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Paperless Coupons & Loyalty Marketing

Coupons sure are a hot topic this year with all the display ads being clogged up utilized by online properties such as Groupon, LivingSocial, DailyDeals, etc. But, what about the long-standing purveyors of coupons.. the grocery store?

As far as I can tell, there are two types of paperless coupons:

a) the digitized version of the coupon that you show to the clerk at a store to be scanned using your mobile or smartphone, and

b) the coupons that users can elect to sign-up for and push to a rewards/loyalty card offered by a particular merchant like Fred Meyers (or any of the Kroger grocery stores with loyalty cards).

The biggest hurdle for the "b" group is consumer awareness. Using a loyalty card has bee pretty straightforward. You go into a store responding to either an in-store ad promotion or one from the weekly circular, match your product and get a discount when you fulfill the offer's requirements. It's a tiny, innoculous keyfob that just hangs there with all the other micro loyalty cards. Every merchant from the pet shop to the grocery store to the local coffee house to the corner drugstore wants a piece of the action in your pocketbook. Very few loyalty cards actually require you to do anything transactional on a merchant's website. Three notable firms that come to mind are: Starbucks (have to register and setup a user account to add more bucks to a Starbucks card, check card balance), REI (stores member details that can be accessed in-store or online at rei.com), and Fred Meyers (via the Kroger parent brand, has a very thought-out loyalty program but few are aware of it).

The following statistic picked up by Internet Retailer is a minor annoyance to how one should use a research data point.

"49% of loyalty program members never or rarely take advantage of loyalty program perks when shopping online; however, 78% of Americans who are members of loyalty card programs say easy online access to their loyalty memberships would make them more likely to shop at the retail web sites that honor their loyalty programs." --a study by ACI Worldwide, on electronic payments and rewards programs.

It really should have started out this way, "51% of loyalty program members take advantage of loyalty program perks when shopping online..." Heck, that's more than half! If ACI had stats from the prior years, they could have let on if this number is growing or shrinking. So anyways...

Like mindshare, there is limited space on your keyfob or in your wallet for additional loyalty cards. Typically, the cards that offer the best rewards are the ones that consumers put up with and carry them around everywhere. Having a customer to opt-into the card is the easy part. Getting them to proactively load their own card with preferred offers with the benefit of not having to print out the coupons is a considerable shift in a consumer's perception about coupons. How these offers are redeemed is no different than swiping the loyalty card at checkout. FM makes it pretty easy for customers to access information about their loyalty card account. No paper clippings are necessary.

FM uses an app called SoftCoin to host merchant offers for digital coupons, which is run by a bi-coastal company called YOU Technology. I think they've gotten pretty good at targeting and pairing offers to consumers. If FM is going to rise from being the #3 grocery retailer in the US, the way technology impacts both consumers and how users get informed about product offers will certainly make a difference.
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