Reward Delivery Options for Marketers
Reward delivery options available for marketers are physical goods, printed coupon, e-coupon, top-up of an existing account and advantage on suppliers own product, brick and mortar (physical stores) highly prefer physical goods and printed coupon for reward delivery, online marketers and service providers prefer e-coupon. Top up on existing accounts and rewards on supplier’s own products is preferred by multiple marketers.
E-Coupon Provider, Retailer, and Marketer: Engagement Overview
The e-coupon provider acts as a mediator between the marketer and the retailers by providing consultancy service to the marketer, they commit a minimum level coupon purchase with the retailers at a negotiated price carrying 15–20 percent discount on the face value. The profit of the e-coupon provider lies in the redemption rates, which is sometime guarded by insurance to mitigate the risk of over redemption. Sometime marketers may have a direct relationship with the retailers where the program is managed in-house.
- The e-coupon provider acts as a mediator between the marketer and the retailers by providing consultancy service to the marketer, they commit a minimum level coupon purchase with the retailers at a negotiated price carrying 15–20 percent discount on the face value. The profit of the e-coupon provider lies in the redemption rates, which is sometime guarded by insurance to mitigate the risk of over redemption. Sometime marketers may have a direct relationship with the retailers where the program is managed in-house.
The e-coupon provider goes to the marketer and analyses the marketer loyalty program in order to understand how many clients will be able to get to win the rewards. Most frequently, the e-coupon provider provides a consultancy to the marketer. They ask the marketer a target price for each reward and preferences regarding the type of e-coupon they wants to deliver.
The e-coupon provider then designs the delivery and redeeming processes to get a certain redemption rate of the coupons. The marketer pays for all the coupons delivered, regardless of the fact that the coupons are redeemed or not. In general, the providers can get a very good margin between the face value of the coupons and the price they pay by arriving to pay $20 a coupon with a face value of $100.
The profit of the e-coupon provider lies in the redemption rate. Some e-coupon providers can even buy insurance for over-redemption, and thus transfer their risk outside.The advantage for the marketer is to provide clients with a very highly perceived value at a very low cost.The advantage for the retailer is to have an immediate cash flow.
Other Sources of Income for E-coupon Provider
- Advertising fees:Marketers/retailers pay a fee to post a coupon.
- Subscription fees:Basic participation (for retailers and consumers) is free but additional services may be charged.
- Upsell:Consumers pay a fee to access the deals.
- Transaction fees:Consumers pay for a product or service and an undisclosed amount gets deducted from the transaction as revenue for the coupon company.
Benefits and Barriers of E-Coupon
- E-coupons cost lower as compared to physical goods or card-based program
- No storage and logistics cost
- Provides instant access to millennial generation
- Reduces the abandonment rates
- Content alteration
- Can be received online
- No waiting time and instant activation
- Rewards can be availed quickly without having to wait for long creates brand loyal and happy customer
- Simple and easy implementation, based on SaaS plug and play model
- Lack of experience and unclear process: The lack of experience with mobile coupons and unclear process at the store level
- Redemption Fraud :Lack of controlled redemption (ensuring that the coupon can be redeemed only once per customer), which opens it up for coupon fraud, including "buddy deal" abuse by store employees
- Contract Price Negotiation: Marketers should take into consideration that e-coupon providers cannot offer too low prices, otherwise they will design the redemption process in such a way that a very small number of participants will get to use the coupon. This will be a very frustrating experience for program participants and it will jeopardize the loyalty programme itself
Coupon Fraud Prevention
- Limit Viewing and Access for Online Coupons:Coupons should not be displayed in format that allows uncontrollable capture or access.
- Manage Value and Method:Free product or heavy discount coupons are main target for counterfeiters, these types of promotion should be distributed via a secured and controlled method.
- Use of Enhanced Security Features:Coupon Information Corporation (CIC) provides hologram this prevents to replicate legitimate offers.
- Use of GS1 Databar as Exclusive Barcode:Retailers systems can be programmed to reject the old UPC-A code that has expired and may be used on counterfeit coupons.
- Use Consistent Coupon Design Standards:Use of industry-standard design and few key features and designs makes it difficult produce coupons that appear to be compliant.
- Monitor and Address Online Coupon Sales:In case where coupons are being sold on certain sites a legal counsel contacting the site owner may prevent a foul play.
- Circulate Information about Counterfeits:Work to inform retail and clearinghouses about its existence co-ordinate with CIC to issue public service announcement and update file for retailers.