The Story So Far…
Paper coupons in the independent convenience sector have never been popular with retailers because:
- They hate having to save the coupons, and send them off to Valassis for counting and verification
- Then possibly receiving payment 6 – 7 weeks later for some of the coupons
So, overall, coupons are an administrative hassle, and the retailers lose money on them. Many independent convenience retailers therefore do not accept coupons.
Manufacturers / brands have not been keen on coupons being redeemed through convenience stores because independent retailers have just accepted them as a form of payment without checking that they’re being redeemed against the correct product. So they may even be paying out against a competitor’s product!
So why are we talking about digital coupons in the convenience sector now?
Several reasons:
a. The alternative promotional tool for manufacturers in this sector has been money-off promotions – Reduced by / BOGOF / multibuy / Meal Deal etc.
b. These are costly for both manufacturers and retailers. Both of them have to give up some margin in order to run the promotions, even when the cost price to retailers is reduced.
c. Manufacturers are not convinced that – even when they’ve given the retailer a reduction in cost price – the promoted price always reaches the end-consumer.
d. Canny retailers also tend to buy more stock at the promoted cost price than they’ll need to meet the demand for the promotion, which just reduces their overall item price. The end result is that the manufacturer may see a short term uplift in sales followed by a slump after the promotion has ended, and they have lost some margin.
e. Retailers know that of the whole range of promotions they are asked to support each period, only about 10% result in sales uplift and a beneficial impact on their store. So they resent having to run them if they’re part of a symbol group.
…and Valassis have developed a digital couponing engine called VERSO, which addresses all these problems.
Coupon distribution
Consumers have a “wallet” on their phones. They can link to the wallet via Facebook or by scanning a shelf barker code once they’re in the store. They enter an email address and password. No App needed, so the wallet only has to be set up once, and works on any device. Once they have the wallet, they receive the coupons in two main ways:
- Social media (mainly facebook, which can be geographically targeted.) Consumer just keeps the coupons in their wallet. Each consumer’s wallet is identified by a unique Code 128 barcode.
- In-store. This is the most powerful way to engage consumers. Shelf-edge barkers display a barcode, with the message along the lines of: “Scan the code with your mobile phone, and get a discount/FREE product etc. at the till.” This can be supported by leaflets distributed in the store’s catchment area (for group campaigns) and/or posters/screens around the store.
In-store
The coupons are always redeemed at the point of sale.
a. Consumer has EITHER already set up their own wallet on their phone OR when they see a poster or shelf barker in-store and scan it, they can set up their wallet then and there.
b. Once they have the coupon in their wallet, consumer brings the promoted products to the till, and gives them to the system user for scanning.
c.When all items have been scanned, the consumer opens up the wallet on their phone, and presents their phone to the barcode scanner, which reads the unique barcode from their phone.
d. The till system sends a request with the basket data which is used to check if any coupons can be applied. This:
- Verifies that the correct barcodes are in the basket
- Identifies the unique barcode of the consumer
- Instructs the till system to apply the relevant discounts to the basket
e. Once the transaction is completed, the Valassis database knows that the consumer has redeemed their coupon for the particular product(s) in the basket, so that they cannot be redeemed again (which protects the manufacturer) and the coupon disappears from the consumer’s wallet.
f. The Valassis engine applies the redeemed coupons to the retailer’s account for monthly reconciliation.
Payment
The retailer doesn’t have to keep any record of coupons redeemed, and receives a monthly credit from Valassis which breaks down the no. of coupons redeemed from each campaign.