definitive merchant guide to deals, discounts and offers
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Deals Deconstructed: The Definitive Merchant Guide to Deals, Discounts and OffersDeciphering the Exploding Deals Marketplace to Deliver the Right Offers and Build Brand Advocates
Presented by Sponsored by
Deals Deconstructed • 2
Today’s consumers are focused on finding a deal on everything
they buy. According to Google Trends, searches on “coupons”
and “deals” have increased more than 300% since 2004. As
many as 74% of consumers search multiple coupon sources
each week, according to a survey from Coupon Cabin and
Harris Interactive.
The rise in deal and coupon searching isn’t limited to the home
or workplace. Today, it’s common to see shoppers standing
in a store using their mobile devices to research deals about
products in a competitor’s store or online. In fact, more than
half (52%) of smartphone-enabled consumers are using their
devices to help with purchase decisions in-store, according to
The Pew American & Internet Life Project.
Consumers’ growing interest in searching for deals has caused
a fundamental shift in how we find and buy products, and
given birth to a new kind of shopper — one who thinks “deal
first.” Armed with the devices and know-how to find deals
anywhere, anytime, deal-first shoppers are no longer loyal to
particular retail brands, and are savvy enough to price shop
and channel hop to find the best deal.
In response to this shopping paradigm shift, merchants must
deliver promotional programs that appeal to consumers’
“deal desire.” Yet the choices can be overwhelming.
Drowning in a flood of new deal options — such as daily deals, flash sales, eCoupons and check-in deals — many merchants are struggling to choose the best types of deals that deliver new customers and build loyalty in a way that is profitable and sustainable.
The pressing questions around deal choices are: What are the
benefits of the different deal offerings? Which offers are suited
for online vs. in-store sales? And which deals drive one-time
sales vs. sustainable growth?
This E-book will lay out the deal landscape and help retailers
determine which deal strategies can drive measurable,
sustainable results by examining three specific topic areas:
52% of smartphone-enabled consumers use their devices to help with in-store purchase decisions.
- Pew American & Internet Life Project
I. The Deal Landscape — Today’s deal offerings
feature a variety of choices, from the traditional to
the digital. eCoupons, daily deals and card-linked
offers are just a few of the possibilities. More recent
additions to the ever-changing variety of discount
offers include flash sales, gamification and check-in
deals.
II. Deal Delivery Dissected — Beyond mass media,
such as newspaper, radio and TV advertising, a
multitude of other deal marketing options are
available to today’s merchant including web search,
social media and mobile apps.
III. Deal Benefits & ROI — Retailers must determine if
their deals and offers fulfill their business goals. Do
deals add new customers? Boost revenue? Help
retain current customers?
Deals Deconstructed • 3
In order to utilize deals most effectively, retailers
need to understand the lay of the land. Originating
with the printed coupon, which dates back to the
1880s when Coca-Cola offered a free beverage,
the deal landscape has been morphing with the
times. Over the past few years, an exploding crop
of deals has burst onto the scene. From daily deals
and flash sales, to check-in deals and deal games,
to 24-hour sales, to online scavenger hunts, today’s
shopper is immersed in new ways to save and earn.
To use deals effectively, retailers need to understand
all deal options and then determine which deals fit
their businesses and suit their customers. Hence flash
sales, which are quick and have tight deadlines,
may work for happy hour on Friday, but not for an
upscale steak house, fashion boutique or travel
agency. Scavenger hunts on foursquare may
appeal to Generation Xers after work, but won’t fit
for the local florist.
Coupons Still Pack a Punch
The granddaddy of all deals is the old-fashioned
coupon providing a discount at the point of sale.
According to a 2011 study conducted by CGT/
Cognizant, coupons still prevail as the major form
of promotions, constituting approximately 80% of
all deals. Coupons were initially marketed through
newspapers, weekly store inserts and direct mail
(and still are), but increasingly are delivered as
eCoupons and redeemable electronically. Store-
specific eCoupons can now be electronically
loaded on or linked to customers’ loyalty cards,
with savings automatically included as part of
the transaction. In addition to store-based loyalty
eCoupons, a number of third-party eCoupon sites
are available to shoppers, such as Cellfire.com,
Upromise.com and SavingStar.com.
Daily Deals Deliver an Uptick in Shopper Traffic
While coupons continue to be effective for some
target audiences, particularly the 40+ age group,
younger shoppers expect offers to be faster, easier
and more fun. The daily deal has emerged to meet
this need. Daily deals typically are opt-in programs
for consumers looking for a substantial percentage
discount on desired items or services. The deal
offers are sent via email and often require a group
purchase threshold to be met to “activate” the
deal. Sites such as Groupon and LivingSocial, which
control approximately 73% of the deal-a-day market
according to Yipit, have become major players in
this new billion-dollar market. More recently Google
joined the fray with Google Offers, which was live
I. The Deal
Landscape
Deals Deconstructed • 4
in 40 local markets by January 2012. Due to the
large, often unprofitable discounts and questionable
attribution data for new customer acquisition, many
merchants are hesitating to renew daily deals.
