Make your incentives the icing on the cake

Changing shopping habits and the growing use of vouchers on mobiles requires an omnichannel approach to promotional offers.

Above: Ikea realises the importance of a seamless customer experience online and in-store

Coupons have long been used to entice consumers and encourage exploration of new products, but as retail becomes increasingly omnichannel, brands are realising the power they have to seamlessly bridge the gap between online and offline.

“Consumers don’t think about channels or devices separately,” says Ikea’s deputy marketing manager for the UK and Ireland Aaron Mitchell. “They just see it as another interaction with the brand, so everything has to be joined up.”

It is well documented that consumer journeys are changing with the impetus shifting towards digital channels, particularly for research.

Over the past four weeks, 66 per cent of UK consumers have browsed for products online compared to 44 per cent in-store, according to an Ipsos MORI study for marketing firm HighCo MRM.

However, going online first does not necessarily mean that consumers will not make their purchase in-store, or vice versa. And considering that only 10.5 per cent of all retail sales were made online in October, according to the latest figures from the Office for National Statistics, there is a lot brands can do to join up digital and physical channels and entice consumers along the purchase journey.

One way is with mobile coupons, because although only 17 per cent of UK shoppers have downloaded a voucher to their smartphone, 87 per cent are open to the idea and would consider doing so in future, with the majority suggesting it could influence their choice of brand and encourage them to buy products they would not otherwise, finds the study.

But the message has to be relevant, says Kristin Berg, Coca-Cola’s director of shopper marketing, Europe, who suggests that in addition to looking for convenience, saving time and entertainment, mobile consumers want promotional offers to be delivered in a way that is “contextualised, personalised, immediate and seamless”. 

She says: “I think it is incumbent on marketers to ensure that the experience gets to consumers in the right way. Coupons can help deliver a contextually relevant offer at the right time and place. We did an offer for the 11.30am Diet Coke break, so as consumers walked past [certain stores] at that time they were prompted with the message ‘would you like to take a break – enjoy this offer for a Diet Coke’.”

Consumers don’t think about channels or devices separately. They see it as another interaction with the brand so it has to be joined up

She urges brands to think more clearly about how they match messages, media and platforms, and suggests gamification is one option. 

“If you have fun with promotional mechanics, you can leverage the full power of the mobile medium,” she says. “We transformed what once may have been an instant win competition to a mobile game called Pop To Win, which allowed consumers to instantly win one of five offers or free prizes.”

McDonald’s used gamification in its McSundae Melt outdoor campaign in Germany, which offered consumers a free ice-cream if they downloaded a coupon to their smartphone using a QR code. This directed them to the nearest restaurant where the voucher could be redeemed. However, it was only valid for a certain period of time, thereby encouraging consumers to act quickly, because as the ice-cream image melted, the time to redeem the offer reduced. 

The use of social coupons is also on the rise, particularly among FMCG brands as they enable a more direct and personalised connection with consumers.

Dairy company Fage UK, manufacturer of the Total Greek Yoghurt brand, chose to engage with consumers through Facebook to encourage them to try its new Fruyo yoghurt range.

“Launching a new brand can often be tricky,” says Alison White, PR and social media manager at Fage UK. “Fruyo is most likely to be a substantial yoghurt ‘upgrade’ for many, therefore the objective was to get the product into as many UK consumer homes as possible. We decided that a social media coupon campaign via Facebook was the best way to reach the target audience and we wanted to use the strong presence of the Total Greek Yoghurt brand
in order to achieve this.”

The brand worked with Coupons.com to offer consumers who ‘liked’ the Total Greek Yoghurt Facebook page a printable coupon that could be used in Waitrose stores to claim a free Fruyo yoghurt worth £1.09.

During the two-week campaign, ‘likes’ on the page increased by 7 per cent and of those who printed the coupon, 27 per cent claimed their free yoghurt in-store.

Fruyo-product-2013-460
Fage UK used a Facebook coupon campaign to encourage trial of its new Fruyo yoghurt – achieving a 27% redemption rate

Additionally, as the Facebook app required users to provide their name and email address, Fage UK has since been able to inform them about other offers, such as coupon promotions.

White adds: “Social media provides FMCGs with the ideal platform to generate awareness of a product’s qualities. It allows brands to target specific audiences and tailor messages accordingly, building a clear picture of how the product can benefit the individual.

“Once these messages have been communicated and the audience is fully engaged, there is then the opportunity to offer a voucher or money-off coupon, enabling the customer to try the product free of charge, or at a lower price, increasing the chances of repeat purchase.” 

Accessories retailer Claire’s also wants to attract new customers through the use of vouchers but uses high volume media, which European marketing director Melanie Berry says helps to drive footfall in-store and boost sales online.

“We also use exclusive vouchers and discount codes as a bonus and to thank regular customers via email and print,” she says. “Our Christmas gift guide includes two offers, for example. The first is a Christmas bonus to spend
in December, and the second is a Happy New Year incentive to use in January.”

Building loyalty is high on the agenda at embattled retailer HMV, which relaunched its PureHMV customer loyalty programme earlier this month ahead of the busy Christmas season, as it looks turn around its fortune.

