Thursday, February 17, 2011

COD: Pushpins and the next generation of retail couponing

Thanks to the ad:tech blog for publishing this first.

Boy has the world of coupons changed. A few years ago, the coupon business was an all newspaper and direct mail business. And it was, quite frankly, a fairly quiet business. The recession of 2009 changed all that. NCH reported that in 2009 consumers redeemed more than $3.5B in coupons, up 30% versus the year before. Actual redemptions were up 23%, with the remainder of the increase made up in increased discounts.

While there was growth across all sectors, online distribution of printable coupons really exploded. Coupons Inc., the big Mama of the space, hit $1B in printed savings (there is significant drop off course, between printing and redemption) and that the growth rate for digital coupon distribution was 10 times higher than for print distributed coupons. One of the challenges for the Print distribution side of the business has been the decline in daily and Sunday newspaper circulation, which is likely a long term trend.

At the same time, we all know that many chains have adopted loyalty card programs. Many chains have now initiated a service whereby the consumer can visit a website and load their card with the discounts they like. Those discounts are then read off their cards when they go to the store.

A startup called Pushpins is trying a different approach – one that requires less premeditation on the consumer’s part. Using the Pushpins iPhone application, the consumer checks in when they arrive at the store, and then scans their purchases with their phones as they shop. The phone then shows the discount(s) that are available on that item, and the consumer taps them to have them transferred to their loyalty card. The app also enables you to send word of a deal to friends, and keeps track of your weekly purchases and total savings.

Here’s the sizzle vid:

Mind you, the platform is asking the consumer to add a step to their shopping process – scanning items as they go into the cart. The extent to which the coupon platform is successful will rely on consumer willingness to consistently take that step. Pushpins has an answer to this challenge: to drive consistent use of the platform, there is a points program that enables “top savers” to win prizes.

Pushpins ensures that a broader set of consumer types gain access to a discount. One needn’t be a “clipper” or a “printer” to get the discounts – rather they are made available as the user shops normally. In addition, as the consumer scans items, the app tells them about other discounts available on related items, like a jelly coupon if you are buying peanut butter.

As of this writing, the app works in more than 2000 stores including:

Tom Thumb

On a high level, this methodology appears to favor rewarding current buyers rather than attracting brand switchers and “deal prones.” Many have feared that traditional couponing approaches actually reduce brand loyalty by driving loyalty to deals rather than brands. Meaning that the deal prone thinks...I buy the cereals that offer me a buck off, and so forth. The flip side, of course, is that broad scale adoption of Pushpins might constitute “subsidizing your user” – the idea that you might be giving people a discount you didn’t need to in order to make the sale. But that negative characterization of this loyalty approach may be a vestige of a bygone era. In a transparent world, treating our loyal users right makes sense.

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