Editorial Articles

Recent independent market research has found that promotional offers continue to have a significant impact on consumer spending habits, with a noticeable shift towards digital coupons and vouchers

Coupons and vouchers are a staple part of shopping in the UK and are increasingly popular amongst younger people. Even though we are officially out of recession, research shows that 28% of consumers are looking for promotional offers more than they were a year ago. This is happening because costs continue to rise with the price of food (26%), cost of living (22%) and having less money (17%) cited as the main reasons for the increase.

Promotional awareness is highest in 16-24 year olds, with 41% of consumers in this category looking for promotional offers more than they were a year ago and 25% using more coupons than a year ago.

Consumers are demanding best value from everyone on the high street, from supermarkets and fashion outlets to cinemas and restaurants. Consumers like to receive coupons, and they are an effective way for brands to engage with consumers that are looking for ways to reduce their weekly spend.

Like consumers in the US, the UK is becoming a nation of ‘coupon clippers’ and digital coupons are now starting to make their trans-Atlantic voyage. The research shows a marked increase in the use of internet coupons that is reflected in the rise of internet shopping, especially on supermarket websites. The volume of coupons that consumers are downloading or printing from the internet will continue to grow with 30% of internet households having printed a coupon or voucher found on the internet in the last 12 months. When asked the same question in June 2009, only 17% of households surveyed had done this.

Conversely, mobile couponing technology is far less advanced in the UK with only 3% of mobile owning households having downloaded a coupon or voucher from a mobile phone in the last year. However, consumers spend a significant amount of time on their handheld devices and we expect to see a rise in mobile coupons, as brands seek to take advantage of the 22% of consumers who said they are yet to download a mobile coupon but would be willing to do so.

Marketing budgets are still revised down considerably against a couple of years ago and no marketer can afford to not be looking at couponing and indeed their promotional return on investment. With coupons it is easier to control the offer value, and unlike in-store deep cut price promotions such as BOGOFs, coupon campaigns don’t become so habitual and cyclical. It is also much easier to establish the optimal “tipping point” with coupons, the point at which a consumer will redeem the coupon against a product for the lowest offer value at the minimum cost to redemption volumes. Brands that take the time to learn this optimum face value can make significant savings on their promotional spend. For example, one major dairy brand managed to achieve a 26.8% cost saving by reducing their coupon face value by 25%. This significant financial saving was achieved at the cost of only a 0.66% reduction in redemptions compared with past campaigns.

Although marketers are slowly getting to grips with coupons, opportunities to maximise the return on investment in such promotional activity are being missed because of the failure to effectively analyse the results of previous promotions and build such insights into future campaigns. With the proliferation of digital alternatives to traditional coupons and vouchers, it is more important than ever to learn which discounts work best for particular brands and the products/services offered, so that campaigns can be tweaked accordingly to achieve the best results.

Charles D’Oyly
Managing Director, Valassis Europe