Coupons: Six ways you get segmented

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I’m not a coupon junkie. In fact, I feel like a coupon victim. Hardly a day goes by that I don’t get an avalanche of offers from:

  • Email.
  • Snail mail (in catalogs, flyers, coupon books, etc.).
  • In-store flyers.
  • Mobile apps.
  • Store checkout.

The vast majority get tossed in my garbage (uh, I mean recycled) or deleted. Some of them are so off target that I know the vendor is using a shotgun approach – blast everyone. Others, the ones that are spookily clairvoyant, get saved. Depending on my budget (or lack of willpower, truth be told) some get used for purchases that I’d actually been considering.

How did they know what I was thinking about buying? The answer for successful retailers is the science of coupon optimization.

Retailers around the world collect millions of customer data points every day, but most don’t use the hard-won insights buried within their databases. The smart ones are using their terabytes of customer data to grasp useful insights. Customer analytics is what enables them to identify profitable opportunities that otherwise go unnoticed.

Here are the ways that retailers are placing me in buying groups:

  • Recency: how recently I’ve shopped with them.
  • Frequency: how often I shop.
  • Monetary: how much I spend and how profitable the items I buy are for the retailer.
  • Lifestyle: things I’m likely to purchase based on geographic location and income.
  • Life stage: if I’m a first-time homeowner or preparing for retirement.
  • Price consciousness: do I buy the best or the cheapest?

With the proper tools, all of the data about me and the segments I belong to are tracked analyzed and the result is highly targeted, highly effective offers.

In coupon optimization, mathematical formulas are used to maximize results for a goal such as revenue, redemption rate or number of printed coupons. Each of these goals leads to a different outcome. Some future-thinking retailers are also using these type of optimization decisions to shape their merchandising choices.

To learn more about coupon optimization and how customer analytics tools are being used by leading retailers, read this free white paper:  Improving Retail Decisions with Customer Analytics.

Photo by jridgewayphotography // license by creative commons

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Jeff Alford

Senior Editor

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