BY JERRY SOVERINSKY

Finally, coupon technology that makes cents for convenience stores.

imless Netflix watchers like me The checkout process unfolds much to the may recall a recent TLC show, chagrin of an irked store manager, whose staff “Extreme Couponing,” which and customers endure an incredible shopping follows the shopping prowess of inconvenience, with such disproportionate obsessive coupon clippers. Think attention allocated to just one customer. “Doomsday Preppers” meets “Hoarders,” throw There’s not much to recommend about in pallets of off-brand towels, and you’re the show—it will undoubtedly trigger up-to-speed on the show’s premise. associations with a challenging customer Nearly every episode (40+) ends at a store experience—but the summary underscores checkout, with the subject unloading items the importance of the evolution of digital from an endless procession of shopping coupons, a technological improvement that carts, and an overwhelmed cashier manually enable stores to more efficiently process scanning thousands of products and coupons. discounts without overtaxing their staff. And The tension is nearly always heightened by the for the convenience retailer especially, whose subject’s six or seven kids, who cheer on their operation is ill-suited to accommodate the parent for finding a way to purchase four dozen traditional paper coupon, digital offerings bottles of dishwasher liquid and vanilla wafers present an efficient and effective means to for exactly nothing. drive traffic and sales.

32 DECEMBER 2016 nacsonline.com NACS Magazine DECEMBER 2016 33 NOT ANOTHER COUPON … shortcomings associated with paper coupons. “It “Convenience stores don’t do paper coupons well. allows retailers far better control of the process,” They accept them but they don’t accept them well,” Toth said, an important feature for both retailers said Linda Toth, director of standards for Conexxus. and suppliers. “They’re time-intensive, as the clerk must manually “Consider the supplier who offers age-restricted inspect the coupon. And coupons can be copied, products,” Toth said. “If I’m a tobacco manufac- which leads to counterfeits.” Counterfeiting is a turer, I can validate a purchaser’s age via their prickly issue for suppliers, who often issue high- mobile device, and I can follow-up by sending value coupons and want to control the number of them age-appropriate offers.” coupons distributed—a difficult task as a paper And for the retailer, digital offers update behind- coupon is easily photocopied. the-scenes, eliminating the manual processes for “Also, they don’t maintain the proper codes, store clerks while ensuring that each coupon tendered which are updated frequently. It’s not that they is legitimate and associated with the proper product. don’t want to, it’s just not a high priority for them. The ability to send very precise and appropri- There are coupons that don’t match the item pur- ate offers fosters greater consumer engagement, a chased, and the clearing house doesn’t then honor major reason why digital offers are well on-pace to the promotion,” Toth said. overtake paper coupons. “We’re already seeing that As a result, convenience stores lose a sizable direct mail and circulars are playing share of the coupons that they accept. “If they send a diminished role in retail marketing,” according in $100 worth of coupons, they’ll probably get back to a 2013 McKinsey & Company report. “Mass $80,” said David Ezell, principal software architect will not disappear overnight, but its at Verifone and co-chair of W3C Web Payments influence is certainly waning. Ads are shifting Interest Group. “Plus, it’s a hassle—they have to toward not just digitization but also personal- track them and bundle them up and wait six to eight ization, powered by increasingly sophisticated weeks for the money.” algorithms and predictive models that analyze Enter the digital offer, a promotional tool that transaction data and digital-media trends.” allows stores to build on what they created with How effective are those algorithms? “Already, mobile loyalty while overcoming most of the 35% of what consumers purchase on Amazon and 75% of what they watch on Netflix comes from product recommendations based on such algorithms,” McKinsey wrote.

ALL DIGITAL OFFERS ARE NOT By the Numbers CREATED EQUAL Koupon Media’s 2016 State of the Mobile Coupon Industry Report found As you consider the digital offer landscape, under- that mobile coupon usage is rising sharply in the United States—up 18% in stand that not all digital offers have the same 2015 to 92.6 million consumers, and projected to reach 104 million adult security and functionality. “When we speak of users by the end of 2016. Other key stats in the report include: digital offers, these are secure, single-use offers, not e-coupons,” explained Don Frieden, president and CEO of P97 Networks Inc. “E-coupons can of mobile users have used a mobile coupon be replicated. They’re essentially just a bar code coupon that is delivered via a mobile device. The  of customers spend more if they problem with that is that you can take a picture of receive a personalized coupon it and reuse it as many times as you want.” A secure digital offer is different, Frieden said.  of customers would adopt mobile “These transform the game for CPG companies and payments if offered coupons retailers. “It’s a holistic program in a platform that can deliver different types of offers to consumers, allowing you to control a number of aspects, such

34 DECEMBER 2016 nacsonline.com The ability to send very precise and appropriate offers fosters greater consumer engagement, a major reason why digital offers are well on-pace to overtake paper coupons.

