Data and analytics have become an important aspect of nearly every business function, from supply chain and pricing to risk management and, of course, marketing.
While many marketers have integrated business analytics into large portions of their operations, surprisingly few are using analytics to their full potential in the couponing and promotions space. More than just a missed opportunity for increased program efficacy, the industry’s tendency to overlook the use of analytics in this area could keep couponing and promotions in the marketing Stone Age.
CPG companies distribute hundreds of billions of dollars worth of coupons each year and pay out more than $3.5 billion in redemptions. For retailers, the investment is even higher, especially when factoring in discount promotions. Retailers and CPG companies devote significant budgets to these programs, but marketers are constantly challenged to spend smarter and more efficiently and to reduce their overall expenditure. One of the best ways to do this is by applying rigor around data and analytics.
The Dawn Of Coupons And Promotions
To understand why couponing and promotions have been slow to adopt strong analytics programs, first it’s important to understand how these programs were measured before the digital era. Ironically, marketers measured effectiveness of coupons and promotions much the same as they do today for print campaigns--by evaluating how many offers are circulated versus how many are redeemed.
Measuring these two factors over time allows marketers to adjust their performance, but on a very slow cycle. Ramp-up for these campaigns can take months. For CPG companies, it can take upwards of eight weeks for information on redeemed coupons to make its way back from the retailer. On the positive side, when dealing with print coupons of this nature, a finite number of coupons can possibly be redeemed. This is one area where the introduction of digital couponing actually complicated the field because it allowed for the viral sharing of promotions codes and unlimited printing of coupons.
Digital Platforms Trigger A Renaissance In Promotions
While the first online coupon platforms raised potential issues with uncontrollable reach and limited targeting, they did provide the benefit of reducing the ramp-up time for couponing and promotions campaigns and provided CPG companies with another way to participate in the promotions space. Additionally, these online couponing platforms adapted well to the developing omni-channel experience. Consumers were given the opportunity to access online promotion codes or printable coupons for redemption online or in the physical retail store.
Today, digital promotions and couponing take a number of forms based on the way consumers choose to access and redeem them. This includes printable coupons, e-commerce codes, mobile coupons, point-based rewards, coupons that can be loaded to loyalty cards, and even promotions where the user can scan or photograph the receipt to receive a refund.
Despite all of these formats and technologies, you’d be surprised by how few retailers and CPG companies take advantage of targeting, security, and measurement capabilities for digital promotions.
Looking To The Future With Data And Analytics
Today, through analytics, marketers can know the who, what, when, where, why, and how of engagement: how a consumer opted into the coupon or promotion, how they received it, the unique path they took to get it (i.e. through a specific keyword search, ad creative, subject line, etc.) And all of this information can be gathered and reported in real time. This increased speed and access to information gives marketers the opportunity to adjust and refine their programs throughout their campaigns, ultimately resulting in a more efficient use of marketing dollars.
Though the adoption of these capabilities seems like a no-brainer, it does require marketers to think very differently about promotion and coupon programs.
In order to operate under the demands of today’s shrinking operating budgets, it’s clear retail and CPG marketers will need to adopt couponing and promotions practices that integrate technologies and analytics. In addition to using existing budget more efficiently, providing enhanced metrics on the success of couponing and promotions efforts may even lead to increased budget allocation.
Over time, this could bring promotions and coupons out of the marketing Stone Age and to the forefront where they can have a greater impact on the bottom line.