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Discounts And Downturns: The Power Of Digital Coupons On Consumer Spending

May 8, 2020 Melissa Ledesma

Shutterstock_503761186 Coupon Purchase Order Discount Concept

Consumers want products now, and they want them for less. 133 years after Coca-Cola launched the first coupon, promotional discounts continue to evolve as an effective and enduring marketing strategy for all industries — from travel to CPG. In 2019, 31 billion digital coupons were redeemed by consumers worldwide. Current economic conditions and unemployment rates could accelerate the growth in coupon use. 

Consumers Are Cashing In On The Power Of Digital Coupons

Digital coupon use among U.S. consumers has been steadily growing since 2015. From 2015 to 2019, digital coupon use among consumers increased by 22%. According to the 2k19 Valassis Coupon Intelligence Report, 92% of survey respondents confirmed use of discount codes and coupons at least once in 2018. In 2019, major promotional discount offer sites such as Slickdeal, Groupon, eBates and RetailMeNot generated an average of 32.6 to 68.4 million website visits each month. The surge in coupon use is not expected to slow down, either. eMarketer projected the total number of adults redeeming coupons in the U.S. could grow to 145 million by 2021

Brands And Consumers Embrace Coupon Promotions During Economic Downturns 

History shows that, when times get tough, brands often invest in coupon promotional strategies. During the Great Recession, the number of coupons redeemed by U.S. consumers rose 27%  from 2008 to 2009, ultimately exceeding 3.3 billion. During that time, coupon distribution volume was extensive and aggressive.

Savings-oriented tactics, like coupons, when deployed correctly, can help brands connect with new customers, spur trial, discourage cart abandonment, increase brand loyalty and encourage positive consumer sentiments and emotions. During economic downturns, especially, consumers often prioritize brands that deliver the best value for their money — often equating value with affordability, savings and economizing. Principal Analyst for eMarketer, Mark Dolliver, said, “Economizing will become standard procedure if the coronavirus crisis continues to roil financial markets.” 

Coupons And Savings Offers Have Major Impact On Customer Acquisition

Shutterstock_510647677 Young happy woman with laptop and credit card making online shopping

Savings and discount promotions can encourage consumers to try new products and services, create happiness and stimulate reciprocity among consumers. The rush of securing a discount can emote feelings of satisfaction and accomplishment. Whether it’s a promo code for free shipping, “buy one, get one” deals or an offer that reduces overall transaction totals, the use of coupons can contribute to a key consumer sentiment, “getting more value for your dollar,” according to eMarketer. The availability of discounts and perception of cost versus value can guide consumers to one product or brand over another. The concept of saving through the use of discounts can also cause consumers to increase the frequency of their shopping and their average order value per transaction. Incentives can be strong motivators for shopping behaviors. 

No Industry Is Immune To The Desire To Win A Discount

Retail is not the only industry experiencing coupon use among customers. In fact, consumer-price consciousness has led brands in nearly all verticals to promote special deals, discounts and savings offers. Consumers seek deals on everything they can purchase,  including streaming services, airline travel, electronics, groceries, dining and fashion. Even luxury beauty brands, which were once considered “immune to discounting,” have noticed more consumers seeking deals when preparing to buy. No matter the income bracket, consumers expect seamless shopping experiences and demand flexibility, affordability and optionality. 

Younger Generations Are Heavy Users Of Physical And Digital Coupons

Millennial and Gen Z spending and shopping habits will continue to draw the eye of marketers. In 2018, more than half of all Gen Zers (over 18 years old) and Millennials surveyed by the eMarketer Ecommerce Insights Report described the importance of discounts and coupons as “very important” to their overall shopping decisions. According to the 2k19 Valassis Coupon Intelligence Report, from 2018 to 2019, there was a 42% increase in Millennials that “always use coupons.” Millennial parents are a particularly active segment of coupon users. More than 90% of Millennial parents surveyed claimed to visit social media sites, store websites, search engines or savings blogs to capture promo codes, coupons and savings offers related to their daily purchase needs and desired products and services. 

COVID-19 Could Be The Catalyst For The Next Surge In Coupon Use

Over the past decade, frugal habits for some have grown to become saving obsessions for others. TLC’s show Extreme Couponing premiered shortly after the end of the Great Recession, and its popularity indicated shifts in consumer culture. According to retail data technology Inmar Intelligence, price incentives offered by many brands supported increased coupon redemption during the effects of the last financial crisis from 2008 to 2011. Consumer spending behaviors amidst the coronavirus could mirror those of the Great Recession. 

Shutterstock_1722988366 Happy hipster man in medical face mask use laptop for online shopping from home. Young man shopper in protective face mask hold credit card in hand. Computer for internet purchase, COVID-19 quarantine

The immediate effects of COVID-19 in March and April led to a decline in physical store shopping trips and an increase in bulk buying. With increased grocery spending came a rise in coupon use. Compared to 2018, digital coupons redemptions in March 2019 were up 56.4%. According to Progressive Grocer, enrollment in digital coupon programs from top grocery chains recently surged 93% compared to the prior year. Inmar Intelligence Director of Business Intelligence, Charlie Gage, noted in the company’s recent press release, “Now is not the time for CPGs and food retailers to back away from promotional activity. In fact, there is an even greater need to provide savings options for consumers to have them keep coming back for their essential items. It is important for retailers and CPGs to engage with shoppers and meet their demands for savings and digital solutions.” As unemployment remains near record highs, more consumers may be looking for ways to stretch their budgets to get their essential daily products, like groceries.  

Brands Must Be Cautious Not To Discount Their Brands

While coupons have the potential to grow customer acquisition and customer retention, when coupons become prolific, consumers can start to expect them. Smart coupon, discount and promotional strategies keep an eye on motivation to buy and measure reasons for cart abandonment. Although coupons can be used to encourage purchases, the expectation of deals can also discourage consumers from ever buying at full price. A sophisticated discounting strategy evaluates long-term consumer behavior to ensure the discounts are subsidizing the right behaviors and not discouraging purchases. Likewise, although discounts have become more common for luxury brands than in the past, it's important for brands to understand why consumers prioritize some brands over others. If expensive prices are part of the cache of a brand, discounts could have a long-time negative impact on brand perception even while resulting in short-term sales gains.

As consumers continue to navigate these challenging financial times, digital marketers have an opportunity to deploy innovative online campaigns promoting savings offers. Including coupons in marketing strategies for the remainder of 2020 could help digital marketers foster relationships with new customers and further develop brand loyalty with their current customers. The brands that will come out ahead of the economic downturn will likely be the ones who help their consumers by making everyday life more affordable. Savings incentives combined with flexible payment options and frictionless omni-channel shopping experiences could be defining factors that shape consumer ecommerce expectations and build brand loyalty for years to come. 

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About the Author

Melissa Ledesma

An innovative problem solver by nature, Melissa Ledesma is both experienced and passionate about the digital marketing industry. She has held a number of high-level positions within the real estate, mortgage, entertainment and digital advertising industries, including Director of PR and Business Development at NJ Lenders Corp. and Director of Communications & Government Affairs at Eastern Bergen County Board of Realtors. As Director of Content & Communications at Digital Media Solutions (DMS), Melissa demonstrates a strategic, creative and tactical approach when handling the thought leadership programs and marketing and communications efforts for DMS and its family of brands. She manages all conferences, sponsorships and event execution and plays a pivotal role in the creation of written, digital and video content for all campaigns. Melissa has consistently positioned the team at DMS as experts in performance marketing across multiple industries.

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