Last month I put together a series on coupon use and consumer behavior. You can catch the three part series here #1 Coupon Sites More Important as Economy Swings Down, #2 Online Traffic to Coupon Sites increases, #3 Coupon Sites becoming increasingly important.

Internet Retailer released post Q4 information that I think adds even more food for thought for companies thinking of working with coupon sites and coupons in general.  From their article: “21% of Top 500 e-retailers added coupons and rebates in 2008, according to data published in Internet Retailer’s 2009 Guide to Retail Web Site Design & Usability. Of the Top 500 retailers, 335 said they deployed coupons and rebates in 2008, up from 278 in 2007.” More retailers are using coupons and discounts, not only out of necessity but out of the need to stand out.

“The addition of coupons and rebates reflects a growing trend among web retailers focusing on ways to stand out among competitors in a tight economic period, says Betsy Emery, CEO at Tellus, a Cincinnati-based retail web site design and planning company. “Coupons and rebates are good examples of the trend toward giving consumers a very concrete feeling of measurable value in offers being made,” Emery tells Internet Retailer. “Retailers are testing physical and virtual coupons. It’s almost like a multivariate testing approach to see which form works best.””

Read the rest here.

Beyond coupons, over 24% of retailers saw in increase in user generate content such as customer reviews.  Email a friend and social networking saw large increases as well.  Interestingly enough a wish list feature on retailers’ sites saw a decline.  Some things work some don’t.

I hope to see you at the summit next week!

In the previous two posts in this series I outlined the change in consumer behavior as they look for more sales and discounts this holiday season as well as the migration of their purchases to online coupon sites. It’s a bit obvious that as the economy goes down, consumer change their behavior and spend less on the products they buy. More and more merchants will be discounting more (this is also a good time for manufacturers to find greater efficiencies so their products cost less).

I polled the top coupon sites in our affiliate industry on their traffic over the last year as well as consumer behavior. The results were very interesting and backed up the reports from the last two articles. Was it incredibly scientific? I’m not sure the questions were perfect or the size of the field surveyed was complete enough, but it does give us some good data, in my opinion.

Survey Results

90% of respondents have seen an increase in traffic to their coupon site since the economy started its downward spiral.  54% have seen traffic grow by 25%, and 18% saw in increase of over 100%!  But that may not be entirely the economy as one respondent pointed out: “Some of the increase could be due to normal Q4 increases and some to Google algo changes but overall things are up over most of 2008.” There may also be natural increases on an individual basis due to offline advertising and other factors, but the trend is still important to take note of.

90% of respondents have heard from their site visitors specifically that they are changing their shopping behaviors to shop more at coupon sites because of the crumbling economy.  As one respondent commented: “Absolutely, more users are asking about how long such services as coupon sites have been around. As if they have been missing something. Also, in general a new consumer that refuses to purchase without getting a coupon or at least knowing they got a good deal.”

Not surprisingly, 100% of those participating in the survey said that having your brand on a coupon site does not diminish the brand’s perception in the eyes of the consumer. I expected this exact response from this group (coupon sites). Their reasons for this should not be discounted (get it, discounted, we are talking about coupons, discounts and sales  lol):

• “I think there are very few merchants that this applies to. Great customer service and quality products are what distinguish brands.”
• “But just like not all brands are equal, not all coupon sites are either.”
• “The economy has dictated for a merchant to be successful they need to think about pricing.”
• “People come to my sites to try and get a better deal, they associate MY brand with discounts, not the store’s.”
• “Almost every company offer deals. If you’re company is very high end, then you can offer gift with purchase in place of a traditional coupon. This is what a retailer like Tiffany does.”

I asked if they have seen a shift in demographics of users to their site.  Most did not collect this info, but of the ones that did, this was the most intriguing answer: “it seems order sizes average a bit smaller and higher-end brands are not moving as well.” One would expect that luxury brands would not be doing well as consumers shift their behavior to discount items or at least to shopping with only a coupon or during sales.

So maybe you have read this and want to work with coupon sites but you don’t have the ability or authority to give site wide, standard coupons.

Coupons don’t have to be site-wide, large discounts.  Charles Brown, Co-chair of the Promotion Marketing Association’s Coupon Council stated in a CNN.com article in October: “It’s an individual company strategy. Some may be promoting discretionary items that might not be purchased if a consumer is economizing.” As some merchants are brand sensitive to couponing, not wanting to offer coupons that they feel may discount their brand, there are other ways to take advantage of the trends outlined.  “I think that what we’re seeing is a behavioral change in the consumer that could have lasting effects. If you shift buying patterns and enjoy benefits of doing that, you will likely continue in that pattern,” he said. “For the marketer, it’s an opportunities to bring in more customers and get them to try new things.”

