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2 How to make voucher promotions pay Better, more cost-effective customer rewards for multi-unit retailers People love incentives, so they re great for customer acquisition and retention but they also need to make financial sense for your business. That s why a smart digital voucher system should be part of your retail strategy. In this eguide, we explore: The benefits of a personalised voucher-offer system for multi-location brands How to harness the system s capabilities to deliver an effective and measurable customer promotion strategy Using the system s technology to test which offers work best for your businesses

3 Encouraging and rewarding your customers Vouchers have been a popular way for businesses to motivate brand loyalty for a very long time. In fact, it s thought Coca-Cola led the charge in the late 1880s, with a coupon for a free glass of Coke. It was mailed to the public and featured in magazines allowing the company to claim soon after launch that their drink was enjoyed throughout the US. In the 21st century, the traditional paper voucher has been increasingly replaced by a digital version to use via smartphone or tablet, usually received via or text message and often redeemed by scanning a QR code at the point of sale. This is a sensible move for businesses, especially bricks-and-mortar brands with multiple outlets, as research shows that over 60% of all adults use smartphones (Adults Media Use & Attitude Report 2014, Ofcom) a trend that s still growing fast. Evolution of the coupon: Traditional paper vouchers are being replaced by digital versions. On the surface, a digital system seems simple. Step 1: Customers are excited to receive a voucher and head to their local outlet to spend it at the soonest possible opportunity. Step 2: They redeem their reward via smartphone. Step 3: They have a great time and tell all their friends and acquaintances. But, of course, humans are human. Many customers see a voucher offer in their inbox, then get distracted and forget about it. They might need to collect it from a website, but have forgotten their username and password. Or, once collected, they might save it in a safe place on their device and forget where or that they ve got it at all. So, a successful digital voucher system must aim to eradicate these risks and make it as easy as possible for customers to receive, save and use their vouchers and also encourage them to share the opportunity with others. This is where clever design and strategy become really, really important, especially if multi-location brands also want to monitor how vouchers are being used by whom, what for, where and how often. With more people than ever using mobile devices, a thoughtfully devised digital rewards system is indispensable for retail and hospitality brands page 3

4 Making voucher promotions efficient and profitable CE has developed a Rewards Hub system, which we use on behalf of several clients with multiple outlets to manage voucher distribution and track how customers use them. Unique user codes known as UUIDs (universally unique identifiers) are assigned to each person in a brand s marketing database, meaning that linked website content and the vouchers themselves can be personalised for individual customers. The use of each voucher can then be monitored, providing useful strategic insights. The best voucher promotion systems are simple and straightforward for users, but highly intelligent underneath Benefits for your consumers Our personalised Rewards Hub system is easy and super-accessible: When a customer receives an , one simple click will take them to get their voucher They don t need a username or password, as the web page they land on is already personalised based on the they received No repetitive requests for personal information or additional registration Personal information is kept safe, as UUIDs are used rather than transferring detailed individual data All available offers and rewards can be viewed in one place If a voucher is lost, it can be quickly and easily resent via upon request Vouchers can be shown immediately on a smartphone or tablet screen, which means they can be acted on as soon as they re received Extra bonus rewards can be triggered by redemption Future offers may be based on data collected from previous redemptions meaning tailored rewards for each customer Vouchers can still be printed if preferred, but a simple design minimises use of printer ink page 4

5 Benefits for your business As such a user-friendly system, Rewards Hub helps to acquire and retain customers but also does much more, including: Real-time tracking of vouchers, from issue right through to redemption producing data that can be measured against sales figures for clear analysis of return-on-investment Tracking of specific offers, marketing strategies, advertising sources or creative campaigns so you can discover what s most effective Providing customers with a premium digital experience, thus increasing goodwill towards your brand Minimising costs, as voucher codes are only provided to customers who request them Segmenting vouchers dependent on the source of customer sign-up i.e. advertising or seeding thus allowing tracking of different channels to measure effectiveness Personalisation of vouchers using customer data such as name, birthday or demographic profile making offers even more appealing Reminding customers of offers by automatically resending vouchers to those who haven t yet used them Split-testing of s featuring different voucher codes, to test which are most effective Quick boosts for sales via targeted or responsive voucher promotions especially to sell particular items, or at specific times of day or week Easy to add time limitations to encourage faster voucher uptake A quick method of offering vouchers as a goodwill gesture to resolve a complaint or acknowledge feedback A system which queues up voucher requests to be dealt with in bulk, serving a high volume of traffic as quickly as possible page 5

