Definitive Merchant Guide to Deals, Discounts and Offers

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Definitive Merchant Guide to Deals, Discounts and Offers

  1. 1. Deals Deconstructed:The Definitive Merchant Guide to Deals, Discounts and OffersDeciphering the Exploding Deals Marketplace to Deliver the Right Offers and Build Brand AdvocatesPresented by Sponsored by
  2. 2. Today’s consumers are focused on finding a deal on everything 52% of smartphone-enabled consumers use theirthey buy. According to Google Trends, searches on “coupons”and “deals” have increased more than 300% since 2004. As devices to help with in-store purchase decisions.many as 74% of consumers search multiple coupon sources - Pew American & Internet Life Projecteach week, according to a survey from Coupon Cabin andHarris Interactive. for online vs. in-store sales? And which deals drive one-timeThe rise in deal and coupon searching isn’t limited to the home sales vs. sustainable growth?or workplace. Today, it’s common to see shoppers standing This E-book will lay out the deal landscape and help retailersin a store using their mobile devices to research deals about determine which deal strategies can drive measurable,products in a competitor’s store or online. In fact, more than sustainable results by examining three specific topic areas:half (52%) of smartphone-enabled consumers are using theirdevices to help with purchase decisions in-store, according toThe Pew American & Internet Life Project. I. The Deal Landscape — Today’s deal offeringsConsumers’ growing interest in searching for deals has caused feature a variety of choices, from the traditional toa fundamental shift in how we find and buy products, and the digital. eCoupons, daily deals and card-linkedgiven birth to a new kind of shopper — one who thinks “deal offers are just a few of the possibilities. More recentfirst.” Armed with the devices and know-how to find deals additions to the ever-changing variety of discountanywhere, anytime, deal-first shoppers are no longer loyal to offers include flash sales, gamification and check-inparticular retail brands, and are savvy enough to price shop deals.and channel hop to find the best deal.In response to this shopping paradigm shift, merchants must II. Deal Delivery Dissected — Beyond mass media,deliver promotional programs that appeal to consumers’ such as newspaper, radio and TV advertising, a“deal desire.” Yet the choices can be overwhelming. multitude of other deal marketing options areDrowning in a flood of new deal options — such as daily available to today’s merchant including web search,deals, flash sales, eCoupons and check-in deals — many social media and mobile apps.merchants are struggling to choose the best types of deals III. Deal Benefits & ROI — Retailers must determine ifthat deliver new customers and build loyalty in a way that is their deals and offers fulfill their business goals. Doprofitable and sustainable. deals add new customers? Boost revenue? HelpThe pressing questions around deal choices are: What are the retain current customers?benefits of the different deal offerings? Which offers are suited Deals Deconstructed • 2
  3. 3. lI. The Dea In order to utilize deals most effectively, retailers all deals. Coupons were initially marketed through Landscape need to understand the lay of the land. Originating newspapers, weekly store inserts and direct mail with the printed coupon, which dates back to the (and still are), but increasingly are delivered as 1880s when Coca-Cola offered a free beverage, eCoupons and redeemable electronically. Store- the deal landscape has been morphing with the specific eCoupons can now be electronically times. Over the past few years, an exploding crop loaded on or linked to customers’ loyalty cards, of deals has burst onto the scene. From daily deals with savings automatically included as part of and flash sales, to check-in deals and deal games, the transaction. In addition to store-based loyalty to 24-hour sales, to online scavenger hunts, today’s eCoupons, a number of third-party eCoupon sites shopper is immersed in new ways to save and earn. are available to shoppers, such as Cellfire.com, Upromise.com and SavingStar.com. To use deals effectively, retailers need to understand all deal options and then determine which deals fit Daily Deals Deliver an their businesses and suit their customers. Hence flash Uptick in Shopper Traffic sales, which are quick and have tight deadlines, may work for happy hour on Friday, but not for an upscale steak house, fashion boutique or travel While coupons continue to be effective for some agency. Scavenger hunts on foursquare may target audiences, particularly the 40+ age group, appeal to Generation Xers after work, but won’t fit younger shoppers expect offers to be faster, easier for the local florist. and more fun. The daily deal has emerged to meet this need. Daily deals typically are opt-in programs Coupons Still Pack for consumers looking for a substantial percentage a Punch discount on desired items or services. The deal offers are sent via email and often require a group purchase threshold to be met to “activate” the The granddaddy of all deals is the old-fashioned deal. Sites such as Groupon and LivingSocial, which coupon providing a discount at the point of sale. control approximately 73% of the deal-a-day market According to a 2011 study conducted by CGT/ according to Yipit, have become major players in Cognizant, coupons still prevail as the major form this new billion-dollar market. More recently Google of promotions, constituting approximately 80% of joined the fray with Google Offers, which was live Deals Deconstructed • 3
