Electronic Coupon Clearing
Continues to Spark Interest
By Lynne Cooke
There have been many tests of Electronic Coupon Clearing (ECC) over the last decade without a standard practice emerging for the industry. But interest in the process remains as the search continues for the right formula for broad acceptance by trading partners.
Coupon officials say the industry must overcome several ingrained obstacles before this time-saving and efficient process for in-store validation and redemption becomes a widespread practice. Executives believe that the rewards are real, but attaining them has become a major challenge.
“Immediate gratification for the retailer and more effective, quicker redemption for the brands” are among the benefits of ECC, according to Dan Abraham, president of the Brand Coupon Network.
“To understand the benefits of ECC, one has to understand the current paper coupon clearing process,” said Vijay Chetty, president and CEO of ScanAps in Los Angeles. “Even in today’s electronic world, coupons are the only cash instruments still counted, processed, settled and cleared manually. From the time a consumer submits a coupon to a cashier in a store, an average of eight pairs
of hands physically touch every coupon before the retailer finally
gets reimbursed,” said Chetty, who will present a seminar on ECC
at the Annual Industry Coupon Conference April 10-12 in St. Petersburg, Fla.
The process calls for retailers to scan and validate coupons. They submit electronic totals to the manufacturer and usually receive payment within a week. The coupons are then stored. Most are never counted and sorted in coupon processing plants. Test counts are made periodically to ensure accuracy.
“Most manufacturers will not accept coupon counts directly from their retail partners,” said consultant Carlene Thissen. “So, third-party vendors are needed to collect and control the quality of electronic coupons clearing data. This is where momentum for electronic coupon clearing has stalled.”
Indeed, early efforts by third-party vendors have not succeeded. They include programs by Advanced Promotion Technologies (APT) with its Coupon Eater, Comark Technologies with its Universal payment Platform (UPP), and Catalina Marketing and its division called Catalina Electronic Clearing Services (CECS). More recently, other vendors have also launched programs that were not sustained or expanded widely.
“There have been many good systems tested over the years, but before they are rolled out, the company goes out of business. Everyone is aware of this trend and waits to see if the company is going to last,” said Chetty of ScanAps.
The allure of the benefits for trading partners still fuels interest in ECC. The process provides the fastest exchange of payment to retailers and redemption information to manufacturers. Most of the chargeback adjustments that occur in the traditional and one- count processes are eliminated. Marketing information is expanded, and fraud is reduced by product validation.
“The primary perceived benefits of ECC are speed and cost reduction,” said Matthew Tilley of CMS. “These perceptions are based on the assumption that if coupons do not have to be physically moved, sorted and handled, the clearing process will be faster and cost less.”
The process replaces the need to ship coupons to Mexico, thus eliminating shipping, insurance, customs and related costs. ECC would provide accurate and reliable coupon redemption data in virtually real time to all interested parties. Additionally, ECC will eliminate coupon fraud and mis-redemption, which will save the industry an estimated $300 to $500 million per year.
The history of coupons is one of efficient evolution. First, there was the two-count processing of coupons without bar codes. Coupons were counted and data collection was based on manual keying. Coupons were reviewed by retailers and manufacturers and the entire process could last as long as four months.
Today, coupons undergo one-count processing, based on the scanning of EAN-128 bar codes. Processing cycles have been reduced to around two weeks. This method has proved to be reliable, of relatively low cost, and is clearly auditable.
Tilley believes many executives see ECC as a packaged product, but that would be missing the point. It is a new way of thinking
about coupons.
“As with every evolution in our industry, the primary obstacles to overcome are coordination and cost,” he said. Everyone must be on the same page and agree to what the implementation and processing requirements are and how the conversion costs will be covered, in order for ECC to move forward.”
Ron Fischer, president of Redemption Processing Representatives (RPR) in Blairstown, N.J., added, “The rules governing coupons are all voluntary and recommended practices. Once the leading retailers and manufacturers endorse ECC, others will follow.”
So why hasn’t that happened yet?
According to Chetty of ScanAps, some retailers would be faced with the prospect of purchasing costly new hardware and software. In addition, they demand a compelling value proposition of profit and ROI (Return on Investment) before going forward. Since electronic clearing primarily benefits manufacturers, retailers want them to pay all or a portion of the cost.
“Another roadblock is that retailers would have to eliminate their deduction programs,” he said. “For some, this means eliminating a source of revenue.”
Fisher added that manufacturer agents would also lose a source of revenue being achieved from traditional and one-count programs, although there are possible options that could offset the loss. .
