The Battle of Offers versus Coupons
Written by: Sue LeClaire
Before you can decide whether to deliver an offer or a coupon to your customers, you need to first understand the difference. Although many use the terms interchangeably, there is a fundamental philosophy that sets offers and coupons distinctly apart: ACCOUNTABILITY.
By far, the most common type of discount available to consumers are offers. Offers come in many forms such as, “buy X quantity, get one free.” Retailers like using offers because it gets consumers to buy more.
In the mobile space, customers who have signed up for a retailer’s marketing list will typically receive offers in the form of SMS messages. My SMS app is littered with “limited offer” messages from retailers. All of the messages contain a promo code to present at check-out to obtain the discount. The length of the promo code often tells me if the retailer gave me a generic or a one-time-use offer.
Everyone on the planet can use a generic promo code to receive the discount. As a consumer, I can use it 100 times in one day as well as share it with friends and family. Generic offers tend to be predictable. Generic offers will never inspire me to “drop everything and run to the store because I have to use the coupon now.” My reaction is more akin to “next time I’m out running errands I’ll use the coupon.” An example of a generic offer is $5 OFF a $100 purchase.
From a retailer’s perspective, more is better when delivering a generic offer to consumers such as “buy 10 pizzas, get one free”. On the other hand, more is not always better when a retailer decides to use one-time-use offers (e.g., $10 off to shop in-store). $10 off could become an expensive promotion if customers are able to use the offer with no restrictions.
On the other hand, coupons allow retailers to provide more generous discounts to their customers, sometimes as a way of saying thank you for being loyal to the brand. First, coupons can only be used once. This means there are reliable security measures in place eliminating a retailer’s liability and minimizing fraud. Second, if the coupon is dynamic – updated every time a customer views it, it can be managed in multiple channels providing a truly unique customer experience. Finally, retailers can track coupon usage.
A genuine security model is two-fold: the coupon codes have to be unique and the ability exists to link the codes to unique identifiers. For example, a unique identifier could be a person’s mobile device number, a loyalty number, a smartphone app ID, an email address, etc. The combination of a unique coupon code and unique identifier, such as mobile phone number, ensures the mobile device (or owner of the mobile device) receives only one coupon. Even when deleted, the person will receive the same coupon if they attempt to retrieve it a second time.
Given that consumers are multi-device, they should be able to view the coupon – the same coupon – in the channels of their choosing. Channels could include email, mobile web, a retailer’s mobile app, Facebook, Passbook, etc. The combination of a unique coupon code and channel ID lets the retailer both deliver and invalidate the coupon in all of the channels their customers choose to view it. The retailer can even mark the coupon as redeemed so the customer knows it has been used and doesn’t re-present the coupon at check-out. Dynamically updating coupons in all channels provides a true omnichannel customer experience.
The icing on the cake is the ability to track the purchase funnel via the coupon. Using the coupon codes and linked attributes, a retailer will know who received the coupon, when it was viewed, in which channel, and where it was redeemed. Whew! That’s a lot of customer intelligence that can be applied to the delivery of future coupons.
All three of these capabilities encapsulate ACCOUNTABILITY – only the number of coupons issued can be redeemed; a customer can receive only one coupon; if they delete the coupon and try to retrieve it, they will receive the same coupon as before; and the retailer knows by whom, when and where the coupon was used.
Offers will continue to be a popular vehicle for retailers to deliver discounts to consumers. Primarily because they’re easy – anyone can create one. Hopefully, in the mobile offers versus coupons, it is clear that coupons are different than offers. A coupon is a liability and should be treated as such. Providing digital coupons (not offers) can create a unique customer experience and provide the information retailers need to create even more compelling coupons for their customers.