Digital Coupons to Explode in 2014

Coupon trends are moving toward mobile delivery

Coupon trends are moving toward mobile delivery

Do you or your clients employ a coupon strategy for customer generation, new product trial and/or awareness?

If so, you’ll want to hear about the latest coupon trends just released from NCH Marketing Services. NCH is a coupon tracking company under the parent of Valassis – a leader in coupon distribution and measurement.

All data in this blog post references 2013 coupon activity, unless otherwise noted.

After a banner year in 2010 where a record 332 billion coupons were distributed in the U.S., 2013 came in at 315 billion coupons from all product categories. The total for 2013 represents the second highest year for coupon distribution over the past six years, showing a trend that consumer packaged goods companies (CPG) are devoting more attention to enticing consumers for trial or repurchase of their brands.

In 2013, non-food products coupons showed the highest growth of all coupons distributed in the U.S. In fact, 9 of the top 10 consumer products coupons distributed were non-food related. Top 3 in order of distribution volume are #1 Hair Care, #2 Shaving Needs and #3 Detergents.

It’s not surprising the good old-fashion paper coupon is by far the leading source for coupon distribution. FSI or free standing inserts accounted for over 91% of all coupon distribution in the U.S.

In terms of redemptions, people still love to bring the printed coupon to their favorite retailers. Nearly 51% of all coupon redemptions were from the free standing insert.

In 2013, a trend in offer characteristics stood out. The total average face value of coupon offers increased by nearly 6%, from $1.53 in 2012 to $1.62 in 2013. However, where product manufacturers handed out higher discounts, they reduced the amount of time to redeem the coupons from 9.3 weeks in 2012 to 8.6 weeks in 2013. This may have contributed to nearly 30% of people saying they did not use their coupons because they expired before they had a chance to redeem them.

Walmart remained the #1 retailer for coupon redemptions, followed by Kroger then Target. Two traditional drug store chains made the top 10 list of redemption places – Walgreens placed #5 while CVS placed #6. Bottom line – consumers look for discounts at all their favorite retailers, from mass merchandisers to their corner drug store and favorite grocer.

The NCH report also showed approximately 40% of all consumers in 2013 used more coupons than the year before. The main reasons for increased coupon use were from the obvious “I like to save money” to “I enjoy using coupons” to a more telling sign of the current economic conditions “I need to stretch my budget” and “Gasoline and food prices have increased”.

Finally, NCH measured which coupon delivery method generated the highest redemption rate. Across the board, instant on-pack coupons offered a nearly 22% redemption rate of all coupons in 2013, the highest rate of all distribution methods. It is surprising the instant on-pack redemption isn’t higher, however, some people never use coupons and some people may not have noticed the coupon. The actual reasons would be interesting to know. However, this wasn’t measured.

Digital coupons are on the cusp of a major explosion in the coupon market. Although they account for less than 1% of all coupons distributed, the category in general experienced double-digit growth in 2013. Digital coupons include print-at-home, mobile, social and loyalty card downloads. As social media sites continue to promote content sharing and smart phone apps continue to evolve and grow, coupon use through mobile devices will catch on and erode the print coupon experience.

One caveat however is the ability for retailers to scan mobile coupons. Our current research on digital coupons revealed that most grocery chains do not have mobile enabled scanners at their registers. This lack of technology upgrade will hinder the initial growth of digital coupons however it will be interesting to watch how fast the technology changes over as consumers become more technically savvy on their smart phones seeking easier ways to download, store, share and redeem coupons.

Click here to reference the NCH 2013 Year-End Topline Coupon Facts Report

Contact Capstone Media for guidance on your upcoming coupon development strategy!