Another hurdle is that the barcode on coupons today has limitations that hinder electronic clearing, explained Joan Wyndrum, vice president of Pinpoint Data in North Plainfield, N.J.
“The current UPC-A/EAN-128 coupon coding rules present many challenges to marketers,” she said. “In some cases, the terms of the offer just don’t ‘fit’ into the limited options available for offer value and purchase requirements. In others, acquisitions and divestitures can make accurate purchase validation difficult, if not impossible. These ‘hard-to-handle’ coupons either wind up being processed manually outside the flow, or leave manufacturers accepting a ‘close-enough’ redemption.”
These coding problems, which only increase over time with shifting couponing trends and a dynamic business environment, hamper electronic clearing efforts, according to Wyndrum. If a coupon cannot be accurately processed as intended without human intervention, it can’t be cleared electronically.
“But there is hope on the horizon,” she said. “A new coupon standard, called the GS1 Coupon DataBar (RSS), addresses most of the shortcomings of the UPC-A/EAN-128. The specification, due to be fully implemented in 2010, offers a robust flexibility that will allow marketers to create complex offers that can be accurately coded and redeemed at the POS, thus removing this long-standing obstacle to electronic clearing.”
What are the next steps for ECC?
According to coupon experts, manufacturers must show interest in ECC by taking part in trials to determine the reliability and accuracy of data. As the party with the most to gain from ECC, they could provide financial support for the technology’s research and development. Existing clearing houses could promote ECC to their clients and to the industry at large.
“Getting this issue back on the board room tables of the various associations would also help promote the process,” said Fischer of RPR. “ACP’s Industry Coupon Conference will provide an update.”
Editor’s Note: A new White Paper on Electronic Coupon Clearing
is now available. Click on the “Free Information” tab on top of
this page.
New Name: RSS is GS1 DataBar
By Jack Grant
The RSS (Reduced Space Symbology) bar code for coupons has been renamed the GS1 DataBar. The change was made by GS1, the global standards organization, to avoid confusion with “RSS” which is very broadly used on the Web for “Really Simple Syndication.”
“The GS1 DataBar name was selected because it is easy to remember and pronounce and works in all major languages,” according to written statement from the organization.
“It also fits perfectly with the GS1 DataMatrix name already used for GS1’s version of this 2-dmiensionalbar code.”
To ensure a smooth name transition in the marketplace, GS1 will keep referring to the previous name through 2008. Until then, the bar code will be called GS1 DataBar (RSS) to allow for industry documentation to match equipment interfaces during the transition period. GS1 also made provisions to maintain legacy terminology for five years in the GS1 General Specifications glossary to accommodate ISO/IEC standard maintenance cycles.
GS1-US has been working with trade groups such as the Joint Industry Coupon Committee (JICC) and the Association of Coupon Professionals (ACP) to educate retailers and manufacturers on preparing for the new bar code on coupons and the new benefits
that will be possible. For manufacturers, the GS1 DataBar (RSS)
will provide more options for purchase requirements and values and make it possible to code more complex offers. It will enable the coupon to be validated at checkout to ensure the manufacturer intended the purchase that was made. Also, it may reduce misredemption.
Meanwhile, retailers would get better scanning accuracy at the POS. More specific coding and fewer human readable elements should reduce misredemption, while minimizing the amount of “hard-to-handle” coupons. With the new bar code, retailers will be able to code chain-specific promotions, which now is almost impossible to do. They will also be able to leverage offer tracking and provide improved purchase auditing back to the manufacturers.
“The plan is in mid-2008 coupons will start having both the UPC and the expanded bar code on coupons together. Then sometime probably in mid-2010, the plan is to drop the UPC and just have the expanded bar code on there,” said Gregory Rowe, director of business development for GS1 US.
For more information on the GS1 DataBar and plans to adopt it in 2010 for trade item scanning, visit www.gs1.org/barcodes.
Mobile Coupon Solutions
Start to Gain Traction
By Jack Grant
The mobile coupon is a relatively new option in the promotional toolkit. This sophisticated form of couponing is starting to develop interest from marketers and retailers looking for new ways to reach consumers.
Mobile coupon solutions involve sending electronic coupons to subscribers' mobile phones for starting or supporting a promotional campaign. They can be redeemed by showing the coupon in stores and are important tools that provide the “push to purchase” element in a mobile advertising campaign.
At first, this option was hampered by a lack of effective security, inefficient management of coupons on the mobile handset, and inadequate branding. Since then, the technology has improved and the promotion is gaining some ardent support.