6 Measuring return on investment When Rewards Hub is integrated with a client s point-of-sale system, or even its data simply merged with the business s sales data, it can yield real-time reporting detailed enough to determine the return-on-investment delivered by an individual voucher. A firm baseline of comparative data would allow for comprehensive analysis of each promotion and, with it, the ability to: Improve the performance of campaigns to increase voucher take-up and redemption Analyse the effect of supporting activity run across other channels Calibrate the best opportunities for return on investment (ROI) page 6

7 Rewards Hub optimising the voucher landing page for Harvester Headline & copy Message to reassure user that their voucher is on its way. 2. CTA buttons Clear calls-to-action to encourage redemption and sharing, driving users further through the online customer journey. 3. Banner video Video banner showing the brand experience to help motivate action. 4. Local outlet Page personalised to the customer s local restaurant, for a relevant and consistent user experience. 5. Reward boxes Additional offers still available for the individual user, with descriptions, images and countdowns to drive take-up. page 7

8 Case study: Harvester which offers work best? Our Rewards Hub is also extremely useful for informing future strategies. For example, our client Harvester wanted to discover which was more effective: a discount offer, or a buy-one-get-one-free (BOGOF) offer. What we did A selection of 38 Harvester outlets was divided into two, with half allocated a 50%-off deal and the other half allocated a buy-one-get-one-free (BOGOF) deal Relevant s were sent to recipients subscribed to each outlet, split by allocated offer Customers who had requested their voucher but hadn t used it in the final week were automatically sent a reminder This activity was supported by flyers at all selected outlets, encouraging direct website visits to the Rewards Hub. Plus Within the same experiment, we wanted to discover whether brand promoters people who actively advocate Harvester and visit often still used vouchers despite being sent a single-choice offer; a free ice cream sundae (instead of a 50%-off or BOGOF deal). And finally, we wanted to learn how easily we could maximise the attention and goodwill captured by the voucher offer to obtain customer satisfaction data, so: Upon voucher redemption, a triggered invited users to complete a survey Upon survey completion, a triggered offered users a bonus offer voucher page 8

9 the results The campaign performed very well, driving 6,000 customers into restaurants to redeem vouchers. It also showed us that the buy-one-get-one-free offer was more popular with users than the 50%-off offer; and it obtained 769 entries of valuable data via the survey. In detail: The 50%-off and BOGOF offers attained respective conversion rates of 39% and 45% (compared with a benchmark conversion of 33% for a 5-off campaign run earlier in the year) The offer for brand promoters performed less strongly than the others, showing that offer quality is an important factor a valuable insight for planning future campaigns Of the total number of customers who redeemed the offer, 13% completed the survey (769 people of whom 16 redeemed the bonus offer) page 9

10 Another reward system we admire... Tesco Supermarket giant Tesco uses a concept known as Tesco Lifestyles, a segmentation and modelling system based on customer shopping behaviour. Its data is derived from the use of Tesco Clubcards, a reward system whereby members swipe cards when they pay for their shopping, earning points which are frequently converted into reward vouchers. Each card has a unique code, which feeds details into the system about the contents of customers shopping baskets. This enables the retailer to identify trends and groups. Tesco is now issuing digital vouchers to its 11m Clubcard members, sent by and immediately redeemable. Formerly, it would take five days for customers to receive paper coupons, but the digital system achieves the same in two hours so it s no wonder 50% of members choose the digital system within two weeks of joining. This new system also achieves operational savings and reduces the risk of voucher fraud, due to using unique codes and secure redemption methods. page 10