Card-Linked Offers Connect Deals to Cards
One of the limitations of Daily Deals, and most deal
types, is the complexity of redemption. The hassle of
finding a digital coupon code, remembering a punch
card, or printing a voucher can limit the effectiveness
of deals for merchants and consumers. Card-linked
offers solve this issue by automatically rewarding
consumers for regular purchases, right back on the
cards they use the most, in currencies they already
like to collect. Consumers get card-linked offers from
their banks or loyalty programs, and “redeem” them
just by swiping their favorite credit or debit card.
Merchants fund rewards only after consumers buy,
don’t have to deal with vouchers or their own
loyalty cards, and get actual transaction data
to prove results. Some of the added value
from card-linked offers includes the ability
to track customer acquisition, obtain order
values, promote repeat purchases and garner
new customers. Currently, Cartera provides
card-linked programs to three of the four top
bank and card issuers, and all top five airlines.
Flash Sales Provide Limited-Time Offers
Several upscale web sites such as the Gilt Group
and Gift Man offer flash sales, a limited, time-bound
online sale. A report by Ypartnership noted that
these deals frequently offer discounts of as much as
50% off from retailers looking to unload off-season
inventory or liquidate unsold stock. These deals
typically are offered only to subscribers, bringing
cachet and exclusivity. Limited time frames motivate
consumers to buy quickly, spurring interest.
Gamification Adds Fun to Deal Delivery
To capitalize on mobile deals, companies like
foursquare and Scoutmob are using gamification ―
turning deal redemption into a game or scavenger
hunt. Smartphone-carrying consumers can find
rewards waiting for them when they reach a
destination. For example, once consumers reach
An exploding crop of deals has burst onto the scene…today’s shopper is immersed in new ways to save and earn.
Deals Deconstructed • 5
certain restaurant or retailer, they press a button on
their smartphone and obtain deals as email coupons,
such as a two-for-one dinner or 25% off coupon.
Check-in Deals Simplify the Offer Process
Not all shoppers are looking for an adventure; some
prefer to simply check-in online or on a mobile
app to obtain deals and rewards. Retailers offer
these check-in deals on sites such as Google+
when consumers search for information on their
establishment or product. Consumers can keep
the deal private or disseminate it to their friends,
maximizing exposure for the retailer.
Loyalty Cards Speak to Brand Enthusiasts
Simple and effective, loyalty cards appeal to
consumers’ desires to get something back for
each purchase they make in the form of rewards
points, cash or miles. According to recent research
from Colloquy, there are now 2 billion loyalty
memberships in the U.S. To maximize the value of
rewards and earn enough points to redeem for
items of real value, however, consumers are focusing
their earning power toward a primary credit card or
airline frequent flier rewards card. That’s why credit
card, debit card and airline frequent flier programs
now make up more than 750 million of the 2 billion
loyalty memberships. This trend has made it more
challenging for merchants to use their own loyalty
credit cards to attract new and repeat customers.
Punch Cards and Rebates Allow Retailers to Set Limits
An alternatives to a loyalty credit card, punch
cards and rebates — either physical or digital — are
standby deal options for local merchants, such as
coffee purveyors and sandwich shops. This loyalty
scheme offers shoppers a free item after a threshold
is reached, such as a tenth purchase or basket
size more than $100. New online services, such
as Stampt, are bringing punch cards into the 21st
century by merging them into smartphones, making
it easier for consumers to track and redeem, and
easier for the merchants to track results and ROI.
Deals Deconstructed • 6
Today’s deal choices can seem endless: games,
cards, rebates, check-in deals, card-linked offers and
more. Retailers want to stay one step ahead of their
customers, not fall a step behind. And staying one
step ahead these days involves moving beyond the
printed voucher or coupon and entering the world of
digital offer marketing and redemption through the
web, smartphones, mobile devices and social media.
Deals can still be delivered in old-fashioned
ways including store sales signage, a coupon
in a newspaper or magazine, TV and radio
advertising, or via direct mail. But technology has
changed the landscape of deal delivery. Deals
can now be offered via email on
PCs and mobile devices, banner
and search ads, and mobile ads on
web sites and mobile apps. Groupon,
LivingSocial and other daily deals sites
distribute thousands of deals online via
email, filling up consumers’ in-boxes
with dozens of offerings daily.
As a result of the unprecedented influence of Google
and challengers like Bing, search marketing has
become one of the most effective ways to reach
customers, since it targets a consumer who has
already expressed an interest in a specific product.
Additionally, when a shopper is searching via
mobile phone, a merchant can go one step further
and identify the person’s exact location via geo-
targeting, then push an immediate and relevant
localized offer to that consumer. This and other types
of location-based services are providing the ability to
better personalize the retailer-shopper interaction.
The more specifically a marketer can target and
market a deal to an individual consumer who
has already purchased or expressed interest in
a product, the higher the probability of a sale.
That logic also translates to social media; retailers
can garner additional sales from fans who visit a
company’s Facebook or Twitter. Sending coupons to
a company’s enthusiasts can lead to repeat business.
