Vouchers: reclaiming the market from the deal-chasers

Brands are at risk of being held to ransom by consumers unwilling to buy without a money-off deal. Does the solution lie in offering added-value incentives with a personal touch?


The popularity and growing use of voucher code and deal websites may be well documented, but research seen exclusively by Marketing Week suggests that consumers are not only refusing to buy unless tempted by deals, but are also becoming increasingly sceptical about discount offers.

Many shoppers now see discounts as part of ‘playing the game’ with the ultimate aim of beating retailers through meticulous deal hunting, suggests a qualitative study by The Thinking Shed.

One respondent commented: “If I stop using store loyalty cards for a month or so, I’ll get a handful of vouchers as an incentive to start shopping with the card issuer again.”

Consumers are also deal watching week to week, often leading to mistrust of offers. Another respondent commented: “Some deals are really misleading. Mller Corner yogurts were on offer at 30p each last week. Today they were four for £2. Beware of these tricks.”

Attitudes are changing as it has become the norm to buy using some sort of deal or discount. According to The Thinking Shed’s report, more people are getting involved in voucher collection and redemption, and are looking out for deals to the point that many feel that if there’s not a deal involved then there’s no point in buying.

With such attitudes in mind, the key challenge for retailers now is how to appeal to customers by using vouchers and discounts without it just being about price.

Jemima Bird, marketing director at Tragus Group, which owns the Strada, Bella Italia and Cafe Rouge restaurant chains, suggests that the best way for brands to do this is to offer customers greater value with discounts and offers by tailoring incentives to customers’ preferences and driving greater loyalty.

She says: “The whole restaurant business has been tied into discounts for the past three years but focusing on that creates a customer who is discount loyal rather than brand loyal.”

At the end of last year, Tragus announced a new strategy to reward customers who generated social media content on Facebook, YouTube and Twitter with discount vouchers.

Boots: Uses common sense and data mining to personalise offers

The strategy not only encourages the development of user-generated content, but increases footfall into the restaurants by persuading them to make repeat visits. Bird explains: “Our strategy is less about easy deals for people who are just interested in vouchers and more about developing brand-related content.”

In line with objectives to shift perceptions of Cafe Rouge away from cafe status, Tragus aims to emphasise the cultural aspect of the brand – something that has also filtered down into its offers. Late last year, customers were tempted in by a special dinner and French lessons offer, which received around 1,000 clicks per day over the six days it ran, and generated more than 1,000 Facebook likes for the brand. A similar promotion where customers were offered a wine lesson and a meal generated an extra 3,000 unique visits to the site.

Bird says: “People feel like they’re getting a good offer but it’s also very brand-related and we’re seeing people participating on the site, talking in French and having a conversation with us.”

As well as attempting to drive deeper engagement, Tragus has also invested in personalising its vouchers to make them more relevant to consumers. The restaurant group has introduced vouchers determined by past spend, such as discounted wine for customers who regularly choose premium bottles. It also uses gender-targeted deals distributed by direct mail, which have increased click-through by 20%.

Bird says: “If you target deals that are specifically relevant to customers and show that you are taking time to understand them a little bit more then they’re more likely to react to that.”

Targeting and relevancy are the key phrases that Ruth Spencer, director of insight, loyalty and multichannel at Boots, keeps front of mind when she’s putting together an offer. “If an offer’s more targeted and it’s relevant then we get a much better response rate,” she says.

In December last year, Boots announced plans to give customers bespoke discount vouchers at the till as well as Advantage Card kiosks and through direct mail, while Sainsbury’s also introduced a similar till-based voucher scheme for its Nectar card programme last year.

Both Spencer and Bird agree that vouchers must be part of an integrated marketing strategy, and personalised offers should be just one element to show customers that they are valued.


Spencer says: “People are absolutely more value-conscious, but value manifests itself in different ways. You want the right product at the right price, but you want a good service with it. It’s only one part of your marketing mix and it would be a mistake to think that pushing vouchers at people is a fix for the recession, rather than thinking about your whole customer offer.”

House of Fraser business incentives manager John Dove adds: “I certainly think it’s very easy to do reductions but there’s a cost value equation, and people are looking for good value.”

Last year, House of Fraser aimed to increase the value of its offers through greater personalisation and relevance by partnering with the O2 Priority Moments scheme to offer location-specific deals. The loyalty scheme sent messages to Priority Moments members to alert them that if they spent £40 in a nearby store, they would be rewarded with a £15 voucher.

Dove says: “The fact there was some kind of proximity link to the location of the individual was integral to the activity’s success.”

