Clicking instead of clipping

Customers are surf­ing the web for deals on just about everything, including finding a better deal on groceries. That, coupled with the fact that many retailers are cutting back on newspaper advertising and inserts, appears to be a boon for online couponing and promotions.

Still, retailers are taking several different approaches to online promotions. Some are working with third parties such as Coupons, Inc. and AOL’s Shortcuts.com to drive web traffic. Others are blasting out coupons and weekly circulars to customers who opt to receive e-mails or text messages on the latest deals. And, some more aggressive retailers are bulking up their websites with offers, recipes, shopping lists and other incentives for shoppers to visit.

About 90% of all coupons are still distributed through free-standing inserts in Sunday newspapers, according to the New York-based Promotion Marketing Association. But the trend is definitely towards online activity. “It is a sign of the times,” says Steven Boal, CEO of Coupons, Inc., based in Mountain View, Calif. “Newspaper circulation, which has been the primary source of couponing, has been on a steady decline, and is down 5% from the same time last year.”

Bargain hunters are making more use of the web and online tools as they search for deals and compare prices, according to industry officials. “People are turning to digital resources more and more,” says Alec Newcomb, vice president of MyWebGrocer, based in Colchester, Vt. “The eyeballs have moved.”

Newcomb says retailers need to develop an online presence with customers that extends beyond coupons. “Retailing has always been about building relationships,” he says. “Customers build a relationship with the butcher in the store. What grocers are looking to do is mirror that with the tools that they offer online, with e-mail offers based on location and widgets and networking sites specific to individual stores.”

Observers say the online promotion landscape shifted earlier this year when AOL got into the business when it launched its Shortcuts.com service. The Kroger Co., General Mills, Kimberly-Clark and Kraft are the first partners to participate. Instead of printing the coupons, consumers search the Shortcuts online coupon service by brand, product or category and click on grocery coupons they want to add to their loyalty card. When consumers scan their loyalty cards at checkout, the coupons are automatically applied to their purchases.

“We’re seeing a lot of traction,” says Tara Trocki, Shortcuts.com’s marketing director. “Consumers are very excited and see this as an easy way to save. We’re seeing people who have never used coupons using this system, as well as traditional coupon users signing up. Most people have grocery store loyalty cards. Given that they are swiping their card at the store anyway, they are happy to spend a few minutes online and get the additional savings.”

In addition to savings on individual items, Shortcuts.com recently announced “meal deals” which provide coupons for groups of items for meals. A recent Pasta Night Meal Deal, for example, included cents-off coupons for a Macaroni Grill dinner kit, Kroger frozen chicken, Pillsbury crescent rolls and Green Giant frozen vegetables.

One of the primary advantages of digital promotions is the ability to quickly gauge consumer response. “We can provide feedback to the CPGs so that they can know if a promotion is being well received or if it needs to be tweaked,” Trocki says. “With an FSI, the promotion has to be set far in advance, and if it is not receiving the expected response, there is no going back.”

On the retail side, Trocki says that the technology integration is fairly straightforward to participate in the program. “Our systems need to talk to the grocery store’s system in terms of the coupons selected and the offers that need to be redeemed, but it is not a huge project,” she says.

MOVE TO MOBILE
Since cell phones have become so ubiquitous, many retailers, manufacturers and technology providers are looking for ways to get offers to consumers through their phones. Coupons, Inc., for example, recently signed a deal with Yahoo! to expand its current relationship to enable consumers to search and redeem coupons from their phones.

While retailers and CPG companies are just beginning to explore mobile couponing, Boal says it is important to prepare to provide users with coupons in whatever format they desire. “We see this as something for the future, and we are putting the technology in place,” he says.

Earlier this year, Findlay, Ohio-based Community Markets introduced a program to drive sales utilizing text messaging through a partnership with IDT Telecom, based in Newark, N.J. “The results have been outstanding,” says Eric Anderson, co-president of Community Markets. “Our customers love it. Redemptions are running at 20% or more,” he says. He says that more than 4,000 users have signed up for the program and about a dozen customers are signing up each day.

Customers sign-up for the program at the store with their cell phones. A new offer is sent to customers each week, ranging from free, seasonally appropriate items to 10% off total purchase offers. The text messages are usually sent once a week on a Sunday afternoon, Anderson says, “because that is when we find that families are together and likely to be shopping or thinking about shopping for the weekly groceries.”

Each message includes a unique PLU number that the cashier enters at the register from the cell phone screen.

Anderson says he realized that mobile coupons would be successful when he began sending offers to his own circle of friends, family and acquaintances from his own PDA. “We’re reaching people who may not get the weekly paper, but they’re walking through the store with their phone. They just plain love it. It was a very pleasant surprise.” He says the cost is very low, “a fraction of direct mail.”

Dan Cepeda, director of marketing for Ray’s Food Place/C&K Market, based in Brookings, Ore., says that for online coupons and promotions to be successful retailers have to provide more than just cents-off offers. “You need recipes, shopping lists and other things to make it interactive,” he says. “E-mail blasts and monthly contests are also important to continually generate interest.” 

Currently, Ray’s is running an online and in-store promotion called Ray’s Great Giveaway. The company is working with Catalina Marketing, St. Petersburg, Fla., and ePrize, Pleasant Ridge, Mich., on the contest. “We’re expecting about two million hits on the website [www.raysgiveaway.com] and one of the interesting thing we found from last year is that consumers 50 and over are very involved online.”