who are avid users of FSIs and especially digital offers, which will increase in popularity.
Those are among the predictions by leading experts polled by CPGmatters.
“Improved promotion targeting and enhanced personalization – enabled by brands’ and retailers’ accelerated use of machine learning – will be the big story line for coupons in 2018,” said Jim Hertel, Senior Vice President at Inmar Analytics. “With digital promotions continuing to enjoy double-digit growth in redemption, retailers and CPGs are going to further prioritize data-driven delivery of genuinely personalized promotional content to shoppers, at scale and across media channels. Marketers will make it standard procedure to aggressively employ predictive analytics and leverage multiple touchpoints to ensure every engagement is contextually relevant to shoppers and provides carefully targeted audiences with influential and motivating content. Trading partners that commit to truly understanding shoppers and focus on delivering true personalization – informed by this deeper understanding – will gain significant competitive advantage and can expect to see continued growth in promotion redemption and measurable sales lift.”
Curtis Tingle, Chief Marketing Officer of Valassis, pointed to Millennials and Gen Zers as important consumer groups for marketers because the former represents about one-fourth of the population and the latter has nearly $44 billion in buying power. Millennials are fervent coupon users, he added, with 94 percent of them using coupons in 2017, versus 88 percent the previous year, according to a Valassis study.
“While consumers are willing to share personal data with brands, they’re doing so in hope of a more personalized shopping experience with relevant offers and messages,” he said. “Next year, marketers will be increasingly tasked to reach consumers where they are at all times. Brands must gain clear insight into a shopper’s path to purchase, providing value when it matters most – while at the same time balancing personalization and scale in order to achieve their growth goals.
“To better capture these audiences in 2018,” he went on to say, “brands should strive to offer flexibility – leveraging a combination of personalized and targeted deals, an omni-channel marketing approach and partner with retailers to enhance the shopping experience in-store and online to win not only their business, but their trust, too.”
A focus on omnichannel coupon campaigns was also identified by Charlie Brown, Vice President of Marketing at NCH Marketing, who said that they are part of the art and science that CPG marketers must strive to achieve for product categories where consumer buying options are expanding.
He said, “The vast majority – 99 percent – of coupons motivate consumer redemption in-store via a combination of both print and digital coupon media formats, according to NCH’s tracking. The artful blend of an integrated coupon strategy is not expected to shift anytime soon, due to its effectiveness. One aspect, however, of coupon planning that marketers can’t lose sight of in 2018 is the science of aggregating all redemption results data in one place for analysis and evaluation – regardless of the channel utilized to reach and influence shoppers’ purchases. Without that centralization, omni-channel couponing will be a struggle to measure.”
Mir Aamir, President & CEO of Quotient Technology, expects to see more CPG brands get out of the FSI entirely and shift those budgets into digital coupons. What will drive brands to digital is the need for results and to influence shoppers digitally as Amazon tries to remake the grocery industry.
“The digital coupon of 2018 is so much more than a typical coupon,” he said. “It’s a data-packed offer that, when delivered intelligently with the input of multiple in-store and online data sources, is customized for each person. In 2018, we’ll see more examples of successful personalization along with the capabilities that come with that, such as dynamic pricing. That means one shopper might get an offer for $1 off a box of cereal, while another, standing right next to her at the store, might get an offer for $1.50. Why? The data says the second woman needs more of an incentive to make the purchase. I believe dynamic pricing with coupons will become commonplace.”
Aamir also predicts that digital coupons will be woven into other types of marketing, such as mobile Shopper Marketing ads, because “well-crafted mobile ads are more powerful when they come with a call-to-action. Brands, under intense budget pressure, want this, and I expect this these types of promotions to grow over the year.”
Digital is growing and allows for manufacturers new to couponing to have promotions with selective retailers, according to Ron Fischer, President of Redemption Processing Representatives, which has assisted over 150 manufactures new to couponing with digital or finding an agent for traditional coupons. “Digital promotions provide more controls, faster reporting which include store level redemption and lower costs.”
Meanwhile, there has been some progress in the industry’s fight against coupon fraud. Bud Miller, Executive Director of the Coupon Information Center, has seen increased cooperation between industry participants to address coupon fraud challenges. He listed:
- Industry participants are reviewing and strengthening their coupon integrity-related policies
- More retailers are working with law enforcement and the CIC to prosecute coupon counterfeiters
- Technologies and procedures are being enhanced to address “coupon decoding” and related coupon fraud issues.
“Glitching and stacking issues will continue to be exacerbated by social media, Miller said. “This underscores the need for quality control and promotion management. Additionally, the increased complexity of multiple promotion channels, corporate downsizing, and personnel turnover increase the possibility of such errors. CIC will continue to educate its Members and the industry about these issues and strive to prevent coupon integrity issues before they happen.”
RPR’s Fischer agreed that counterfeits will continue to be a major issue. He outlined what he called “the negative or dark side of couponing.” His candid comments are:
- "The industry is stagnate due to the lack of regulation. Voluntary, recommended guidelines can’t be enforced, so the exception is the rule."
- "No one wants to touch the fact that the Handling Fee hasn’t been changed since 1987 and now the same fee is being used for digital."
- "We have the technology to clear coupons at point of sale which is happening with digital, but not traditional paper coupons."
- "Independent retailers are denied and have to prove their innocence, which can take 3 months while major chains are fully reimbursed with a quicker turn-around. Communication to resolve denials requiring proof of purchase is done through snail mail by agents and 3rd Party vendors."
- "Anyone can become an Agent, but manufacturers reserve the right to authorize retail clearinghouses."