• Offer coupons where you don’t lose margin.
• Offer coupons on products that are not moving or are in your clearance section.
• Simply use the products in your clearance section as the content for your coupon partners.
• Many merchants offer at least free shipping, that is enough to work with these sites and can add quite a bit to your bottom line. (It’s not perfect but may enable you to offer them something to get them started)
• Loss leaders - does your company stock products that they lose money on solely to gain the customer?  Promote these products to your coupon affiliates.
• Offer a small discount on your top items.  Product specific coupons are great ways to gain customers.
• Offer one-time, new customer only coupons.  I haven’t seen anyone do this right yet, but it’s been attempted.  To make it work, your shopping cart must be able to identify the customer and whether they have been shopping with you before.  All in the cart.  That can be difficult.

Coupon affiliates - what other ideas can you give to merchants?

Overall, I hope this series has shown that you can’t outright dismiss the importance of this group of affiliates.  They drive an incredibly amount of sales, many are incredibly responsive, professional and really good people.  Many of them I consider close friends and leaders in this field.  Often times you can engage these affiliates in your couponing strategy and they can provide you with some great information and ideas.  Afterall, they work with your competitors and they know what converts.  They may prove to be very valuable partners.

What do you think?

1st Blog in this series

2nd Blog in this series

Yesterday I explored the somewhat obvious change in consumer behavior as the economy continues to slide.  I was listening to the radio today and, I can’t recall which show, but they reported that the GPD shrunk .5% last quarter.  One more quarter of shrinking GDP and we are officially in a recession.  And that is driving users online in larger numbers and driving them right to coupon and discount sites.  Below is what I’ve found to back that up.

Consumer’s Online Behavior

In February of last year, as the economy worsened, ComScore reported an increase in coupon site traffic.  “The number of page views on Web sites that feature money-off coupons for all manner of consumer products surged 38%, to 281 million, in March from a year earlier, compared with 5% for the Internet as a whole, according to comScore (SCOR). Those visitors spent a total of 145 million minutes on the sites, a 37% increase. While the number of new users to coupon sites isn’t growing faster than the larger Internet audience, existing coupon site users are certainly becoming more active. “User engagement by deal-seekers appears to be ramping up,” says comScore analyst Andrew Lipsman. “As a general rule, something like online coupon site activity would increase as a result of macroeconomic trends.”“  Makes sense doesn’t it?  And from what I heard from my coupon affiliate colleagues, their traffic is up considerably as well.

“Visitors to Coupons.com, a decade-old site that lets users print coupons that can be redeemed in stores, grew 35% in the first three months of 2008, compared with the prior quarter, says the site’s CEO, Steven Boal.” Wow, a 35% increase in the 1st quarter over the 4th quarter of the year prior.  That is pretty significant.

Business week weighed in on traffic increases to coupon sites as well earlier this year.  Thanks to Michael Block for sharing this information:  “traffic to sites focusing on coupon offers has increased a whopping 38% from March 2007 to March 2008; compared with 5% growth for the Internet overall. They aren’t just going more often, people are spending more time on these sites - also up 37%.“  That increase was before our economy really got bad, or at least we realized how bad it was getting.

This summer, Hitwise released some very intrigueing data that shows the trend of more traffic to coupon sites continuing.  For the same week in June, coupon site traffic was up 56% over last year.  ““Rising gas prices and tightened budgets have many consumers using the Internet to help save money while shopping online and off. Retailers can entice purchases by making discounts available to price-conscious consumers as the cost of living continues to increase,” said Heather Dougherty, research director at Hitwise. “While discretionary income is shrinking for some households, consumers are still shopping online, but making sure that they find the best deals.”“  I think that is one of the key findings from this report.  Consumers are still shopping, but they are using coupons sites more and more to be sure they get the best deal.  The brands that are not there don’t get the benefit of this comparison and shopping.  US searches, during the same time, doubled compared to last year and that trend just keeps increasing.

In October of this year,  Entertainment.com announced in a press release:  “Entertainment.com usage has risen more than 50 percent in 2008 as consumers scramble for savings.” “Nationally, coupon usage has risen 72 percent in just the past six months, according to a consumer poll released in September by online marketing company Prospectiv.”

But wait there is more:

Lenka Keston of CouponWinner.com and SurfMyAds.com reported in eBizine.com on October 16th: “CouponWinner.com, a website that streamlines and publicizes the marketing capabilities of online coupons, has seen a 110 percent increase in traffic during 2008. The consumer is discovering the personal money-saving power of e-commerce, so retail companies need to explore new ways to monetize that power in order to stay competitive.”

There are more examples of this going on than I care to put here, otherwise this post would take four hours to read.  But it is clear that whether it is 37%, 56% or 110% increase, consumers still want to have a merry Christmas but are going to coupon sites in much larger numbers to do their shopping.

It is becoming increasingly important to participate on these websites and take care of these partners.  It’s not so much about branding anymore, it’s simply about sales.  If you are where the consumers are, they will shop with you, if not, well then a better placed competitor will get the chance to close the sale.

Tomorrow I’ll explore some ways merchants can provide creative coupons and some of the findings from my short and unscientific survey of the top coupon sites :).

Read my next post in this series.

