The Coupon Network: Everything You Need To Know About The Web’s Hottest Business Model

Due to the proliferation of deals sites like Groupon and Livingsocial, couponing is currently the hottest thing on the Internet. At yesterday’s Social Currency CrunchUp, TechCrunch CEO and resident coupon expert Heather Harde sat down with News America Marketing VP Ginny Byrnes to dispense couponing advice to startups, which tend to approach the problem from a technical perspective.

As we enter the next generation of couponing, this list of tried and true lessons is a must-read for those vying for the top of the heap.

10. There are two types of shoppers: Planners and impulse buyers

Planners take time, make a list, look at the circulars, check coupon sites and clip coupons at home. The impulse purchaser prefers to make buying decisions on impulse while they’re in the store.

These two types need a two-prong approach to in order to best be reached when buying decisions are made: Home (planners) vs. Point of purchase (impulse buyers). For example, an impulse buyer needs an advertisement or promotion that calls out and draws attention to the product – i.e. “tell me how this will make my life easier.”

9. Brand tactics are different for each consumer: Loyals, Switchers, Non-Category User

Loyal: Encourage  a loyal customer to continue purchasing in high volume, perhaps offering “buy two get one free” types of offers.

Switcher: Switchers are price sensitive, so a discount of a few cents over your leading competitor can hook them and bring them into the category.

Non-Category User: Oftentimes offering a trial of your product can give people incentive to continue using it.

8. Premium brands need to pretend they don’t discount

Because high price points equal higher quality in the minds of consumers, premium brands need to be more delicate with their discounting, using promotions that are more targeted to an elite niche market. Luxury brands succeed by providing a higher quality free sample, as well as cultivating a higher end look and feel.

7. Create promotional patterns to match purchase cycles

Each product has its own shelf life so businesses need to take into account when and what is the best way to reach their target consumer. Luckily this is getting easier with technology’s ever expanding capabilities to profile and target consumers.

6. Consumer targeting: Know when to use a hammer and when to use a scalpel

Targeting is a double-edged sword — You don’t want to be too targeted because you don’t want to miss out on growing your market. Still some products, such as septic tank cleaner, are better served using a direct approach.

Don’t be too narrow minded with your targeting; If you don’t see toilet paper on a customer’s Safeway loyalty card data, that doesn’t necessarily mean that they’re not buying toilet paper, they might be paper pantry loading at CostCo and not Safeway.

5. Redemption rates, highs lows, & truth

While coupon redemption rates are relatively low (.5% to 1% according to CMS) when you launch a coupon campaign you are generating awareness. Customers recall seeing a coupon promotion, so even though they might not be redeeming the offer, they are still purchasing your product.

4. All promotions need a little pain

You want to make sure that the customer works a little, giving someone a coupon for a latte while they’re in line at Starbucks feels like cheating. “If the consumer gets the discount without any work, then the brand doesn’t feel like they got credit for the discount or helped to really change consumer behavior,” Heather Harde points out.

3. 360 degree marketing works

With currently available technology (like QR or shortcodes) it’s now more than ever possible to interact with your customer at multiple touch points. Touching the consumer no matter whether they are outside, at the store, in home or at point of purchase is crucial for brand absorption.

2. Build for your currency: Virtual vs. real money

While with virtual currency you can always change your plan, if you’re using monetary coupons you first need the correct infrastructure and security to complete what amounts to financial transactions.

1. Don’t slow down the checkout

You want to make it as easy as possible for consumers and retailers to buy your product. You don’t want a consumer to give up on a purchase because the process is so slow, or because there are issues or concerns or point of purchase.

Frictionless options such as integrating customer coupons into loyalty cards, with all coupons preloaded for redemption at point of purchase, are currently at the bleeding edge of coupon marketing innovation.