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Store Operations

Rate of Redemption

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A  number of retailers offer coupons and special offers online, but few actually know how effective the coupons are at driving business in their stores. Tracking click-through or redemption rates for coupons offered on websites other than those owned by the retailer can be difficult.

That was the problem at True Value Company. Since 2007, the cooperative had been running promotions in which $5 off coupons were offered on purchases of $25 or more. Customers printed the coupons and redeemed them at independently owned stores. The coupons were sent to a fulfillment house and then forwarded to True Value’s corporate office, which reimbursed the store owner for the cost of the offers.

The ads ran on several True Value-owned home improvement websites as well as Facebook; banner ads with coupons also ran on a number of independent home improvement websites. The goal was to attract young, first-time home buyers.

True Value knew that customers were printing and redeeming the coupons, but they didn’t know how effective individual campaigns were — what type of stores had the biggest coupon redemption, and which websites had the greatest success in getting customers to print a coupon.

Putting coupons in the right hands
“We had trouble tracking the effectiveness of the online offers,” says Michael McCann, director of consumer marketing for True Value. “When we offered coupons in print newspapers and magazines, we had an effective means of tracking where the coupons were coming from and how effective each coupon placement was. But we didn’t have the same ability to track and manage our digital coupons.”

After completing the RFP process, True Value chose a tracking service from RevTrax. Using RevTrax, True Value can evaluate the best sites for placing coupons and which sites are not generating a significant volume of new purchases.

Part of the value of using a tracking system is evaluating the redemption rates on a store-by-store basis. “After each campaign, we want to look at where the coupons are being redeemed,” McCann says. For example, if the analysis shows that coupons from some websites are being redeemed more often at urban stores, it will consider other websites that might attract more rural customers.

True Value also wanted to track the ticket size of coupon redemption to see if coupons printed from certain websites had a higher ticket value than others. It found that its coupon redemption program does increase ticket size: Purchases without coupons average about $40, while purchases made as part of last year’s digital coupon program averaged about $46.

The corporate office is currently evaluating the results of its spring 2011 campaign and will look at the results of a fall campaign before deciding if changes are merited in terms of coupon placement for 2012.

“We want to give this some time to gather enough data,” McCann says, “but the results will help us decide where to place our advertising online for 2012. This helps us be more educated about what we are doing with coupon placement and helps us make sure we are getting our digital coupons in the hands of the right people. We were already able to track our print coupon placement — this helped us do the exact same thing with digital coupons.”

The impact of digital media

While investigating possible solutions, True Value found RevTrax “to be one of the easiest to implement,” McCann says. “We did not want to tie up company time or resources implementing a tracking program. And RevTrax also was the closest to what we wanted in terms of what it could track for us.”

Tracking digital coupon redemption at physical stores is something few retailers have a good handle on, says RevTrax COO Seth Sarelson. While many spend a lot of resources tracking the impact of digital promotions on their online retail sales, “Few retailers understand the impact of digital media on their bricks-and-mortar stores.

“They don’t understand the effects of things like paid search, e-mail and social media,” he says. “They spend a lot of money sending out e-mails and placing promotions online, but do not have a good feel for how those promotions get customers in their stores, what customers are buying and what kind of lift the promotions bring them.”

RevTrax is working with about 100 large national retailers to track the effectiveness of digital promotions on in-store sales. The True Value program was particularly interesting because it involved a cooperative: The fact that the stores are not owned by the corporate office that controlled the digital promotions made them especially challenging to track, Sarelson says.

RevTrax can also track mobile promotions. In these cases, customers are e-mailed coupons that they redeem by waving their phones over a special barcode reader at the point of sale. If the barcode reader is not equipped to read smartphone codes, the clerks can view the promo code shown on the phone and type it into the system. The tracking system works the same as for printed coupons.

“We see this as part of the evolution of digital promotions,” Sarelson says. “Our clients are beginning to look at the ratio of online vs. in-store sales and they realize that for every dollar they see in online sales as a result of a digital promotion, even more dollars are being generated in their in-store sales. But until now, they had no way to track how effective these digital promotions were on their in-store operations.”