In My Words… by Fred Neil

February 26, 2009

Coupon Innovations: SMS Push Strategy Being Used By Kroger

Filed under: CRM, loyalty marketing, Marketing, mobile marketing — Tags: , , — fredneil @ 6:54 pm

Finding Coupons Online Has Increased to Stretch Grocery Budgets – WSJ.com.

Getting the right coupons to the right customers can mean the difference in surviving or not surviving in these difficult economic times.  You must use customer data to make it happen.

At a time when consumers are cutting back on spending, and trying to make that which they spend go much further, Kroger is once again embracing innovation and technology to sustain its leadership position in the grocery space.  It is no surprise that Kroger continues to deliver stellar results to its shareholders as they always find ways to surprise and delight their customers by embracing and activating change.

Mobile marketing and SMS are something which many companies have talked about, but Kroger is one of the companies doing something about it which will pay dividends.  It is not just about activating a mobile strategy, but activating the right mobile strategy.  Kroger has been testing an SMS push strategy for the deployment of its coupons and will soon be rolling it out.  The coupons are pushed to customers via SMS, which are then loaded to their loyalty card for easy in store redemption.  This avoids the hassle of having to clip and carry paper based coupons and creates customer stickiness.  There are some exciting things Kroger can do in a later phase of their roll out, including pinging customers in store as a reminder to purchase the items that have received coupons for.  Additionally, they can add other cross sell promotions based on behavior and shelf adjacency.  Kroger has been brilliant in their strategies and innovation, thus I am fairly certain there will be many more advancements in this strategy, without over complicating the process or confusing the customer.  It is always best to crawl, walk, run.

The statistics for electronic coupon usage and redemption suggest this is a strategy that more companies should begin to incorporate into their marketing mix and loyalty programs.  Today online coupons only represent 1% of all issued coupons, but their usage is growing rapidly and redemption is up 140 percent year over year.  The key to increased redemption is less about the channel and more about the relevancy.  Those companies who are beginning to embrace electronic coupons are advocates and converts to one to one marketing.  Kroger is a leader in the grocery space, which can be attributed in large part to the effectiveness of their loyalty and couponing strategy, which will further be enhanced by the convenience of electronic deployment.  As smart phones become more pervasive, shoppers will be able to build their lists on their computer and push it to their phones and match items to eCoupons, or do it directly on their phone like my wife (but unfortunately we do not live in a state which has Kroger or other sister brands, thus we don’t get the benefit of participating in their loyalty program).

Kroger has embraced the power of customer data and continues to innovate their business, embracing technology to connect directly with their customers in a relevant and one to one manner.  This is not just a win for Kroger, it is a clear differentiator with Kroger customers who have often said that Kroger really knows their shopping habits and continually delivers relevant coupons based on what they buy, rather than being like most other grocers and retails who subscribe to a one to many saturation approach for their coupon programs.  A third critical participant and winner in this strategy are the CPG companies who work closely with Kroger, participating in the couponing matrix strategy based on customer behavior.  This is another success story, worthy of another blog post at another time.

My hat is off to Kroger for its continued innovation and continued belief that customers should be at the center of the decision making process.  Through their key partnership with dunnhumby, a global consultancy that has perfected the practice of using customer data to drive insights which lead to action, Kroger has continued to differentiate itself with its customers, winning greater share and delivering an impressive string of year of year earnings growth which they have directly attributed to how they have embraced their customer data to drive insights which have reshaped their strategy!  In these difficult economic times, more than ever, data is king and more companies should take a page out of Kroger’s playbook.  It is not acceptable to cut marketing budgets across the board or cut programs you do not like, but rather a triaz of your customer data should be performed to determine where you are getting ROI for your spend and where you can prove value.  This is not a time for keeping pet projects with soft benefits which cannot be proven as meeting a clear and measurable objectives.  We are entering into a new marketing era where accountability is more essential than ever.  A lot of what worked in the past, or could be sold as having value, is either not working or at risk.  This is not a short term situation, thus as marketers we must be strategic, accountable and put customers at the center of our decision making process, using the rich data that sits in our databases.

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