By Brad Mild
We can all think back to a time when our parents would sit down with a Sunday paper, pull out the coupon insert and begin to snip out one promotion at a time. Then, they would place the clips of paper into a little envelope and set it aside for the next trip to the store. The whole process took at least an hour to complete only to be foiled by forgetting the envelope at home. Thanks to CVS the days of tireless coupon clipping are at an end.
CVS stores began to roll out interactive coupon kiosks in 2007. These intuitive red boxes scan a consumer’s ExtraCare shopping card and pop out a money-saving offer based on prior purchases.
Both CVS and the consumer benefit from this relationship. Kiosks entice consumers to share their shopping behaviors in return for personally tailored coupons, and their use increases revenue for CVS. It’s a win-win.
For customers, the red box meets two needs. It saves them money and time. Tailored deals save customers money on items they want to buy without having to look for coupons elsewhere.
This process can also be fun. The shopper does not know what promotion they will receive. All they know is that it will be relevant to their needs. The uncertainty behind each scan encourages customers to scan their card more often. This phenomenon is called variable ratio reinforcement. Can you say Vegas?
So what does CVS get from the deal? Data! They collect mounds of data on purchasing patterns. This info can tell marketers about trends in seasonality, time of day, recency of purchase, and the dollars spent. All of which can help in strategic and managerial planning.
However, that is only the icing on the cake. The major gain is the ability to automate decisions and test promotions instantaneously. A computer automatically decides on a promotion and offers it when the customer is in the mood to buy. If a consumer doesn’t use the coupon that day, the computer knows that the promotion was not relevant and it adjusts. Or, if they buy a product on a regular basis and then stop, the program will notice that trigger event and alert the operator.
The question now is whether CVS has the means to analyze this data. If they do are on the right path to understanding their consumer and meeting their needs. If instead they are letting the data rot they are missing out on a solid competitive advantage .
So the moral of the story is that win-win situations exist. With a little data marketers can tailor offers to consumers and increase returns.
Brad Mild is the Visual Communications Manager at Vitamin IMC and a student in the Masters in Integrated Marketing Communications program at Northwestern University's Medill School. He daydreams of wakeboarding in the early morning when the water is glass. He can be reached at mild@u.northwestern.edu