Personalisation is also a concept that is filtering into the corporate incentives market. Rob Froome, head of New Look Business Solutions, says: “We’ve seen a big switch from vouchers to gift cards and part of that is to do with tailoring our offer to clients’ needs. There’s been a move towards supplying clients with the ability to load gift cards with their own denominations via web-based gift card management systems. I definitely see more demand for services for gift card management systems or virtual vouchers.”

Card sharp: House of Fraser and Pizza Express use vouchers to enhance the customer experience

Pizza Express has also made moves towards personalising its gift vouchers system, both for consumers and corporate rewards. Whereas before the scheme only offered customers the ability to load denominations of money onto the cards, customers can now choose from a number of meal options to suit the receiver’s family size and food preferences.

Harriet Rhys-Williams, Pizza Express retail and new business director, explains: “You can tailor exactly the kind of meal to the audience and the customer experience is great as they’re not worrying whether they’ve redeemed the £20 yet. For the giver it’s great because the person receiving the card doesn’t know how much you’ve spent.”

Both Rhys-Williams and House of Fraser’s Dove agree that value, rather than low prices, should drive how marketers think about vouchers and incentives in the next year. Dove concludes: “It’s always a race to the bottom if you only think about offers in terms of monetary value. You have to think about the whole customer experience.”

Fact focus

Promotional offers available to customers over the Christmas period increased by 25% compared with the same period last year, according to voucher website Savoo.co.uk.

Thorntons, The Body Shop, Boots and Clarks Shoes all improved their offers during Q4 of 2011, introducing discount codes and percentage discounts over a certain spend.


Brand in the spotlight


Ruth Spencer

Director of insight, loyalty and multichannel

Marketing Week (MW): What is the strategy behind personalised offers at the till?
Ruth Spencer (RS): Our advantage card gives us lots of great data about what customers are doing. We’ve historically been using that to target via direct mail and by the kiosk and it was a natural extension from there. We know how well-targeted offers compare to non-targeted offers, so we should be extending that across as many channels as we can.

MW: Why are personalised offers so popular with Boots customers?
RS: An offer for a main course at a restaurant will be relevant to nearly everyone that comes into the venue but if you imagine you’ve got a huge Boots store, we can’t assume that everyone’s coming in for the same reason.

MW: Are there any potential pitfalls to personalised offers?
RS: You’ve got to have the data and have good data mining people. There isn’t a shortcut for that but you’ve also got to have a dose of common sense as well.

Before we launched this we did lots of tests with people in the office. On an early test, I got a baby offer. The team realised that this was wrong because I’ve not got children of that age, but I do go walking a lot so I buy baby wipes because they’re handy to put in my rucksack.

You’ve got to have common sense. We have to consider what is enough baby purchasing behaviour before we know this person is actually interested in the baby sector.

MW: Have you had to improve your technology to make this new offer?
RS: We made big improvements to our back-end systems about three years ago, and we’re ploughing lots of the lessons from direct mail and kiosks into what we’re offering in store.

It’s been an evolution rather than needing a whole new set of technology. The change was enabling the technology so we could get it easily to a till. There was a lot of blood, sweat and tears from the IT department to make that happen.


Top trends

Ruth Spencer

Director of insight, loyalty and multichannel

Next year is going to be a watch and see year. There are a lot of technology options out there but testing needs to be done to see what makes it into customers’ habitual use. We’re doing tests of things like evouchers to see how they get used and added into consumers’ portfolios.


Rob Froome

Head of business solutions
New Look

We’re going to see a lot of movement from virtual vouchers in 2012 because a lot of the leading solution providers in the US are coming over and will establish themselves in the UK this year.

We launched a virtual voucher just before Christmas after conducting some insight consumer panels. As a recipient, people felt they were more impersonal. Other problems were concerns around junk email filters and the ability to print the vouchers. Marketers need to take note of those comments that we saw in the research so things like personalisation are going to be important drivers when developing this type of solution.


Martin Cooper

Head of national accounts and marketing

The demand for evouchers is outstripping the ability to supply at the moment. It’s been the retailers themselves that are being slow to make changes. Even allowing gift vouchers to an extent online is more difficult than you would believe.

What we will see is the ability to drive the geo-specific information. There will be a lot of focus on that this year. We’ve just launched an iPhone and Android app for finding store locations and offering location offers.


John Dove

Business incentives manager
House of Fraser

I think the trend will continue away from paper towards plastic gift cards. We can deliver House of Fraser gift cards electronically and I think that’s something that we’re going to see a lot of movement with and will develop.

Once we’re confident about how that works we’ll be moving towards mobile phone vouchers. People are trying different things, there’s a little bit of watch and learn at the moment. But electronic delivery is going to be very important.



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