Jeff Weitzman, president & COO of Coupons, Inc., explains the advantages of online coupons for marketers.
Jeff Weitzman is president & COO of Coupons, Inc., a leading provider of internet-based technology solutions that enable businesses to deliver secure, consumer-printed coupons and other certificates. With over 15 years of experience in online publishing and marketing, Weitzman is responsible for Coupons, Inc.'s day-to-day operation. Prior to joining Coupons, Inc., Weitzman was senior director, client services at Yahoo! Inc., having also directed field sales operations and promotion marketing teams. Earlier, he ran operations at Yoyodyne, Inc. (acquired by Yahoo!) and was COO of the online service for lawyers Counsel Connect (now part of Law.com), an early Time-Warner interactive company.
We talked with Weitzman recently to get a better idea of what online couponing is all about.
iMedia: Alan Gerson, who works for us and has a long history with promotions, recently talked about how giving coupons and discounts is a huge waste of money if you're giving them to people who are going to buy your product anyway (read our interview with Gerson). The key, he said, is targeting new customers, which the internet enables more efficiently than other means. Do you agree? Could you comment on using the net to target new customers?
Weitzman: I understand Alan's point, and ideally, of course, you're looking to generate incremental sales, not change your pricing. Incrementality is a notoriously hard metric to determine, however, and more complex than it might seem at first blush. For example, a loyal customer may still be an appropriate couponing target and generate incremental sales if you can increase her frequency or volume of purchase. Targeting is one of interactive's strengths, but let me describe a few other tactics where interactive coupons have advantages over their offline counterparts.
Some product categories are very coupon-driven; consumers are highly price-sensitive and may switch between several brands depending on promotions. The long-term goal may be to use brand advertising to differentiate the brand and reduce switching, but in the meantime, coupons preserve unit sales volume. Interactive couponing still provides critical advantages in this situation.
The much shorter lead times of online versus print provide an opportunity to respond more effectively to competitive or sales volume pressures. Distributing a coupon in advance of a competitor's newspaper FSI drop or encouraging pantry-loading with multiple purchase discounts can take the wind out of another brand's sales as consumers have already made their purchase in that category. In these situations you're looking to preserve sales to existing customers.
A brand may be faced with an unexpected, and probably temporary, shortfall in unit sales. A pricing action would help smooth out that dip, and an online coupon may be the easiest way to drive that into the marketplace for a very limited time while preserving the normal price point and retailer margins.
Coupons are also an especially effective tool for gathering consumer information. Building a solid consumer information database is part of the equation in learning how to find new consumers and new sales with your marketing efforts. The targeting Alan refers to has to drive off solid profiles, and offering coupons to consumers in exchange for that information is a smart move. The cost per response is lower than most other tactics, and since the incentive is your product, the respondents are highly qualified; you're not filling your database with people simply looking for a free iPod.
Coupons have long served a number of purposes for CPG companies and others. Coupons share the benefits of targeted interactive advertising, and marketers should use them in that context. It would be a mistake, however, to think that just because you can target your promotions, you should in every campaign.
iMedia: Can you comment on geo vs. behavioral targeting? What are advantages/disadvantages of each? What other targeting does couponing enable?
Weitzman: Geographic and behavioral targeting are both relevant but are used for different purposes in the context of coupons. The most obvious use for geo targeting a coupon is to only distribute it where your product is available. Many CPG products have regional distribution, and it's just wasteful to pay to send coupons to people who can't buy the product. A lot of interactive advertising is designed to drive consumers to other websites where they can buy or learn about a product. Coupons, however, are primarily designed to drive purchases in brick-and-mortar retail stores, so geography becomes a highly relevant distribution criterion.
Geo targeting can also create efficiencies for a coupon campaign. Coupons, even online, are often designed to simply drive incremental sales volume. Ideally, you would use the exact value that will cause a given consumer to purchase the product when they otherwise wouldn't. Newspaper FSIs don't provide fine enough control over that value. You'll end up providing a $2 coupon to everyone within a given geographic region, when perhaps 40 percent of the zip codes within that region would have responded to a $1 offer. The redemption value of the coupon is always the major component of the total cost of a coupon campaign, so anything you can do to reduce that cost while still achieving the same results produces a very high return.