11 Three challenges presented by digital voucher promotions Digital voucher systems must be carefully managed and considered as part of a wider strategy, as dovetailing with other marketing channels will maximise opportunities and results. 1. Acquisition costs Every time a voucher is issued and redeemed, there s a cost (around per voucher) which could be expensive for brands with large databases. CE s Rewards Hub triggers s only to people who opt in, instead of sending vouchers to all subscribers. Example: The cost of issuing vouchers to 24,000 people upon request would be only 72, as the average click-through rate of marketing s in the restaurant sector is 2.4%. Conversely, the cost of issuing vouchers to a full 1m-strong database would be 3, Encouraging subscriptions To get vouchers, people need to sign up and provide data so it s vital to make sure the user journey is as attractive and simple as possible. You don t want people to get halfway through and feel discouraged by a cumbersome process. 3. Customer reliance on offers If too many incentives are offered, customers will get into the habit of waiting for the next one, instead of also visiting in between (for a standard experience). No system is perfect but handling the pitfalls well will give you an edge over your competitors page 11

12 Voucher promotions the essentials If you re considering a digital voucher system, here s your to-do list. Use it wisely. Dovetail with other strategies Make sure your voucher code campaigns are fully integrated into your marketing strategy, including offline elements like press and point-of-sale marketing. Every other channel can feature a call-to-action i.e. sign up online to get a voucher (with website address supplied). This creates a truly joined-up, cross-channel campaign. Also integrate with payment systems If your voucher promotions are redeemed through your point-of-sale system, you ll have better control and visibility of them. With efficient, accurate reporting, you ll also have a much better handle on your return on investment. Collect and use data through analytics If you ve got the data, make good use of it. Analytics can tell you which campaigns and strategies are successful and which are failing. So focus on what s working for you, learn from your campaigns and continuously improve by focusing on the results you ve obtained. Prioritise the data Not all data you get is useful, so identify and prioritise what s important for you. Analyse (regularly) and modify It s often not enough to simply look at results once a campaign has finished. Use real-time results to influence your approach by dialling up or dialling down promotional activity by channel where necessary, depending on how your campaign is tracking. Set yourself goals Setting yourself goals and realistic key performance indicators (KPIs) at the start of each marketing campaign is crucial. Without these, how do you know when you ve done a good job? You need a case to support the goals you ve set; and a full understanding of why you ve set them. As you roll out more and more campaigns, these KPIs will increase in intelligence. page 12

13 See your strategy all the way through Once you ve decided on a strategy, don t stop midway. See it through to completion and use what you learn. This way, your users will know that you re consistent. Be mobile You simply cannot afford to ignore the growing use of mobile devices. Everything you do should be easily accessible to a mobile audience and actively encourage them. Research from Google suggests that mobile users are more focused than desktop users, with a majority of searches resulting in conversions; and often very quickly. Know your target audience Don t segment for segmentation s sake. Think about your audience and what will resonate with them; adapt your communication (i.e. content, mechanic) accordingly; and test everything to truly understand the benefits in your segmentation practices. Study your competition Your competitors are probably already using digital reward systems. Take a look at what they re doing and try it out from a user s perspective as well as watching out for published results. It may help you consider ways to expand upon your current activity. page 13

14 points to take away Consider how to make your voucher delivery easy and appealing for your customers. Collect data and analyse it, to inform future campaigns. Experiment with different offers and measure the results. Identify your priorities and set realistic goals. Watch what your competitors are doing. Dovetail with your other channels and systems, including point-of-sale. page 14

15 For more ideas and insights on engaging your customers online, try the following free eguide: Preparing for a new age of digital relevance For more ideas and insights on engaging your customers online, try the following free eguide: How to increase engagement How to make voucher promotions pay by Matthew Bowell (group account director), Adam Cox (lead developer) and Liane Baddeley (content specialist) Let us know your thoughts by ing matthew.bowell@connectingelement.co.uk or join in the conversation on social: For more eguides and our regular blog posts, visit our website.