The move follows the appointment of former Warner Home Entertainment Group marketer Patrizia Leighton as head of marketing, the launch of a new logo and marketing push and a revamped website with a focus on content and personalisation rather than ecommerce.

The PureHMV scheme was halted when the entertainment retailer went into administration at the beginning of the year, but new owner Hilco has overhauled the programme. Existing members can reclaim their points until 31 January 2014, as HMV looks to rebuild trust among disillusioned consumers.

JLS-2013-460
Customers of HMV’s refreshed loyalty scheme could use their points for a chance to win tickets for JLS’s Goodbye tour

The HMV business suffered greatly when consumers began to move online. Dan Truscott, who joined the business in August as managing director of PureHMV, realises that the proposition this time around has to be about more than simply buying CDs and DVDs.

“We want to make stores an environment for entertainment that brings consumers closer [to the bands and performers they love],” he says. “We want consumers to come into HMV for the experience, not just to make a standard purchase.” (See Q&A, below.)

As part of the scheme, consumers can also use points to enter competitions for the chance to win tickets to gigs or signed memorabilia. Recently, members could use 1,000 points for the chance to see Gary Barlow play at an intimate gig in London or 500 points to win a pair of tickets to JLS’s Goodbye tour.

Points can also be converted into digital download vouchers that can be used on the recently launched HMV Digital music service, exchanged for a magazine subscription or a gift card at Topshop or Topman. 

Like HMV, Ikea also offers members of its Ikea Family loyalty scheme a more personal experience, and uses the data it collects on users to provide them with relevant offers. The way Ikea rewards members is different, however, explains Mitchell, who focuses on the Family loyalty scheme.

“We haven’t built our loyalty scheme on the basis of points like others have as we didn’t want to be like other retailers,” he says. “For us, it’s about providing people with relevant tips and ideas, inspiration, home furnishing advice and events and workshops that are free for members. We also offer free tea and coffee for members
from Monday to Friday and if they swipe their card on purchase their goods are insured against damage on the way home, or mishaps when assembling it.” 

Additionally, the retailer uses its loyalty programme as a “local marketing and engagement tool” to promote special member prices on selected products in-store, which are chosen locally using the knowledge each store has of its members.

Ikea has also tested adding coupons to email communications, which people can print and spend in-store.

“At Ikea, we need to work out what it means to have a loyalty scheme in a multichannel environment because consumers’ behaviour is changing,” says Mitchell.

“Digitalisation means that people are more connected than before and that means there are many more opportunities but with that comes the challenge to make sure we are always there when the customer needs us.”

Consumer purchase journeys are changing, so the quicker brands and retailers are able to link up the different channels the better. There are many ways of achieving this, but vouchers and incentives that connect digital with physical are a good start.

Q&A

Dan Truscott
Managing director
PureHMV

Marketing Week (MW): How important is it to link up the online and in-store experience?

Dan Truscott (DT): It’s very important. We don’t have a transactional website, but do have the ability for customers to purchase music online through HMV Digital. There were a huge number of downloads in the UK last year but HMV wasn’t a part of that, so strategically it is important that we can use the customer database at PureHMV
to introduce them to our new digital service.

MW: When HMV stopped the loyalty scheme many customers thought they had lost their points. How do you aim to rebuild trust?

DT: We have had lots of questions about when customers can get their points and what they can do with them. At the moment, it’s about getting the message out through our direct channels. That will be a journey, but the key message is that customers can get their old points back and start using them in 14 days once they re-register.

MW: How do you plan to get new consumers to sign up for PureHMV?

DT: Stores will be our primary channel, but we will also be leveraging our website HMV.com. While not transactional, it still has significant footfall and that links directly into the PureHMV website. We are also keen to capitalise on our social media presence.

The three big challenges

1. Personalisation

The Ikea Family loyalty scheme started off as a nationally-driven programme in the UK. But because each store has a large catchment area, some elements are also targeted locally. Deputy marketing manager for the UK and Ireland, Aaron Mitchell, says: “Although there are similarities between how shoppers live in London and Scotland, for example, there are also differences. The idea of a loyalty scheme is to provide relevant offers and ideas based
on the information members share with us.”   

2. Loyalty

Offering discounts and incentives is guaranteed to increase footfall in-store and boost sales in the short-term, but brands also need to retain these customers in the long-term. One way accessories retailer Claire’s does this is through regular competitions offering consumers the chance to win money-can’t-buy prizes such as meet and greets, personalised messages and VIP tours and trips. These are advertised online and in-store and customers who enter are also often rewarded with special discount codes as a further incentive to take part.

3. Social coupons

According to research from Ipsos MORI for HighCo MRM, 63 per cent of Facebook fans across Europe would use coupons to buy a product they know about but have not purchased before; and 58 per cent would use vouchers to buy a product they do not know, which means the opportunities for brands to recruit new customers through social channels are vast. Social couponing allows FMCG brands to build stronger direct relationships with consumers in a way that more traditional media channels cannot offer.

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