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Using Coupons to Drive Engagement and Retention

Dan Slavin
Dan Slavin

Learn how relevance and a focus on savings can boost both sales and the bottom line.

Amazon is arguably one of the first online retailers to leverage past purchase history to make recommendations to consumers about what they might want to buy next. It's a service that consumers grew to love – and one that gave Amazon quick bottom-line results. That concept of sending custom offers to past customers to encourage new purchases is one that all retailers can leverage.

Recent CodeBroker research on coupon and offer personalization supports this practice. In a survey of more than 1,100 U.S. consumers across the country, 73% responded with a resounding yes to the question, "Do you prefer to shop at stores that send you custom discount offers based on your purchase history?" Consumers value strong relationships with vendors they've done business with. Strengthening communication efforts in personalized ways can build loyalty.

Opportunities to connect and engage with past customers

The ability to personalize offers represents a ready-made opportunity for retailers to give consumers what they want – as long as these offers are relevant. Although some consumers are uncomfortable about the idea of retailers tracking their shopping behaviors, most still welcome personalized offers based on their shopping history. Their reasons vary. Here's a sampling of responses:

  • "I like coupons for products I've purchased, but not comparable products."
  • "It's a nice perk for places I shop at frequently to get discounts on items I am already buying."
  • "Having customized discounts increases the attractiveness of a merchant. It makes the store more personal and intuitive to patronize."

The ability to stay in front of customers after they've made a purchase is critical to effective engagement and retention. Customers don't want to feel forgotten. Follow-up offers that are aligned with their needs, interests and purchase history can spark both action and loyalty.

It's not all about you

Here's an important point, though, for retailers hoping to gain relevance and spark engagement among their customers. It's not all about you. It's all about them. If you hope to stand out from the myriad of communications that consumers receive on any given day, you need to get into their heads and deliver value.

Customers are engaged with a wide range of retailers and make ongoing decisions about where to spend their money. While price is certainly a factor in encouraging sales, it's not the only factor.

Customers also value experiences with retailers that are unique, personalized and provide higher value than what they might receive elsewhere. Marketers need to consider how they can effectively position themselves as high-value providers that are tuned in to customer needs across all channels.

You won't have a positive impact with customers if you send an SMS coupon for a product the customer has recently purchased, offer a "we miss you" promotion to a customer that just made a purchase the day before, or promote childcare or pet care products to consumers who have neither children nor pets.

Today's consumers are increasingly savvy and know all too well how technology can be leveraged to provide exceptional experiences. They've learned this largely through interactions with retailers like Amazon. They expect the same experiences from you.

Technology matters

Technology is a big driver and a critical aid for harried marketers. Joseph Brady of Reliant Funding Technology says IoT (the internet of things) and CI (customer intelligence) technology can help retailers reward loyal customers. The offers must be used in relevant ways, though, or its efficiency and impact will be diminished.

For instance, although high-value coupons and offers are nearly 100% effective for reactivating lapsed customers, it's critical to leverage purchase history and preference data to generate a positive impact. Two factors that will impact customer decisions to use a discount are store location and product need/desire. These factors need to be considered when designing offers that are likely to spur the desired action.

Technology can also impact the retailer experience. Retailers must exercise caution in terms of security for their couponing efforts or the bottom line can suffer. If offers can be used multiple times or can be shared by recipients with non-customers, the impacts can be dramatic. Many retailers are revisiting their approach to couponing and making shifts, although they face the risk of disengaging – even losing – loyal customers. The craft retail chain Michaels lost sales when the company attempted to replace its coupons with everyday low prices, according to Daphne Howland of Retail Dive. JC Penney made the same misstep a few years ago and is still feeling the impact. The right balance between customer engagement and bottom-line impact is critical.

Balancing customer needs and the bottom line

Using data to identify customers poised to make a purchase and tying coupon and promotional efforts to personalized offers can help to engage and retain customers. But, at what cost? Retailers must ensure that their promotions are well designed and that they eliminate the potential for reuse and sharing. This is where single-use coupon security comes in.

Single-use coupons and offers are being employed by numerous retailers today to ensure that high-value coupons do not get used more than once, or go viral.  What makes the single-use model work is that it employs security on two fronts: offer distribution and offer redemption.

Secure coupon distribution and redemption ensures the following:

  • Retailers are able to generate millions of unique, single-use coupons or promo codes daily that can be accepted, validated and redeemed by the POS system or e-commerce platform at high speed, in real-time.   
  • Consumers can only obtain offers that are meant for them.
  • Consumers can obtain an offer only once, even if they try to access the offer multiple times over different channels.
  • Offers can be redeemed only one time, even if customers try to redeem the offer on a different channel.

That's the power that the right technology, used the right way, can bring to retailers seeking to balance the need for customer engagement and loyalty and a healthy bottom line.

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High-value, personalized offers are effective for engaging certain customer segments; however, it can be risky to use them without single-use coupons. Think about it. You don't want customers to exploit coupons more than once or have your offers go viral without your oversight.

There's another big benefit to single-use offers. Single-use offers allow for data collection because you know where and when the offer was used. That provides you with key information about your customers and their purchase patterns and preferences – information that can be applied to future marketing initiatives. Single-use offers fueled by the right technology will help you personalize your offers in a risk-free way while adding accuracy to your metrics and allowing for improved A/B testing to boot.

By establishing a reliable method for reaching out to key market segments on an ongoing basis, you can positively impact engagement to drive customer retention. Ongoing iterations based on what you learn will serve to continually help you reduce costs while boosting revenue – just like Amazon.

Don't risk losing customers dismayed by your lack of tech-savvy to understand and deliver on their needs and expectations, or lose revenue due to unfettered coupon distribution. Today's retail technology puts you in the driver's seat.

Image Credit: monkeybusinessimages/Getty Images
Dan Slavin
Dan Slavin Member
Dan Slavin is CEO and co-founder of CodeBroker, a provider of mobile marketing solutions. He was CEO of Framework Technologies, VP of Open Market, and CEO of International Testing Services. He earned a BS in Electrical Engineering from Yale and an MBA from Harvard.