Be sure to check-in on Foursquare and friend Fallon Brainfood on Facebook for SPECIAL OFFERS!

Coupons 2.0 How Shoppers Are Leveraging the Network to Beat

Retailers at Their Own Game

June 22, 2011

We are…

Sarah Crist Digital Associate Fallon Twitter: @scrist5 LinkedIn: http://linkedin.com/in/sarahcrist

Liz Giel Digital Strategist

Fallon

Twitter: @lizgiel LinkedIn:

http://linkedin.com/in/lizgiel

We want to share what we’ve learned about the evolution of Coupons and the future of Coupons 2.0.

-  The Coupon Comeback

-  The Psychology of Saving

-  More Than Dollars Off: Delivering the Thrill

-  Turn Discount Addicts into Brand Loyalists

-  How to Get in the Game

Coupons Make a Comeback

At the turn of the millennium, coupon use began to slide from 4.6

billion coupons redeemed in 1999 to 2.6 billion in 2008.

Then the recession hit, triggering a coupon resurgence driven in large

part by the Internet.

While coupon enthusiasts continue to find deals in Sunday mailers, they supplement their stack with online savings.

The rapid adoption of mobile devices has offered an even more simple approach to finding and accessing coupons.

Redemptions grew by 27% in 2009 alone, with Internet coupons leading the

way, rising more than threefold.

But the people redeeming coupons aren’t just those in economic need of savings.

Enthusiast couponers who use online coupons are most likely to be young and high income, with 60% making more than $50,000 HHI per year.

It’s become clear that the lure of couponing goes deeper than “easy savings.”

The Psychology of Saving

is more powerful than the discount.

16

The great difference found between those highly prone to coupons and those less

prone is “a strong underlying ego-related dimension” to extreme couponing.

Source: Highly Coupon and Sale Prone Consumers: Benefits Beyond Price Savings Journal of Advertising Research (2003)

The “Krazy Coupon Lady” does not need to save hundreds of dollars on groceries.

She needs the feeling she gets from saving.

Extreme Couponers aren’t the norm, but their behavior is an exaggerated version of the everyday coupon seeker.

KRAZY EVERYDAY

“I loved it. I’d just gotten $10 worth of books free. It almost felt as if I’d shoplifted.

It’s absurd that I should have felt so giddy. ”

David Pogue (on Groupon), NYTimes Tech Journalist

20

Easy Savings does not explain the success behind

sites like Rue La La and Gilt.

The average coupon user has developed an expectation of savings that affects their purchasing behavior.

Pricenoia — noun

Insider Discount for Everyone!

Pricenoia: A disorder characterized by the systematic verification of international sites when ordering from Amazon.

Marketers should focus on delivering the thrill of saving—not simply discounts.

Coupons 2.0 is the next era of couponing—leveraging the power

of the network to enable shoppers to feel they’ve beaten

retailers at their own game.

Brands must embrace this mentality and offer consumers the rush they seek.

RESISTANCE IS FUTILE.

Cop

yrig

ht ©

20

07

Fallo

n W

orld

wid

e. A

ll ri

ght

s re

serv

ed.

The Krazy Coupon Lady is not the enemy.

If you look closely, she’s actually driving awareness, traffic, and trial of your products.

23% of total monthly visits came from Krazy Coupon Lady

The key for brands is to use the appeal of savings as bait to maximize brand engagement.

Cop

yrig

ht ©

20

07

Fallo

n W

orld

wid

e. A

ll ri

ght

s re

serv

ed.

Businesses that succeed in the era of Coupon 2.0 have identified ways to extend

the feeling of accomplishment consumers experience when cashing in on deals.

Once You Got ’Em, Keep ’Em

For Old Navy, the lure of a $1 scarf brings people into the store, but providing the rush of saving around every corner leaves visitors with a full cart.

Backcountry.com’s version of the $1 scarf is Steep and Cheap, a daily deal website which serves as a gateway for users to explore their site for additional savings.

Dairy Queen uses deals to recruit members for their Blizzard Fan Club, fostering an ongoing relationship with their customers.