  4. 4. in 40 local markets by January 2012. Due to the An exploding crop of deals has burst ontolarge, often unprofitable discounts and questionableattribution data for new customer acquisition, many the scene…today’s shopper is immersedmerchants are hesitating to renew daily deals. in new ways to save and earn. Card-Linked Offers Connect Deals to Cards Flash Sales Provide Limited- Time OffersOne of the limitations of Daily Deals, and most dealtypes, is the complexity of redemption. The hassle of Several upscale web sites such as the Gilt Groupfinding a digital coupon code, remembering a punch and Gift Man offer flash sales, a limited, time-boundcard, or printing a voucher can limit the effectiveness online sale. A report by Ypartnership noted thatof deals for merchants and consumers. Card-linked these deals frequently offer discounts of as much asoffers solve this issue by automatically rewarding 50% off from retailers looking to unload off-seasonconsumers for regular purchases, right back on the inventory or liquidate unsold stock. These dealscards they use the most, in currencies they already typically are offered only to subscribers, bringinglike to collect. Consumers get card-linked offers from cachet and exclusivity. Limited time frames motivatetheir banks or loyalty programs, and “redeem” them consumers to buy quickly, spurring interest.just by swiping their favorite credit or debit card.Merchants fund rewards only after consumers buy, Gamification Adds Fun to don’t have to deal with vouchers or their own Deal Delivery loyalty cards, and get actual transaction data to prove results. Some of the added value from card-linked offers includes the ability To capitalize on mobile deals, companies like to track customer acquisition, obtain order foursquare and Scoutmob are using gamification ― values, promote repeat purchases and garner turning deal redemption into a game or scavenger new customers. Currently, Cartera provides hunt. Smartphone-carrying consumers can find card-linked programs to three of the four top rewards waiting for them when they reach a bank and card issuers, and all top five airlines. destination. For example, once consumers reach Deals Deconstructed • 4
  5. 5. certain restaurant or retailer, they press a button on their earning power toward a primary credit card ortheir smartphone and obtain deals as email coupons, airline frequent flier rewards card. That’s why creditsuch as a two-for-one dinner or 25% off coupon. card, debit card and airline frequent flier programs now make up more than 750 million of the 2 billion Check-in Deals Simplify loyalty memberships. This trend has made it more the Offer Process challenging for merchants to use their own loyalty credit cards to attract new and repeat customers. Punch Cards andNot all shoppers are looking for an adventure; some Rebates Allow Retailersprefer to simply check-in online or on a mobileapp to obtain deals and rewards. Retailers offer to Set Limitsthese check-in deals on sites such as Google+ An alternatives to a loyalty credit card, punchwhen consumers search for information on their cards and rebates — either physical or digital — areestablishment or product. Consumers can keep standby deal options for local merchants, such asthe deal private or disseminate it to their friends, coffee purveyors and sandwich shops. This loyaltymaximizing exposure for the retailer. scheme offers shoppers a free item after a threshold is reached, such as a tenth purchase or basket Loyalty Cards Speak to size more than $100. New online services, such Brand Enthusiasts as Stampt, are bringing punch cards into the 21st century by merging them into smartphones, making it easier for consumers to track and redeem, andSimple and effective, loyalty cards appeal to easier for the merchants to track results and ROI.consumers’ desires to get something back foreach purchase they make in the form of rewardspoints, cash or miles. According to recent researchfrom Colloquy, there are now 2 billion loyaltymemberships in the U.S. To maximize the value ofrewards and earn enough points to redeem foritems of real value, however, consumers are focusing Deals Deconstructed • 5
  6. 6. yII. Da ily Deliver Today’s deal choices can seem endless: games, cards, rebates, check-in deals, card-linked offers and With the card-linked offer, merchants Dissected more. Retailers want to stay one step ahead of their can deliver deals to shoppers through customers, not fall a step behind. And staying one some of the most “trusted” online step ahead these days involves moving beyond the sources: the banks or airlines consumers printed voucher or coupon and entering the world of already do business with regularly. digital offer marketing and redemption through the web, smartphones, mobile devices and social media. of location-based services are providing the ability to Deals can still be delivered in old-fashioned better personalize the retailer-shopper interaction. ways including store sales signage, a coupon The more specifically a marketer can target and in a newspaper or magazine, TV and radio market a deal to an individual consumer who advertising, or via direct mail. But technology has has already purchased or expressed interest in changed the landscape of deal delivery. Deals a product, the higher the probability of a sale. can now be offered via email on That logic also translates to social media; retailers PCs and mobile devices, banner can garner additional sales from fans who visit a and search ads, and mobile ads on company’s Facebook or Twitter. Sending coupons to web sites and mobile apps. Groupon, a company’s enthusiasts can lead to repeat business. LivingSocial and other daily deals sites Encouraging them to send the coupon to friends can distribute thousands of deals online via trigger new business through referrals. email, filling up consumers’ in-boxes with dozens of offerings daily. Additionally, with the card-linked offer, merchants can deliver deals to shoppers through some of the As a result of the unprecedented influence of Google most “trusted” online sources: the banks or airlines and challengers like Bing, search marketing has consumers already do business with regularly. become one of the most effective ways to reach This can be a win-win-win for three players — the customers, since it targets a consumer who has consumer gets an automatic deal just for using the already expressed an interest in a specific product. cards he or she already has; the merchant gets a Additionally, when a shopper is searching via quick and easy way to offer deals to shoppers and mobile phone, a merchant can go one step further track redemptions; and the bank boosts customer and identify the person’s exact location via geo- engagement and card-spend. targeting, then push an immediate and relevant localized offer to that consumer. This and other types Deals Deconstructed • 6