“Mobile coupons are a more efficient way of advertising when compared to paper coupons,” said Vikrant Gandhi, an analyst with Frost & Sullivan. “Newspapers and coupon books sent through the mail do not offer a direct tie between the advertiser and the person who uses the coupon, whereas in mobile coupons, there is a direct connection between the company offering the coupon and the person who elects to use it.”
He singled out one company, Cellfire, Inc., a free service providing coupons available through Web-enabled mobile phones. He said the company has leveraged its strong relationship with national retailers and mobile operators to provide the best offers, while also demonstrating significant financial benefits for its partners. It also plays a crucial role in spreading greater awareness about the potential for mobile coupons.
According to Vikrant, the company's mobile coupon solution satisfies the key expectations of retailers, brands, mobile operators and consumers and is expected to emerge as a preferred option for the mobile coupon industry participants. It will increase consumer adoption of mobile coupons by eliminating coupon portability
problems and presenting multiple offers to consumers in a single interface.
“Cellfire's retailer partners have seen 100 percent increases in coupon redemption rates over paper coupon campaigns,” said Vikrant. “Mobile operators can use Cellfire as a data services growth accelerator by presenting relevant promotional offers for premium content services to their subscribers.”
Cellfire was the recipient of the 2007 North American Frost & Sullivan Award for Mobile Coupon Solutions. Companies that have signed on to the service include Domino’s, Hollywood Video, T.G.I. Friday’s, Hardee’s, and others.
Meanwhile, another service is available from Text2Store Mobile Corporation, which provides mobile coupons for opt-in consumers. The service transmits discounts and special offers via coupons
delivered directly to customer cell phones nationwide.
Consumers of this opt-in coupon services can choose when they want to receive coupons and what type of coupons they want
to receive.
“The customer has complete control. We don't send more than two coupons a day and the customer can go online and stop the service at any time,” said Ola Ayeni, founder and CEO of the company whose web address is www.text2store.com.
MARCH 2007
Unique Methods of Distribution
Signal New Era for Promotion
By Jack Grant
New ways to distribute and redeem coupons in the store engage consumers while they are shopping. The national brands and private label products being showcased benefit from the added awareness created from the newfangled distribution methods. What’s more, they signal a new era for America’s favorite promotion.
“Technology is giving shoppers more alternatives to obtain and use coupons in the store,” said James Tenser of VSN Strategies, a consultancy based in Tucson, Ariz. “CPG marketers get more brand exposure, retailers get more sales, and shoppers get more savings. It’s a win-win-win.”
Some of these solutions were on exhibit at the annual convention of the National Grocers Association (NGA) in Las Vegas recently.
Shortcuts is a new service of AOL which has not launched yet (www.shortcuts.com). It essentially is a paperless online coupon program linked to store loyalty cards. Here is how it works: Consumers go to the Shortcuts’ web site to select coupons which are then linked to their store loyalty card. They buy the promoted brands in their regular store. The coupons redeem automatically when consumers swipe their loyalty cards at checkout.
According to the company, the service will help manufacturers build long-term brand-consumer relationships. The program includes daily tracking and reporting. Marketers can manage coupon performance by brand. The metrics include coupon selection, redemption, and the ratio of coupons selected to those actually redeemed. Marketers can segment coupon campaign results by geography, demographics, behavior, and custom-defined segments.
Meanwhile, the company says retailers get a streamlined experience because paperless online coupons drive more transactions, and enhanced efficiencies at checkout build better in-store customer relationships.
ShoptoCook markets a Recipe Center to make meal-planning
more pleasurable and efficient for time-pressed shoppers (www.shoptocook.com). The touch-screen kiosk is typically located along the perishable perimeter of the supermarket in the meat, seafood, produce, wine, and cheese departments where meal planning takes place. With a simple touch of the screen or an item scan, shoppers can view and print recipes that can include coupons for the specific brands featured.
“We offer branded manufacturers a media channel that places their message where most meal planning takes place – in the perishable aisle,” said Frank Beurskens, CEO of the firm in Buffalo, N.Y. “We use kiosks as a vehicle to promote branded ingredients in the context of a meal solution for a shopper.”
The Recipe Center is installed in over 200 supermarkets operated by AholdUSA throughout New York and Pennsylvania. The company also provides its in-store interactive application in all Bloom stores operated by Food Lion/Delhaize Group.
ScanAps is an enterprise solution for retailers and CPG manufacturers (www.scanaps.com). Through a unique coupon scanner and targeted promotions, the company aims to help trading partners increase loyalty to stores and brands. The former is a mini key chain scanner distributed by retailers to their shoppers. The process begins at home where shoppers scan and store barcodes from FSIs or direct mail coupons. Then they bring the scanner to the store to download the data into a special docking station or a kiosk. The coupons are redeemed when the promoted items are scanned at checkout. The system validates, redeems, and clears these coupons in the store.