This has been a pretty tough year for our economy.  It seems that every headline is worse than the last and every industry is asking us, yes us, to bail them out.  I’ve met, and know, so many in my area that are effected by the slumping economy, either with jobs lost or just general business downturn, it can be tough to swallow.

As we get geared up this week for Black Friday, Cyber Monday and the beginning of the Christmas and holiday shopping season, I wanted to dive into consumers’ behavior and how it is changing over this difficult time.  My thought was that more consumers are, and will be, shopping with coupons and more and more web traffic is going to these type of sites, the coupon and discount shopping affiliates.  What I learned, the more I researched, was that consumers are doing just that.  They continue to spend, but not without researching their purchase through coupon sites.  They want to make sure they get a deal.

I have broken my findings into three posts this week in hopes to get you all ready for Friday.  The first post, today’s, is reporting what I was able to dig up on consumer’s behavior.  The second will be published tomorrow and discusses the trend of of increased traffic to online coupon sites and gives some ideas for unique couponing strategies.  The third will release some data from a survey I conducted by polling the top coupon affiliate sites on the net and provides some of my recommendations for merchants.  Coupon sites will be more important to your online distribution the farther down our economy goes and I hope you get a lot out of this series.  So let’s dive in…

Consumer’s Changing Behavior

As recently as a few days ago, Anne D’Innocenzo, an AP retail writer, reported this:  “Americans have slammed their wallets shut since the financial meltdown, and the future is looking downright scary for stores across the country and the whole U.S. economy.” Some more less than encouraging statements:

“The recent data has been startling: For the third quarter, consumer spending fell 3.1 percent, the worst performance in 28 years. Sales at established stores for October were the worst since at least 1969. The slump is continuing into November: Macy’s says it expects a decline of at least 10 percent this month.  Even those with appetites for Prada and Gucci aren’t immune. Among the hardest hit are luxury stores. Saks Inc. and Nordstrom Inc. reported same- store sales fell at least 10 percent. At Neiman Marcus Group Inc., the drop was nearly 27 percent.” But how is this effecting coupon use and what changes are consumers making to combat this downturn?

According to the Wall Street Journal, this year was the first year coupon redemption did not decline.  For the last 15 years coupon redemption has fallen each year.  As our economy prospered, less and less coupons were redeemed.  But not anymore.  Last year it held steady.  Does this show a general trend in purchasing behavior?  How does this relate to online retail?

RetailMeNot commissioned Harris Interactive in March of this year, prior to the economy really taking a downturn, to conduct a survey on consumers’ shopping habits during a recession.  In that survey they found that 54% of adults would decrease discretionary income during a recession and 63% of consumers WILL NOT make a purchase if they cannot find a deal.  From their press release: “Coupons are a household staple for many Americans–the survey found that the vast majority of adults (86%) have used coupons and/or discount codes while shopping. However, this figure may soon rise as the economic slowdown prompts many consumers to reevaluate spending behaviors and place a higher priority on budgeting and deal-seeking. More than one in three adults (37%) said that, during a recession, they would increase the use of coupons and/or discount codes; among women, the figure was even higher at 43% (vs. 31% of men). Retailers have an opportunity to bolster sales and preserve customer loyalty by rewarding savvy shoppers with discounted merchandise.”

In another survey done by Principal Financial, and reported by Inc.com, more than half of the respondents said they were cutting back on spending due to the economic environment.  That was in June, it’s only gotten worse since.  “That has many Americans eating out less, relying on generic brands and clipping coupons in efforts to save, the survey found.”

RetailMeNot again worked with Harris Interactive in October to release this report.  In it they confirm their first results (since we are arguably in the first quarter of a recession): “nearly half of online adults (45%) plan to spend less money on gifts this holiday season compared to last year given the current state of the economy and one in five plan to spend significantly less.“  They also reported that 19% will shop during Black Friday deals, 44% will shop at discount stores, and 37% will shop online to save gas.

The Washington Post reported that coupons are now coming back in favor.  “With wages not rising as quickly as the cost of basic necessities, coupons are back in favor after many years of steadily declining popularity, experts said.“  … “Were we not in this economy, we probably would be looking at a slight decrease again,’’ said Matthew Tilley, co-chairman of the Promotion Marketing Association’s Coupon Council and director of marketing for CMS. “There’s definitely an increased interest to use coupons for savings by consumers.’’

It’s being widely reported that consumers are shifting their buying habits.  As the articles I referenced above point out, more and more consumers are no longer purchasing a product without researching to ensure they have the best deal.  They are using coupons in larger numbers, purchasing items without them less frequently and generally planning for a prolonged downturn in the US and global economies.  But consumers continue to shop, that is the good thing.  They continue to plan to spend money this Christmas, but are doing it more wisely and making sure they have a discount prior to making that purchase.

But how does that relate to online coupon sites and merchants’ participation there?  I’ll explore how traffic to these sites has been increasing dramatically and how merchants can, and should be leveraging this shift to weather the storm in my next post tomorrow.

2nd post in series - Consumers flocking to coupon sites.