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Tuesday, March 8, 2011

Digital Coupons - The Revolution Begins

For the last few days, I was thinking about what would be a good post for March. Of course, I thought about the fire-prevention month (which is really important) and how marketing can help them increase their awareness but stumbling across some sites changed my mind.

I'm talking about these sites that offer digital coupons - ensogo, groupon, deal grocer, etc. I started seeing their ads on Facebook last February 14, 2011 where it offered several themed-gifts people can give during valentines. From a few hundred fans it skyrocketed to a few thousands and I believe the sites I mentioned above are now on the 50,000 fans range already since February - that's just crazy!

So what made it so popular? During this time of economic crisis, why do these sites flourish? It seems illogical to have something like this while in fact the average Filipino consumer can't even budget their money to live comfortably on a day-to-day basis. And since these are - in essence - coupons, why is it so different from the coupons you see in the newspapers or magazines?

I tried to recall what is the primary function of a coupon and I remember that marketers use this device as a part of Sales Promotion. As we all know, Sales Promotion is one of the marketing communication tools we can use to introduce our products to the consumers or the trade. We conduct sales promotions in order to stimulate market demand and increase consumer spending. This is a good way to introduce a new brand to the market where competition is high. Sales promotion even helped marketers to break the ice and induce consumer trials which in effect can encourage brand switching. It can be part of a marketers push or pull strategy.

A simple review would tell us that in order for a sales promotion to work, it must have the following characteristics:
  1. Short-term value proposition to the consumers - it means it must be done in a limited time. It can not run forever.
  2. In order to get the value proposition, the consumer/customer MUST perform an activity to become eligible.
So going back to the digital coupon sites, browsing through their sites, the two conditions above are actually met. First, there's a promo with a significant amount deducted to make it look more appealing (imagine from 25,000 pesos they can offer it at 14,000) and most of the offers are things or activities that you won't normally do or purchased due to high cost. Second, all of them equipped their promo with a timer to indicate how many days or hours left a customer has to get the promo.

But what's really interesting is how the digital execution made it more lucrative versus it's traditional counterparts. Some key points to learn here for fellow marketers who wants to go into digital sales promotions:
  • Digital coupons made it easier to be distributed and cheaper to produce since no paper production is involved. The customer prints the actual coupon as soon as they purchased it.
  • Digital coupon sites are often restricted to MEMBERS only therefore, signups or email opt-ins pave the way for the digital marketers to create a highly targeted database that they can use on for later promotions or other marketing related activities. In this step alone, condition number 2 is immediately satisfied.
  • Having a digital coupon site made it possible for the marketer to do a high level segmentation and create promos based on the information they get from their site. This includes the demographics (from the signup section) as well as the buying behaviours. They can easily track everything since digital marketers can attach tracking codes in their sites.
  • These type of sites cater to a highly targeted market since most people who have access to the internet are in the middle income to high income families.
  • The reach for these type of sites are multiplied a thousand fold since the Internet can be accessed anywhere as long as the customer has a computer and is connected to cyberspace.
  • The digital marketer can take advantage of the web 2.0 capabilities of websites today in order to present it more alluring. Say goodbye to smelly, black and white text coupons you see in newspapers!
  • And the beauty of having this as part of your sales promotion tactics is that you can offer a lot of promos simultaneously without the added cost of material production.
And I'm sure a lot of digital marketers out there, specially those who mastered the art of digital sales promotions, can add more to the list.

Lastly, I would like to stress that the growing number of sites who offer coupons is an indicator that it is ballooning. The digital coupon revolution makes it more appealing for more marketers to "switch" their strategies in acquiring more clients or customers.

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  1. I think you're right!
    Coupons are definitley more powerful on a digital platform for many reasons. Although i don't think it's the best way to use social media. Coupons are great to gain new customers but they don't retain them. Loyal customers are what keeps a company afloat, specialy on these tought economic times.

    I own a blog about social media marketing and all there is too it! It's really new, but i have a tendency to write a lot of posts and i think you can find useful information on the topic.

    I invite you to go take a look and tell me what YOU think! I'm really new at this so your opinion will be very helpful to me.
    You can post your comments on any post or answer the survey at the bottom of the blog

    NOTE: Most posts are not writen by me, they're merely interesting post and topics that i found on the web and that i think are worth sharing. All author rights are recognized.

  2. Thanks Karla! I'll definitely drop by at your blog and read your stuff.

    It's interesting how digital coupons now are flourishing and I think you are right about retention. It's hard when the people buying has no significant relationship with the coupon site and they're just there to grab the next best offer. But what about the competition? If their competition finds a way in understanding the trends of how their customers buy, then they could develop a loyalty program that can stop the other coupon sites from growing.