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UK Coupon Malredemption Coming to a Head

Posted by Russell Buckley on 06.11.07 | 1 Comment

In the course of my varied career, much of it was spent in the world of Promotional Marketing, working in specialist agencies and for quite a while, as a supplier to them. One of the issues that’s consistently been a big problem is coupon malredemption and it’s being raised by the UK Institute of Sales Promotion again, in a fairly aggressive manner. Indeed, the Chairman is threatening to gatecrash the giant retailers’ shareholders’ meetings in an effort to bring the spotlight on the iniquity.

Malredemption is where a retailer takes a coupon issued by a manufacturer in part payment by a customer, but where that customer hasn’t actually purchased the correct product. So, a customer might present a coupon off Kelloggs Corn Flakes, yet stick to their normal preference of Weetabix.

Naturally, many customers are more than aware of this lack of policing of coupons and blatantly use it just to reduce their shopping bills.

The ISP reckons that this currently costs the UK industry £60 million ($118 million) every year. And the losses are compounded by the retailers’ collective refusal to try and solve the problem. While policing manually in the good old days may have been challenging, with contemporary technology, it ought to be a doddle - unless the applicable product is purchased, no deduction is made. The customer doesn’t even need to be advised and if they are cheeky enough to appeal, they’re clearly in the wrong and word will spread.

One of the competitive pressures that might also be applied soon is Shop, Scan, Save that I meant to write about when it was announced in April and assuming all is going to plan will launch in August in 17,000 independent and smaller shops throughout the UK. Customers sign up by texting ‘JOIN’ to 62111 and thereafter are sent a weekly text message with special offers.

One of the problems these sorts of ideas invariably run into is the operational nightmare of having every customer at the checkout frantically trying to find the right offers in the right sms and holding up the queue. However, with this concept, the customer is sent a membership barcode to their mobile and then every week an sms containing a list of special offers. The membership barcode is then scanned at the point of sale and any coupons that apply to their membership that week are deducted, provided the customer has purchased the applicable product. In other words, malredemption is suddenly impossible.

The Shop, Scan, Save platform is also a learning one. As it learns what your purchases are and what coupons you’re thus using, it can tailor future offers to your preferences.

Given the malredemption fix, the likes of Unilever, P&G, Nestle and Mars have all signed up for the launch. And here’s the rub. If the Shop, Scan, Save system actually works (and extensive successful trials have already happened), it’s not unlikely that these big brands will simply stop issuing coupons redeemable in the giant retailers’ stores. I mean if one channel works and another quite obviously doesn’t, brands might just vote with their feet.

All this means that the mobile phone might result in the ISP Chairman not having to picket shareholders’ meetings for very much longer.

 

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