Encouraging them to send the coupon to friends can
trigger new business through referrals.
Additionally, with the card-linked offer, merchants
can deliver deals to shoppers through some of the
most “trusted” online sources: the banks or airlines
consumers already do business with regularly.
This can be a win-win-win for three players — the
consumer gets an automatic deal just for using the
cards he or she already has; the merchant gets a
quick and easy way to offer deals to shoppers and
track redemptions; and the bank boosts customer
engagement and card-spend.
II. Daily Delivery
DissectedWith the card-linked offer, merchants can deliver deals to shoppers through some of the most “trusted” online sources: the banks or airlines consumers already do business with regularly.
Deals Deconstructed • 7
Merchants trying today’s new deal and delivery
channels must remember to choose options that
drive both top-line and bottom-line growth by
helping them attract new customers and drive
loyalty from existing customers. For new customers,
the goal is to motivate them to choose one brand
versus another. And for current customers, the goal is
to build brand loyalty and increase
overall purchases.
For retailers, wading through all deal options to find
the ones with the best ROI can be daunting. Each
type of deal or offer may appeal to a particular
target segment, or deliver on a specific retailer
goal. One-shot daily deals from sites like Groupon,
LivingSocial and Google Offers can spark business
and bring in new customers, particularly around
one-time sales events. But some merchants are
finding that these heavy discounts — if not properly
executed — can backfire, cause customer service
issues and damage brand image.
Because of those issues, some daily deal programs
have been experiencing rapid upheaval. Facebook
launched a daily deal site test in May 2011, then
terminated it four months later, as reported by
TechCrunch. Groupon’s core local deal business
declined in late 2011, down 3% in Q3 over Q2, Yipit
reported. Of the 530 daily sites that operated in
2011, 170 were shut down, according to Yipit.
Merchants also are having issues with daily deals.
A 2012 Practical Ecommerce article reported that
52% of merchants are not planning to renew daily
deals. Retailers complained about having to reduce
prices by 50% to offer daily deals, leaving them with
25% to 30% of the retail price after the deal site’s
commission. Some retailers were selling products
and services at or near cost, sometimes losing
money; some deals only became profitable if the
customer returned for a second visit or purchase.
III. Deal Benefits
and ROIFor new customers, the goal is to motivate them to choose one brand versus another. For current customers, the goal is to build brand loyalty and increase overall purchases.
Deals Deconstructed • 8
Besides the daily deal, a number of
different types of deals are appealing to
different groups of customers. Gamification
can attract a younger, more tech-savvy
audience, perhaps ideal for coffee shops,
but not for home improvement stores.
BOGOs and other couponing tactics may
draw in an older, more traditional shopping
crowd, and flash sales can help to move
overstock merchandise while targeting a
specific customer base.
From the retailer’s viewpoint, deals that are linked
to the actual transaction, such as card-linked offers
or electronic punch cards, are proving to be the
most measurable. While protecting consumers’
privacy, new card-linked marketing networks can
deliver retailers actual sales data to see how many
consumers redeemed an offer, how many were
new customers, how many were existing, and the
average basket size for both types of customers.
Card-linked marketing also turns the advertising
payment model on its head because merchants
don’t pay for offers until after consumers buy,
making this new type of marketing truly risk-free.
Card-linked marketing turns the advertising payment model on its head because merchants don’t pay for offers until after consumers buy.
Deals Deconstructed • 9
Choosing between the bevy of offers and deals available to merchants today
is a challenging task. Different merchants and different shoppers have different
needs. Daily deals may bring in a surge of customers who decide to try a brand
for the first time, while card-linked deals can help drive sustainable sales growth
from both new and repeat customers. Games, punch cards, check-in offers and
other new types of deals all offer unique benefits for different types of merchants.
Questions to consider include: Which deals will appeal most to your customers?
Which deals can be measured in ROI? Which deals are seamless? Which type of
deals will result in repeat customers and long-term profitability? Merchants are just
starting to find the answers to these key questions, to deconstruct today’s deals
and find the ones that work for them.
Conclusion
Deals Deconstructed • 10
Cartera Commerce is the leading provider of card-linked marketing solutions that increase revenue
and customer loyalty for merchants, banks, card issuers and loyalty programs. For merchants, Cartera
powers the industry’s largest card-linked advertising network that delivers targeted offers to more than
150 million consumers – including 65 million active linked cards – to help acquire and retain customers.
For banks, card issuers and loyalty programs, Cartera provides the industry’s most comprehensive card-
linked offer platform that powers personalized in-store and online shopping programs to build consumer
engagement, maximize card spend and create new revenue streams. Cartera’s platform delivers card-
linked offers via multiple digital marketing channels including Websites, online banking, email, mobile,
social media and browser apps. Three of the top four largest financial institutions, all five of the largest
airlines and thousands of merchant advertisers drive incremental revenue with Cartera’s fully-managed,
performance-based solutions. The company is headquartered in Lexington, MA and has significant
operations in Atlanta, GA. For more information, visit www.cartera.com.
About Cartera
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