Digital Coupons ‘Cut Out’ Challenges
Of Traditional Offer Redemption

By Randy Malluk

When it comes to driving and incenting consumer behavior, no promotional vehicle comes close to the power and value of a coupon. With the evolution of digital marketing, digital coupons have become the natural extension of their physical counterparts, supported by their value which allows marketers to better target consumers and utilize promotions budgets more efficiently.

Traditionally, CPGs have been faster to embrace digital coupons because they allow a direct touch-point with consumers; a challenge faced less by brick-and-mortar retailers. But now the vast quantity of brands and retailers leveraging digital coupons to test, target and optimize their marketing campaigns is growing at astounding rates. Through proprietary client data and in-depth industry research, RevTrax has identified three key trends brands and retailers should embrace, including increasing their emphasis on mobile, encouraging social sharing and utilizing real time offer testing, in order to improve redemptions.

The Increase in Mobile Traffic
Offer traffic from mobile devices is on pace to surpass desktop and become the primary source of traffic for in-store retail offers. In 2014, 45.8 percent of retail offer traffic came from mobile devices, up over 20 percent from 2013. Accordingly, more than half of retailers who participated in a recent Forrester survey say mobile is their top priority.

Still, mobile coupon growth is slightly stunted due to retailers’ point of sale (POS) system limitations, lack of organizational alignment and small-scale testing. Since POS system updates and organizational alignment typically come from senior management, digital marketers should focus on testing as many new mobile technologies as possible –
geo-fencing, app-specific offers, iOS 9 Wallet (formerly Passbook) offers – as key components of digital promotions campaigns. Particularly interesting, will be whether the majority of retailers adopt payment terminals that support Apple Pay, and whether this new form of currency will integrate well with digital promotions (Apple claims this technology automatically applies coupons at purchase).

The Growth of Social Engagement
Email has always been one of the most efficient channels for distributing offers to consumers. It’s quick, the results are easy to predict and measure, and the recipients have self-selected to engage with the sender. However, in 2014 only 26 percent of our customers’ offer traffic originated from email while 40 percent originatoed from social. This is particularly noteworthy when one considers that email remains the most popular form of digital promotion.

As social becomes more prevalent, it is imperative for marketers to integrate social across all digital marketing efforts instead of approaching it as a separate entity. Incorporating social elements into campaigns – encouraging consumers to share offers or 
interacting with community content – can increase engagement, lead to new consumer acquisition and even boost ROI.

The Advancement of Real-Time Offer Testing
We’ve seen a noticeable uptick in real-time offer testing among brands and retailers, allowing marketers to deliver varying personalized offers to consumers derived from pin-pointing key factors that drive purchases. In practice, marketers distribute multiple offers in real-time, monitor their performance, and identify and distribute the optimal offer from that point forward. Of the offers that marketers tested in 2014, 65 percent were for specific dollar-off amounts, and about 76 percent were for entire product lines (brands) or entire stores (retailers). Real-time offer testing provides an overall understanding of what motivates consumer behavior, and its results can be capitalized on immediately.

The demand for real-time information expands beyond offer testing to consumers’ preferences. According to a recent Accenture study, nearly 60 percent of consumers want personalized promotions to occur in real-time, meaning they are received while the consumer is actively shopping or browsing.

While traditional paper coupons still account for more coupon-related spending overall, most of the current growth in this space is happening digitally – a fact brands and retailers must embrace in targeting today’s consumer. But in shifting their strategy, CPGs and retailers must continue to examine the changing digital landscape and the consumer preferences around digital channels, formats and the overall promotions experience.

Randy Malluk is VP Strategy & Analytics of RevTrax, which uses personalized offers to measure and improve digital marketing’s impact on in-store sales

                                                 Early July 2015