Behavioral targeting has been discussed in this space by others far more qualified than I, so suffice it to say that coupons, like any other form of marketing, can benefit from getting the right message to the right person at the right time. But coupons should also be seen as an input to any behavioral targeting system used by consumer goods companies. Knowing whether or not a given consumer printed a coupon, and ultimately whether she redeemed it, is powerful data.
Consumers who print a coupon, I call "hand-raisers." They have reached the consideration and intention sections of the purchase funnel by expressing an interest in your product and an intention to purchase that product. This is an area of the purchase process that can be murky for a marketer: Surveys can give you some insight into awareness, and various types of purchase data can demonstrate an effect on sales, but where do you lose the consumers in-between? Remarketing to consumers whose behavior, by printing a coupon, demonstrates their likely responsiveness is a solid behavioral targeting tactic.
Similarly, redemption data is purchase data. Scanner data and follow-up surveys can give you an aggregate picture of the effect of a marketing campaign on actual sales, but coupon redemption illuminates a sale to an individual consumer. Combined with a good consumer database, some very powerful insights can be gained about the effectiveness of your marketing and where you should focus your efforts in the future.
Keep in mind that with this type of data available, a coupon should be considered a marketing tool, like a survey. The results of the coupon campaign should not only affect future coupon campaigns, they should be used in a broader context. For example, behavioral data from a coupon campaign, combined with self-reported interest or third-party demographic data, should help inform the site list for media buys. Similarly, behavioral data from a coupon campaign should focus the targeting for a much more expensive sampling campaign, dramatically reducing the cost per customer acquired or cost per unit moved of the overall campaign.
iMedia: As you mentioned, online couponing, to a large degree, is about collecting customer data. What makes this efficient, and what are some tips/keys/best practices for managing and using that data once it has been collected?
Weitzman: Increasingly, online couponing is about more efficient distribution of coupons, as compared to other methods of couponing. More than 340 billion coupons worth $318 billion were distributed last year, and only about half of U.S. households get the Sunday newspaper where the vast majority of those coupons were printed. Online is looking very attractive to marketers now as a way to reach consumers that simply aren't responding to the traditional methods.
Collecting consumer data, though, is still a very important part of the equation. It's a simple proposition: Tell me a little about yourself, and I'll give you a coupon for my product. A straightforward exchange of value, and it works. Consumers understand it. Many brands would consider "trust" one of their key brand attributes, and that sort of respect for the value of consumer information is consistent with a trust relationship.
Consumers online are far savvier than they once were, and they are far more wary of giving out real information. Many people keep a few email addresses on hand just to throw out online; an inbox that will never be checked. When you try to entice someone to opt-in for marketing messages with something that has greater value than the messages, you're going to get a lot of bad data. Using a coupon for your product to reward someone for signing up for marketing that is likely to contain more coupons is a balanced approach that attracts people with a real interest, who are motivated to provide real information, and who will look forward to receiving the messages in the future.
Coupons can also help shift a brand's website from an on-demand information source to a consumer destination. Coupons are something consumers use almost every time they shop, and if they know they can come to your website, answer a question or two, and get a coupon, they'll keep coming back. The more they visit, the more you learn. They'll tell their friends and your database will grow.
iMedia: Tell us something about your company/services that marketers probably don't know.
Weitzman: The same marketing platform that powers the major online coupon distribution sites on our Digital FSI network can be put to work on corporate websites as well. A company can aggregate offers from some or all if its brands, present them in a format that integrates into each brand's website, manage offer distribution, manage registration data, and automatically send weekly emails to site visitors -- and we do all the work. It's completely turnkey and it further reinforces the brand site as destination idea. You can even incorporate video clips from your TV commercials or elsewhere with our new video coupon!
We call it the Digital Solo and marketers can also use it to integrate a single-company or single-brand promotion center into retailer websites. Just tell us to flip the switch, and any or all of the coupons in the Digital Solo can be distributed across the Digital FSI network. Because it is all connected, consumers who print from your website won't get the coupon elsewhere on the network, or vice versa. It's a whole promotional strategy in a nice, neat package.