Coupon'ometrics

One of the many ways that we (know-it-all) consultants recommend measuring online to offline conversion rates (and vice versa) is to do so with the help of coupons. For example, site visitors can be offered a coupon while they are online to be redeemed at any store. When the coupon is redeemed it will have a key code that reveals to what source the business is to be attributed.

 

But , come on! Coupons? Who uses coupons any way?

 

Coupons

 

Well, Scarborough Research has asked that question and published some of their research results last month. They provide the percentage of households using coupons broken down by channel (e.g. online, newspaper, etc) and geo locations within the US.

 

Among Scarborough’s findings is that the Internet coupon usage is up 83% in 2007 compared to 2005. You may remember seeing this in news headlines.

 

Wow.

 

But if you read further you will learn that only 11% of households usually obtain their coupons online. (More than 50% obtain them from the Sunday paper.)

 

Plus, the report isn’t actually saying what I thought I was hearing when I first read it, namely that “11% of households that are online were using coupons.” Upon second reading, the report is saying that “of households using coupons, 11% obtain them online among other places”.

 

So what about that former question though? It is top of mind for retailers that wish to use coupons online for

  1. Pushing prospects that are on the fence over the edge towards a purchase
  2. Make it more likely that prospects that are doing their research online and then evaluate/purchase offline will actually go to the same company’s brick & mortar store instead of going to whatever competitor’s store happens to be nearby to them.
  3. Along the way, use coupon key codes to measure the multichannel conversion rates from online to offline.

 

Well, Scarborough’s research does list the % of households using grocery store coupons for the top 75 markets (DMA) in the US. For example, 33% of households in New York were found to be using grocery store coupons. (the public part of the research says nothing about frequency, who was surveyed, for this finding, etc.)

 

So if 11% of 33% of households are going online for their grocery store coupons, that would mean that a maximum of 3.6% ( 0.11 * 33 = 3.6) of households in New York are estimated to be using grocery store coupons online. (note: maybe even less than that because the 11% figure in the research results doesn’t seem to be grocery store coupons if I see that right.)

 

So, no more than 3.6% of NY households used grocery store coupons in 2007 up from 2% in 2005. Not sure about coupons in general besides grocery stores.

 

circuity city coupon

 

Is that kind of percentage large enough to help multichannel retailers with their goals #1 – #3 stated above? The answer to that is probably:

  • On average across industries, coupon users seem to be too small a group to be representative.
  • From a measurement perspective, it is not clear without further research whether coupon clippers’ behavior is representative of non coupon users’ behavior. So one can probably not extrapolate from this subset to others.
  • But for specific promotions or products the percentage of coupon users can be much higher and worthwhile. It will just depend on the value of the offer and how prominently it is presented.
  • Even more promising may be the delivery of personalized coupons based on past purchase and online browsing behavior. See for example one shoppers experience who accidentally received her own and her neighbor’s personalized coupons in the mail.

No easy answers.

 

But as always with marketing today, marketers need to go an extra mile to make their work relevant to their audience. Customer decisioning using multichannel behaviroal data as input can be that extra mile. But it requires know how. May I recommend a good book 😎

 

P.S.: I must admit I didn’t even know you could clip grocery store coupons online. But you can. See for example http://shortcuts.com for generic grocery store coupons.

P.P.S:  Never mind the question whether it is more wise for marketers to use discount coupons or instead invest that money into brand building which may have a more lasting effect on business.  

2 Responses to “Coupon'ometrics”

  1. Coupons are good for measuring online to offline, but I think the offer should be compelling enough for the consumer to go through the hassle of printing it out and bring to a store. It would be interesting to see results of the new technology with coupon pixel images being texted to a cell phone where the cashier can scan the image for the consumer to redeem.

    http://migpascual.com/2008/03/couponing-reinvented/

  2. Hi Mig,

    Agreed! I am excited about the cell phone technology as well. For sure, that will have some novelty effect when it becomes more wide spread over in the US. I hear it is much bigger in Korea already.

    Imagine, one day you will be able to set up your online automated coupon butler. This butler will be like an executive assistent for you. It will receive promotions and match them up against stuff you are interested them. It will transfer them to your phone.

    Then when you check out at the store you can scan your phone (or loyalty account) and get whatever promotions have accumulated.

    I guess what is missing in this vision would be awareness though. If you aren’t aware that you got the promo, it won’t lead you to a purchase.

    Oh boy, should our cell phones buzz when we walk by an item in the store for which we happen to have an offer? Na, that sounds pretty annoying 😎

    Thanks for the comment!
    Akin