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FEATURE: Digital Marketing Strategies: Clicking vs. clipping

With shoppers of all income levels increasingly on the lookout for savings, at least one grocer is busy testing new applications of "virtual coupons," to see if customers bite.

The Kroger Co., based in Cincinnati, recently launched two separate initiatives with several leading CPG firms and two technology vendors--Shortcuts and Cellfire--to offer its loyalty cardholders special deals via the Internet and their cell phones.

While Kroger and Cellfire have kept rather mum on their experiment involving cell phones, which was set to launch sometime in the spring, Ken Fenyo, Kroger's v.p. of corporate loyalty, offers this explanation for the grocer's deal with Shortcuts: "We're always looking for new and innovative ways to build customer loyalty, and saw the Shortcuts program as another way of helping us to do so. Shoppers are spending more time online and are always looking for ways to save money and save time."

Indeed, analysts note that more and more retailers are looking for ways to connect with their shoppers--and this is just the next generation in a series of more personalized marketing strategies.

In addition, the latest versions of e-coupons may be more appealing, as they don't require printing. "The new e-coupons are moving away from requiring printing, which should help with the risk of fraud," notes Mike Griswold, retail research director at Boston-based AMR Research.

Recent research suggests that customers are open to the idea of clicking vs. clipping for savings. A survey conducted by Toronto-based ICOM Information & Communications in February found that 58 percent of respondents see their coupon use increasing if they have the ability to download a coupon from the Internet and have it automatically connected to an electronically swiped frequent shopper card.

Of course, coupon usage in general--whether electronic or paper--traditionally peaks during slower economic times, studies have shown. (The chart below from ICOM breaks down consumers' coupon usage during a recession.)

Taking 'Shortcuts'

Shortcuts, a Dulles, Va.-based service of AOL, launched the new technology with Kroger and its banners earlier this year. Any Kroger loyalty cardholder with Internet access can use the service (AOL membership isn't required). General Mills, Kimberly-Clark, and Kraft were the first CPG partners in the launch, and Shortcuts says it's actively seeking new manufacturing--and retail--partners.

"Our plan is to have anywhere from 75 to 100 offers from various companies available by the end of the year," says Sharon Baker, executive director of Shortcuts. "We want to expand into a national footprint."

With the Shortcuts program, Kroger shoppers visit to set up an account using the store loyalty card they use at any of Kroger's banners. Then they search the Shortcuts online coupon service by brand, product, or category, and click on grocery coupons they want to add to their card. When they go to the store, they scan their loyalty card at checkout, and the coupons are automatically applied to their purchases.

Shortcuts accommodates shoppers who rely on paper coupons, too, by allowing them to print out a sorted list of "clicked" coupons to take to the grocery store.
The values featured on Shortcuts' site are similar to what consumers would find in the Sunday paper, notes Baker. As with traditional circulars, retailers may also choose to include offers on their private label products.

As players like Shortcuts and Cellfire experiment with digital coupons, other companies are looking toward more personalized marketing solutions as the next big thing. Concept Shopping, a Lisle, Ill.-based firm that works with the legacy Albertsons stores now owned by Minneapolis-based Supervalu, maintains that loyalty card holders seem most impressed with customized offers that are personally selected based on their shopping history.

"In our experience, customers would rather have offers filtered for them," says John Hennessy, v.p. of sales and marketing at Concept Shopping. "We think there's value in pre-selecting those offers, because you're doing the shopper a favor. Then, once you have the message ready, you can send it to them through various channels, whether it's cell phones or an in-store kiosk."

How consumers will change coupon use in a recession

No change Somewhat more Much more
Age group in use likely to use likely to use
18 to 34 years old 29% 21% 50%
35 to 54 years old 31 23 45
55 and over 36 20 43
Source:: ICOM Information and Communications


New Digital Strategies: Online Product Reviews

Customer reviews have become all the rage on the Web, whether they're used by new parents looking to rate baby products or business travelers trying to discover the dish on a hotel or restaurant. Now reviews of grocery products are also surfacing as retailers and manufacturers become savvier with their Internet strategies.

Indianapolis-based supercenter operator Meijer, Inc. recently said it has selected PowerReviews, a solutions developer based in Millbrae, Calif., to tap information from its customer reviews to help boost sales and build stronger customer relationships on its Web site. Although food products are currently not sold via, the retailer is using the technology to let users rate nonfood products in categories including baby care, pet, and toys.

The review structure developed by PowerReviews is different from traditional review systems, in that it creates a dialogue with consumers, explains Jay Shaffer, v.p. of sales and marketing at PowerReviews. "As a consumer goes to write a review, we guide them with questions such as, 'Why did you like the product, or why not?' We work with the merchants to suggest specific words that might describe the product. And we also ask them to tell us about themselves so that readers can relate to them." Like traditional review systems, customers are asked to rate the product on a scale of one to five stars.

Some of PowerReivews' customers are using the reviews not only on their Web sites, but also in the stores, says Shaffer. "Staples, for instance, puts printed review cards on different products in the store to provide additional information and provide the online experience to its in-store shoppers," he notes.

The company's clients work with PowerReviews on an affiliate basis, whereby instead of paying for the review service, they agree to let PowerReviews use their product reviews on a mega-site, The Buzzillions site now features almost 300,000 unique products and 1.6 million reviews, according to Shaffer.

So far, companies have been highly pleased with the service, he notes. "At first our clients were just using the reviews to boost sales. But they've come to realize that the top-rated products in many cases end up outperforming their bestsellers. That's because bestsellers are usually the products that are on sale—but the top-rated products guarantee performance. In addition, our clients are telling us that they've seen a reduction in calls and e-mails in their call centers, as well as fewer returns."

Supermarket chains might find the technology particularly useful to provide more information about their private label products, suggests Shaffer. Natural and organic, as well as gourmet items, are also great categories to be reviewed, he says. "You can imagine with products like tea and chocolate, you would find customers who would identify themselves as environmentally friendly, or vegetarian. These affinities would attract people with similar concerns."
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