Another part of the ScanAps program is an in-lane promotion program called TIPS (Targeted Individual Promotion Software). It enables retailers and CPG manufacturers to deliver in real time different discounts for the same products at the same time from the same store to different customers based on their level of loyalty to store and the brand.
“TIPS enables retailers to offer the best prices to their best customers. It integrates retailers’ and manufacturers’ in-store promotion into one platform. Manufacturers can now deliver targeted promotions to shoppers directly from each retail stores,” said Vijay Chetty, president of ScanAps. “The mini-scanner makes it easy for consumers to use coupons, gives an incentive for shoppers to come back to the store, and introduces the long-coveted electronic clearing for manufacturers,” he said.
The application is being piloted in Michigan by Paw Paw Shopping Center, a one-store independent grocer.
Healthnotes provides health and wellness marketing programs to retailers through in-store kiosks and retailer website integration (www.healthnotes.com). The program is operating in some 2,200 stores and on 200 websites, including leading retailers such as Whole Foods, Fred Meyer, H-E-B, Farm Fresh, Raley’s, HyVee, Meijer, and others. The in-store systems are found in nutrition centers, pharmacies, at the front of the store, and in the meat, seafood and produce departments.
According to consumer intercept studies, 40% of consumers who use the system in the store make a purchase as a direct result of interacting with the kiosk.
“Integrated shopping lists, linkages to retailer promotions, product recommendations, and touch-to-print coupons are among the reasons why consumers like Healthnotes and, by proxy, why they like the retailer,” said Jeff Seacrist, vice president of marketing.
Association of Coupon Professionals
Provides Information and Guidance
By Jack Grant
Got a question about coupons? Where can you go to learn more about America’s favorite consumer promotion? Need some networking to give you an edge in the marketplace?
The primary source of information and guidance about coupons today is the Association of Coupon Professionals (ACP), based in Des Plaines, Ill. It is the only industry trade organization that exclusively serves marketing professionals who work in or have
an interest in couponing. ACP stages events where consumer packaged goods manufacturers, retailers, coupon processors
and vendors can meet, share their ideas and concerns, and
discuss issues.
“We are all about coupons,” said John Morgan, executive director of ACP. “We welcome industry professionals as members. We will do our best to serve their coupon needs through our educational seminars, monthly newsletter, and our annual conference.”
This year ACP will hold its annual Industry Coupon Conference April 11-12 in St. Petersburg, Fla. Shelley Broader, the president and CEO of Delhaize-owned Sweetbay Supermarket and Kash n’ Karry, will be the keynote speaker. The event will be presented in collaboration with the Food Marketing Institute (FMI), Grocery Manufactures Association (GMA), Promotion Marketing Association (PMA) and GS1 US.
The popular Coupon 101\102 workshop, which reviews all aspects of couponing in a one-day session, will precede the conference on
April 10 at the historic Renaissance Vinoy Hotel.
The ACP has three goals:
(1) Improve coupon industry business conditions.
(2) Foster the continuance of coupons as a valuable sales and
marketing tool.
(3) Provide a forum for the education and resolution of common
industry concerns in the development, distribution and
redemption of coupons.
“Our loyal membership enables ACP to continue to serve the industry,” said Morgan.
“At the same time, we look forward to expanding our resources and services as our memberships grows.”
He outlined the key benefits of ACP membership:
- Information The ACP offers the best source of information on all aspects of couponing. Through conferences, newsletters, publications and member referrals, executives can find the latest information on almost any topic relating to coupons.
- Education ACP’S conferences, literature and Coupon 101/102 classes will give executives the education they need to become coupon professionals.
- Networking ACP’s conferences and its member-driven website will make it easy to meet coupon professionals who can share their experience and expertise. Active members representing manufacturers, retailers, distributors, processors and marketing service experts are eager to learn from each other and new members.
- Influence The ACP is an organization whose members are the driving force behind most of the changes in the coupon industry. Every voice will be heard.
- Exposure Active membership and conference sponsorships provide many opportunities to feature services and products.
- Discounts Substantial discounts on conferences, education and reference materials are available.
Over the years, ACP has held industry forums on key issues such as quick pay, electronic clearing, Internet couponing, freight and insurance. It has assisted in development of standards for couponing and has developed guidelines for in-ads and Internet coupons.
ACP has been involved in drafting electronic clearing standards and guidelines and is currently working on family code communication. Its efforts to mitigate hard-to-handle coupons and its work on the new barcode on coupons continue.
More information about ACP is available at www.couponpros.com.