  7. 7. sIII. D eal Benefit Merchants trying today’s new deal and delivery channels must remember to choose options that For new customers, the goal is to and ROI drive both top-line and bottom-line growth by motivate them to choose one brand helping them attract new customers and drive versus another. For current customers, loyalty from existing customers. For new customers, the goal is to build brand loyalty and the goal is to motivate them to choose one brand increase overall purchases. versus another. And for current customers, the goal is to build brand loyalty and increase Merchants also are having issues with daily deals. overall purchases. A 2012 Practical Ecommerce article reported that For retailers, wading through all deal options to find 52% of merchants are not planning to renew daily the ones with the best ROI can be daunting. Each deals. Retailers complained about having to reduce type of deal or offer may appeal to a particular prices by 50% to offer daily deals, leaving them with target segment, or deliver on a specific retailer 25% to 30% of the retail price after the deal site’s goal. One-shot daily deals from sites like Groupon, commission. Some retailers were selling products LivingSocial and Google Offers can spark business and services at or near cost, sometimes losing and bring in new customers, particularly around money; some deals only became profitable if the one-time sales events. But some merchants are customer returned for a second visit or purchase. finding that these heavy discounts — if not properly executed — can backfire, cause customer service issues and damage brand image. Because of those issues, some daily deal programs have been experiencing rapid upheaval. Facebook launched a daily deal site test in May 2011, then terminated it four months later, as reported by TechCrunch. Groupon’s core local deal business declined in late 2011, down 3% in Q3 over Q2, Yipit reported. Of the 530 daily sites that operated in 2011, 170 were shut down, according to Yipit. Deals Deconstructed • 7
  8. 8. Besides the daily deal, a number of Card-linked marketing turns the different types of deals are appealing to different groups of customers. Gamification advertising payment model on its head can attract a younger, more tech-savvy because merchants don’t pay for offers audience, perhaps ideal for coffee shops, until after consumers buy. but not for home improvement stores. BOGOs and other couponing tactics may draw in an older, more traditional shopping crowd, and flash sales can help to move overstock merchandise while targeting a specific customer base.From the retailer’s viewpoint, deals that are linkedto the actual transaction, such as card-linked offersor electronic punch cards, are proving to be themost measurable. While protecting consumers’privacy, new card-linked marketing networks candeliver retailers actual sales data to see how manyconsumers redeemed an offer, how many werenew customers, how many were existing, and theaverage basket size for both types of customers.Card-linked marketing also turns the advertisingpayment model on its head because merchantsdon’t pay for offers until after consumers buy,making this new type of marketing truly risk-free. Deals Deconstructed • 8
  9. 9. Conclusion Choosing between the bevy of offers and deals available to merchants today is a challenging task. Different merchants and different shoppers have different needs. Daily deals may bring in a surge of customers who decide to try a brand for the first time, while card-linked deals can help drive sustainable sales growth from both new and repeat customers. Games, punch cards, check-in offers and other new types of deals all offer unique benefits for different types of merchants. Questions to consider include: Which deals will appeal most to your customers? Which deals can be measured in ROI? Which deals are seamless? Which type of deals will result in repeat customers and long-term profitability? Merchants are just starting to find the answers to these key questions, to deconstruct today’s deals and find the ones that work for them. Deals Deconstructed • 9
  10. 10. ut Cartera Cartera Commerce is the leading provider of card-linked marketing solutions that increase revenueAbo and customer loyalty for merchants, banks, card issuers and loyalty programs. For merchants, Cartera powers the industry’s largest card-linked advertising network that delivers targeted offers to more than 150 million consumers – including 65 million active linked cards – to help acquire and retain customers. For banks, card issuers and loyalty programs, Cartera provides the industry’s most comprehensive card- linked offer platform that powers personalized in-store and online shopping programs to build consumer engagement, maximize card spend and create new revenue streams. Cartera’s platform delivers card- linked offers via multiple digital marketing channels including Websites, online banking, email, mobile, social media and browser apps. Three of the top four largest financial institutions, all five of the largest airlines and thousands of merchant advertisers drive incremental revenue with Cartera’s fully-managed, performance-based solutions. The company is headquartered in Lexington, MA and has significant operations in Atlanta, GA. For more information, visit www.cartera.com.About ts Retail TouchPoints is an online publishing network for retail executives, with content focused on TouchPoin optimizing the customer experience across all channels. The Retail TouchPoints network is comprisedRetail of a weekly newsletter, category-specific blogs, special reports, web seminars, exclusive benchmark research, and a content-rich web site featuring daily news updates and multimedia interviews at www.retailtouchpoints.com. The Retail TouchPoints team also interacts with social media communities via Facebook, Twitter and LinkedIn. Deals Deconstructed • 10

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