as location-based offers and time-sensitive offers. “It’s fairly simple: We try to meet the retailer For the first time ever, we can deliver offers during where they are,” said Bill Ogle, CEO of Koupon the consumer’s purchasing journey and actually Media. “Within the c-store environment, there influence the purchase.” is a huge disparity between POS systems, and For instance, as a consumer travels within a we try to offer solutions to work with every- certain distance of your store at a certain time of body, no matter how sophisticated.” day, you can push an offer that aligns with previous No or mobile app? No purchasing history. problem. “For stores without an app, Additionally, these digital offers eliminate the we’ll work with them to do some- hassle of settling coupon redemptions with a thing with their email database,” clearinghouse. “Digital offers allow us to do near Ogle said. “We can send out texts real-time settlement on the offers, since they can with links that connect to our be integrated into the basket details within the server. We can then apply our POS system. The retailer can settle directly with a geo-location services as we CPG company just like a credit card transaction,” develop a powerful offer.” Frieden said. For stores without If the idea of deploying yet another tech initiative advanced capabilities, seems daunting, fear not: The mobile coupon can Koupon Media offers integrate seamlessly with other digital programs the retailer full control of the and platforms. “There are two ways of looking at coupon process. “We offer tools that how digital offers can integrate [with your existing allow them to create and manage mobile tech platform],” Ezell said. “As either an extension of offers. It’s simple and can be up and running in loyalty or as an integral part of payment settlement.” just a few minutes,” Ogle said. “You’ve now got it set And either can work within your existing operations up, and our security mechanisms make it secure with the help of a dedicated digital offers company. with timers and geo targets, etc. The timers make offers time sensitive, if that’s what’s wanted.” GETTING STARTED Additionally, the company works directly with At just over five years old, Texas-based Koupon brands, creating offers that retailers can either Media is providing mobile offers for both CPG com- accept or reject. “We create deals with brands and panies and retailers. Its proprietary platform cre- then call our c-store contacts to see who has signed ates and distributes digital offers across a variety up for the offers,” Ogle said. “The retailer has full of media channels—email, SMS, mobile app, social control; they can either opt in or out.” media, loyalty, digital ads—while its Offer Network The result is the creation of highly customized and integrates with a store’s POS system to support the targeted promotions that generate tangible sales lifts. instant redemption of mobile offers. The integrated Working with West Des Moines, Iowa-based Kum & system works with retailers of all sizes, no matter Go L.C., Koupon Media studied the results of six mobile how sophisticated their techie capabilities. offer campaigns. On average, the campaigns increased

NACS Magazine DECEMBER 2016 35 product unit sales by 12%, slightly higher than the average mobile offer redemption rate (10%) that Koupon touts from other campaigns. That’s a sizable improvement over the paper coupon redemption rate, Mobile coupons which the company estimated at 0.47%. And that’s a get people off performance lift that wasn’t lost on Kum & Go. “Koupon Media has been crucial to the success the forecourt of [our] mobile marketing campaigns,” said Mike and into the Templeton, head of digital marketing at Kum & Go. “You simply can’t argue with the results.” store, increasing basket size—as WIN, WIN, WIN The benefits of mobile coupons extend beyond the much as 30% in brick-and-mortar merchant. “The value proposi- some cases. tion benefits three parties,” Frieden said. “For the merchant, they get people off the forecourt and into the store, increasing basket size.” As much as 30% in some cases, he said. “For the CPG company, it’s the first time they can see specific details about consumers. If they know that you buy their product every day on the offers,” Frieden said, adding, “That’s now way to work … they can use that information to get converging. We took a sample of customers who you to sample additional products. used mobile and that were rewarded for loyalty. “And for the oil company or fuel brand, there That subset doubled the frequency of their visits used to be a separation between loyalty and compared to when there were no incentives … That’s a huge [increase].”

LOOKING AHEAD If all of this sounds like a lot of upside with minimal headache, Frieden says the assessment Word Play is not far off. “This is really an exciting space When we speak of a digital offer, that is distinct from a coupon and and will be game-changing for merchants, oil e-coupon, said Don Frieden, president and CEO of P97 Networks. companies and manufacturers.” He says to fully • C oupon: A voucher entitling the holder to a discount for a particular leverage the opportunity, though, there is little product or service. Coupons are typically a paper-based format with time to wait. a barcode (discount code or number that can be redeemed at the “The first app that gets deployed and is successful point of sale). really sets the expectation for consumers,” Frieden • E -coupon: The digitization of a traditional coupon—effectively, just said. “Once it’s been adopted, it’s difficult to get con- automating the distribution of traditional paper-based coupons. sumers to move. There’s definitely an early adopter E-coupons are typically scanned by the point of sale and applied as a advantage here.” method of payment against the overall sale. And what about those who remain on the sidelines? • Digital Offer: A secure digital signed offer that is delivered through “They’re leaving a lot of dollars and customers on a digital distribution platform for mobile apps and are typically a the table,” Ogle said. “[Mobile coupons] drive huge single use and time expiring offer. The digital secure offer is directly traffic and volume to convenience stores.” linked to a customer and integrated with the point of sale, so the POS only applies the discount if the exact product is required. Also, Jerry Soverinsky is a Chicago-based acceptance and validation can be automated. freelance writer. He’s also a NACS Magazine contributing writer.

36 DECEMBER 2016 nacsonline.com