When it comes to laying out content and presenting promotion trends, I always start at the same place: Are we answering the questions our clients are asking?
If you happened to be a data geek who tuned into the webinars I hosted, the answer was a resounding yes! Charts, tables and data for miles. Method, share, redemption rates, face values, by category or class of trade? Got you covered.
Unfortunately, most of my clients are not data geeks who live and breathe this stuff. They’re busy professionals with a million things to do, and accurately forecasting redemption curves – while important – may not be at the top of their list.
That sentiment changes, however, as the conversation shifts to digital. (Specifically, digital promotions within the context of a traditional brick & mortar retailer) Suddenly, *everyone* wants to understand “the ecosystem”: when will digital hit a tipping point? When does paperless redemption volume reach critical mass? When will a platform emerge as the clear winner from a currently-fragmented digital landscape? When will mobile barcodes become a thing?
Unfortunately, these are questions with no easy answers.
Realistically, they are simply hard-to-define and nearly impossible to predict: what’s your definition of critical mass? (digitally-discovered offers already account for roughly 6%-7% of all coupons redeemed; is that enough?) What criteria determine the winner? (would you rather have a slick, modern interface only supported by a few retailers, or a clunkier experience that, for better or worse, consumers have already embraced?) How you answer that question depends largely on where you sit, and – regardless of how certain you are – I can assure you that a diversity of opinion already exists.
Just like the approach to eating an elephant, these questions are best taken one bite at a time. Below are a few “component questions” that I believe are instrumental to understanding the larger existential questions surrounding digital promotions. My hypothesis is that once these two primary questions are understood and answered satisfactorily, the remaining pieces will fall into place. But what are we missing? What questions still need to be asked? Feel free to reach out directly, or post in the comments below.
How much longer will paper coupons (in general) and the Sunday FSI (in particular) reign supreme?
- Newspaper circulation has been in decline for over 20 years.
- FSI’s share of redemption has similarly eroded during that time.
- Yet: the FSI still accounts for 43% of all coupons redeemed…
- … and a whopping 91% of all coupons distributed.
- Despite the (apparent) lack of technology, paper coupons are easy to use. You, the shopper, get to decide where to redeem. A “network of eligible retailers,” while commendable and necessary for this 1.0 era of digital coupons, is hardly the same experience.
Consumers want the ease and simplicity of mobile engagement. Some verticals are doing it well (travel, electronics, even banking), so why are CPGs and traditional retailers lagging behind?
- Some individual retailers *are* doing it well! But those are one-off examples. What shoppers are demanding – and CPGs are waiting for – is a free flow of offers and content across ALL retailers (like the humble paper coupon currently enjoys). Do NOT underestimate the utility of a coupon that can be redeemed wherever the shopper wants: whether it be C-store, grocery, drug or mass. This concept is called “open network” in digital promotion circles, and it’s almost certainly the future but not currently widely supported because…
- Retailers are fiercely competitive, and as each builds its own “walled garden” (digital coupon page & other digital media properties), the opportunity for Omnichannel experiences diminishes. There’s no real villain here, though: retailers are in the business of stealing share from each other, not working together for the betterment of all retail. Frustrating? Sure. Irrational? Hardly.
If retailers would collaborate and agree to share digital coupons and content freely, the platform could be built tomorrow. The infrastructure already exists. But have you talked to a retailer lately? Do you see CVS, Walgreens and Rite-Aid working together? Can you imagine Kroger pairing up with Safeway, Walmart and Target to deliver the same offer availability and “redemption ubiquity” that paper coupons currently enjoy? (While we’re asking ridiculous hypotheticals, can somebody round up all the convenience stores and get them on board? There’s only 150,000 or so.) Or (back on Earth) is it more likely that these guys are in the business of offering exclusive content and exclusive offers that can’t be found at any other retailer?
Call me naïve, but let’s do this. Let’s hold hands and take the leap together. Embrace open networks. There are many, many consumer promotion (brand) dollars waiting for those who do. Let the consumer decide, and may the best retailer win.