Consumer insights tell us the following:
- We like to be recognized as special
- We respond to rewards better when they are delivered intermittently
- We take advantage of opportunities we perceive as unique
The questions are: Is it worth it? And why does it work?
Financially, custom coupon campaigns resulted in higher spend among customers yielding a 14% increase in contribution net of marketing. In short, they work - not only for the promoted products but for the whole basket.
So what explains the lift? Why do people put more things in their basket?
- Exposure - the mere presence of a custom coupon program generated results. This suggests that coupons, and the surrounding space should be treated like any other brand advertising element.
- Redemption - the coupon itself acts like an attractor or stimulant, so is necessary but not sufficient to product the gains (otherwise there would be no improvement over manufacturer FSIs)
- Atypical Frequency - because coupons are chosen based on preferences and behavior (or lack there of) the result is an unpredictable timing pattern, and this creates a sense of surprise and delight; improving results
- Rewarding - choosing products for the best customers, and telling them you did so, adds to the effect.
- Build a custom coupon program as part of any loyalty or points program, targeting the top tier
- Highlight items within flyers and other generic distribution means that are unique to the recipient
- Make the communications personal - in tone, message and offers; turn the creative team loose