Totino’s uses the network effect to turn cheap loyalists into social advocates.

Cop

yrig

ht ©

20

07

Fallo

n W

orld

wid

e. A

ll ri

ght

s re

serv

ed.

These businesses have used discounts as bait to drive customers deeper into their brand.

But a unique lure attracts a unique crowd.

Draw them in with an offer they can’t refuse.

The Cosmopolitan of Las Vegas offers deals in a unique and unexpected way.

Sun Country recently used Groupon as bait by offering an unexpected product for unexpected value.

Businesses who use deal sites like

Groupon must make it worthwhile and offer

consumers the perception they’re coming out on top.

Sun Country employed robust restrictions to ensure a positive business outcome from the deal while consumers marveled over the savings.

pssst… not valid for travel on Friday or Saturday, must pick month, additional fees apply.

Sun Country should have taken the deal one step further, by getting users involved with their rewards program.

Target delivers the perception of savings euphoria while solving business problems.

“The more you buy, the more you save!”

The allure of “everyday savings” is similar to loyalty programs where experiential

savings attract repeat customers.

Cop

yrig

ht ©

20

07

Fallo

n W

orld

wid

e. A

ll ri

ght

s re

serv

ed.

But the abundance of loyalty programs has lessened the appeal.

Modern loyalty programs include elements of exclusivity to escalate the thrill of savings.

Zappos takes loyalty a step further and combines exclusivity with competition, tapping into the gamesmanship that’s already present in finding deals.

Many location-based services tempt users with competition, but more importantly, deliver on relevancy as well.

“Coming Soon” technologies will provide even greater opportunity to

deliver the thrill of savings.

Near Field Communications (NFC) allows for simplified transactions, data exchange, and connections with a touch.

A “futuristic” example of how NFC will affect coupons and discounts.

Consider arriving at the airport on vacation and

receiving a check-in notification from your hotel

that contains your room key so you can bypass the

front desk.

Use your cell phone as your room key via

NFC chips in the device and the door

handle.

Ten minutes later, you receive a message from the front desk to ensure you’re satisfied with your room. They also offer 15% off room or spa services.

To check out, your phone can be used before exiting the hotel lobby. You are

given a quick satisfaction survey and, in return,

bonus loyalty points for your participation.

Source: ASSA ABLOY Mobile Keys at Clarion Hotel Stockholm

Starbucks Card Mobile is an early example of what will soon be the norm, allowing customers to check rewards and make purchases from a mobile device.

A rise in smartphone ownership coupled with NFC deployment will increase mobile coupon adoption.

Mob

ile C

oup

on A

dop

tion

Time

• POS equipment for redemption

• Consumer awareness

• Lack of CPG offers

• Opt-in process • NFC deployment

• Consumer interest

• Real-time offers

• Geo-targeting

Source: JupiterResearch (2/08)

In summary, there are a few key drivers when it comes to maximizing the thrill of savings.

-  Once You Got ’Em Keep ’Em

-  Utilize the Network Effect

-  “How Could I Not?” Deals

-  Insider Trading

-  All the World’s a Game

-  Hit Them with Uber-Savings

What does this look like for Fallon and Fallon Brands?

Insider Trading: “Like” Fallon Brainfood

Utilize the Network Effect: Unlock the Dessert

10 People Check-in

Once You Got ’Em, Keep ’Em: Cadillac

All the World’s a Game: Totino’s

Text “Freepizza” to 23459 to find out where you can spot the Totino’s Party Pizza!

Hit Them with Uber-Savings: Nordstrom

Use the promo code “TAGSCAN” for 20% off your order!

To succeed in this new age of couponing, you need to enable your consumers to feel

they’ve “won” a battle against retailers.

Our Parting Words: What marketers can do today.

1.  Focus on delivering the thrill of savings—not technology or savings alone.

2.  Ensure business goals are considered when developing promotion ideas and loyalty programs.

3.  Make sure e-mails are mobile-optimized.

4.  Start thinking about the customer purchase process, and find opportunities to provide the excitement of saving money throughout the entire experience.

5.  Capitalize on the increased foot traffic that comes with using offers as bait.