Technology Trends Alert: No more clipping coupons
Electronic coupons are quickly gaining traction with consumers. Some like their paper-saving, environmental benefits, while others enjoy the fact that they don't have to clip -- and remember to bring with them -- a wad of paper each time they shop. For retailers, electronic coupons mean higher redemption rates and faster clearing, each of which translate into more cash, faster.According to a survey released last month by Toronto-based ICOM Information Communications (ICOM), 77 percent of consumers in the 18-34 age group said they are much more likely or somewhat more likely to use coupons if given access to such paperless technology, in the 35-54 age group, 63 percent said they are much more likely or somewhat more likely, and in the 55-and-over bracket, 47 percent said they are much more likely or somewhat more likely.
Mauldin, S.C.-based Bi-Lo recently launched a coupon system that lifts sales on promoted items by anywhere from 18 percent to 55 percent, is convenient for shoppers, reduces labor costs, eliminates fraud, cuts out paper waste, and, results in a tree planted for every 100 coupons redeemed.
These numbers came from a chain-wide test of the EZ-Pic paperless coupon program from Chicago-based Unicous Marketing, conducted by Mike Mannion, director of sales planning.
"From a retailer's perspective, there are a lot of benefits," says Mannion. "There are no shrink and issues with coupon fraud, like we have with paper coupons. There are no handling costs such as those with paper coupons. And, of course, I'm always looking to sell more, and anything I can do that gives my customers another reason to shop in my stores over a competitor’s and increases sales is in line with my objectives."
The sustainability of the program is the icing on the cake. "Sustainability is becoming more important in the eyes of the consumer, for retailers to do things that are green, and the electronic coupon system is a very viable offering in this area," says Mannion. "And it fits with Bi-Lo's goal of becoming a better corporate citizen. We are increasingly focused on sustainability, and have implemented many programs in this area, such as recycling and energy-efficient equipment. And the EZ-Pic system fits right in."
Here's how it works: Promoted items are identified for consumers at the shelf with explanatory shelf signage that Unicous prints and distributes to the retailers. Consumers receive discounts on participating products merely by selecting the products in qualifying amounts and paying for them at the register. The discounts are automatically applied to the transaction at checkout, and are indicated on the customer's receipt.
Unicous integrates its proprietary processing technology to the point-of-sale system, which then does all of the work of recognizing, applying, and balancing for reimbursement all aspects of the electronic coupons. Besides Bi-Lo, the company also runs EZ-Pic programs for such retailers as Stater Bros., Big Y, Food City, Bruno's, and Coborn's.
"We act as a coupon clearinghouse, and work with the retailer to make the necessary modifications to the POS system to drive and provide the offer to the consumer," says Mike Willis, v.p. of marketing and operations for Unicous.
"For example, an offer may be a promotion in which the consumer will get $1 off when she purchases four boxes or a particular brand of macaroni and cheese," says Willis. "When she checks out, the cashier scans the products, and when the fourth one is scanned, the dollar comes off the transaction and is reflected on the printed receipt. Everything else ? the processing, the reconciliation, the clearing, is all done electronically in the background via the modifications we make to the POS."
These modifications, according to Mannion, are seamless. "The implementation was a surprising success," he says. "I've been involved in several IT implementations where things were integrated into the POS system. The EZ-Pic tool married up very well with our POS, and was the easiest implementation I've experienced. The process of making it work, collecting the data, sending it to Unicous, and getting it back from them has been very transparent."
The moment of truth
The back end may be transparent, but the promotions at the shelf are anything but, and this is what's driving product manufacturers to the program.
"We discussed this with our suppliers, and at the brand level they're always looking for ways to get their offers in front of the consumer at the point of purchase," says Mannion. "The consumer makes the decisions about what categories of products they need at home, when they look at their needs for pantry replenishment. By making offers at the shelf, it helps the shopper decide between the various brands offered at that category. The signs alert the shopper to the threshold needed to realize the promotions, right at the point where they're making the brand decision, and that’s why the coupons at the shelf are a strong factor in their decision."
In addition to boosting sales, the system simultaneously cuts cost by eliminating the handling associated with paper coupons, such as tallying them up, consolidating coupons from each store, and then shipping them to the coupon clearinghouse for processing. Indeed, these are the exact reasons that retailers are widely accepting electronic check conversion, where paper checks go through a similar process to that of paper coupons.
Of course, there's a certain amount of labor involved in setting up the signage, but EZ-Pic helps Bi-Lo make this process efficient as well. "Our price-integrity people have to set up the shelf tags, but the labor is minimal," says Mannion. "Each location receives two store-specific batches of shelf tags, based on the assortment that they have. The first batch goes up at the start of the promotion, which happens on a monthly basis. Two weeks into the program, we check for missing or damaged tags and replace them."
Unicous assists in compliance by monitoring the sales lift daily; if an item isn't moving, it may be a sign that the shelf tag has fallen, or was never displayed, and it alerts the store manager so he or she can investigate.
Since the processing is electronic, Bi-Lo's cash flow is improved; just 21 days after the promotion month ends, Bi-Lo receives a check for electronic coupons redeemed.
To cement its connection to environmental concerns, and in honor of Earth Day 2008, EZ-Pic is running a charitable program in partnership with American Forests, a Washington-based organization that works to protect, restore, and enhance the nation's trees and forests. The group will plant one tree for every 100 EZ-Pic coupons redeemed in stores nationwide.
"This is a win-win for our environment," says Deborah Gangloff, executive director of American Forests. "Reforestation will occur with the company's commitment to plant trees as electronic coupons are redeemed, and as EZ-Pic's paperless coupons become an industry standard, less paper and fewer trees will be wasted."
- Over 330 billion manufacturer paper coupons are issued in the U.S. annually, with almost 4 billion individual coupons redeemed by consumers.
- A coupon has an average face value of 84 cents.
- Over 100,000 U.S. retail companies accept coupons at their individual store locations.
- Over $300 billion in coupons are circulated annually in the U.S.
- Coupons are legal tender in the U.S.
- The redemption process by which retailers are reimbursed by the manufacturer is outsourced to processing agents.
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