Shortages, Inflation Spur New Mix of Paper and Digital Couponing

If you ever watched an episode of the reality TV show “Extreme Couponing,” you know that coupon clipping is serious business for price-conscious consumers and the brands offering them the discounts they demand.

Largely due to fears instilled in millions during the earliest days of the pandemic, the coupon business is undergoing a digital shift, but it’s also retaining a paper attachment when beneficial.

Harking back to 2020, Bill Beyea, senior advisory services manager at Inmar Intelligence, said, “For the first time in many people’s lives, they were facing out of stocks. It was something new.”

Suddenly, people who wouldn’t normally have thought twice about walking out of the store with one pack of toilet paper were looking to stock up. As the pandemic moves into its third year, Beyea noted we’re still seeing random shortages of products — cream cheese over the holidays last year, for instance — as the global supply chain struggles to regain its pre-pandemic footing.

Add an inflationary environment to the mix, and it’s easy to understand why couponing is gaining a bit more cachet.

“It creates a situation where customers are saying, ‘If I get an offer that’s asking me to buy more of this stuff, I might want to stock up on it while I can and buy a little more than I normally would, because it may not be there tomorrow,’” Beyea said. “If you give me the right coupon, I’ll buy more of this right now while I can and save some money.”

But even as they benefit from an uptick in activity, brands are finding themselves at a crossroads where they must decide what to discount — and how best to integrate those discounts into their couponing mix.

Saying it’s unwise at best to push out discounts on scarce items, he said, “What happens if you don’t? Shoppers who can’t find your product might buy something else, or it gets too expensive, and they switch to a cheaper alternative. What’s going to happen is certain brands [will] have to temporarily stop promoting because of these issues.”

Fortunately, digital and paper couponing are proving a valuable combination to combat some of these challenges by helping brands put discounts where they count the most — right now. Additionally, more of them are using data to crack the code on how couponing can help them achieve their targets for moving product as intended.

While non-digital coupons are still an important part of the mix, Beyea said they have limitations in terms of the data they give brands and retailers about shoppers — they cast a wide, though imprecise, net.

Digital-load coupons, by contrast, can deliver data at nearly every point in the customer journey. They appear on the retailer’s website and mobile app, and when customers decide to use them, they’re logged into the point of sale system and associated with their loyalty accounts.

That’s where digital couponing is headed, with a paper receipt trailing.

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Various Forms of Targeting

While Sunday newspapers and freestanding inserts (FSIs) of coupons, and numerous other traditional paper methods are still in use, they don’t connect the usage data to the individual shopper, Beyea told PYMNTS.

“Why that’s important is for brands who want to target and be able to do things like … be able to see that I’ve reached a certain type of person, or I want to deliver things to certain type of person,” he said.

Conversely, digital couponing is a “mostly positive” development for consumer packaged good (CPG) brands, because it gives them a new way to engage with digitally savvy shoppers. It also provides an opportunity to mine the shopper data for retailers where they’re running promotions — for instance, to find shoppers who’ve never purchased their product, but buy others in the same category.

“Let’s just say you’re a soft drink brand, and you want to buy people who only buy other soft drink brands and not yours, or people who used to buy you but haven’t in the last six months,” Beyea said. “The data can be pulled, looked at and those shoppers can be identified. They can’t see you or me, but they can see this group.”

Crafting a discount or promotion with this kind of precise goal and data to match is revolutionizing the old-timey coupon clipping craze into a digital spend management trend.

“The people who are redeeming are going to be your target audience,” he said. “It was much harder to do anything like that historically. Traditional coupons have to be processed.”

And though digital is easier or takes less manual effort than traditional promotions, Beyea explained that couponing shouldn’t be totally frictionless: You don’t necessarily want to just deliver discounts automatically and lose out on an opportunity to build brand awareness.

“With the traditional coupon, you had to go find it somewhere and cut it out of something or peel it off something, carry it with you to the store or find it in the store,” he explained. “Now you’ve got to find it [online] and click it. I think most brands usually want someone to take an action.”

It’s data by another name, and it is crucial to designing the next promotion.

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Crafting Promos for Shopper “Phases”

Recalling how at a prior job, his morning coffee purchase at a nearby grocery store would invariably spit out an offer to subscribe to The Wall Street Journal, Beyea said, “They were looking at it and saying somebody who’s coming in here at 8 in the morning and buying a couple of things, they’re probably on their way to work, it’s a business-type individual who might want The Wall Street Journal.”

That’s employing more digital insight than many basic paper coupons, but the industry can do better.

“Those types of offers are interesting because there is targeting capability there,” Beyea said. “But then that coupon is given to you at the point of sale. It’s a repeat thing, come back and get this on your next trip, versus a coupon that someone may find while they are planning or in the store.”

The digital transformation of grocery shopping is creating some unique promotional challenges for those brands where the in-store phase is critical. With many shoppers now making some or all of their grocery purchases online and then having them delivered or picking them up curbside, there is a specific type of purchase these shoppers are making less often: It’s the impulse purchase, the item you saw while roaming the store and threw in your cart.

Many brands engage with promotions on the shelf in order to stimulate these impulse buys, and online shoppers are going to miss these attention-getting promotional tactics.

“You don’t necessarily see the box of Twinkies, or beef jerky or whatever, all the candy bars and impulse stuff at the checkout” when shopping online, he said. “Brands face new challenges in some cases where they have to get creative and think of other ways to promote.”

On the upside of couponing, however, Beyea said sought-after demographics are emerging as the new extreme couponing crowd.

“Millennials have the highest numbers for both paper and digital coupons,” he said. “We saw 82% of millennials say that they used a digital coupon at least once and in the last few trips, and 72% said they used a paper coupon, while Gen Z was 74% digital and 60% paper.”

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