Data-Driven Personalized Digital Coupons for Grocery Stores

Published by Richard Vermillion, CEO, Fulcrum Analytics on December 8th, 2016

Much has changed since Coca-Cola introduced the first coupon in 1887, but still nearly all consumers (96%) use print or digital coupons today. The high penetration of coupon usage across a broad range of demographics offers great potential to the $606B US Grocery industry. Digital couponing – through web, loyalty cards, or mobile apps – presents an even greater opportunity. Grocers can target their coupons more effectively, down to the individual level, and make them easier for consumers to use, all while driving incremental sales, increased profit margins and improved customer satisfaction. Personalized experiences should be at the heart of any grocery store strategy as 39% of consumers report they would spend more if they received a personalized mobile coupon.

For grocery stores, there are numerous opportunities to profit from hyper-personalization, including:

  • Rewarding your best customers and protecting against losing trips
  • Driving customers into new aisles or into specific categories to expand share
  • Driving larger basket sizes with higher margin products
  • Promoting new products and store brands
  • Maximizing the impact of co-op dollars from CPG’s
  • Bringing back lapsed customers or saving at-risk customers
  • Protecting against competitive store openings and other threats

At the center of this opportunity is a challenging data analytics problem, requiring a modern big data platform. This platform must be able to do the following:

1.   Bring together massive data sets from different sources to overlay customer demographic and transaction history, real-time inventory, results from prior marketing programs and competitor data. This includes Twitter and other social feeds that are great sources of competitor data but are constantly changing. These data streams should be seamlessly integrated with proprietary data sources.

2.   Provide tools for rapid experimentation that leverage historical experiments and results, identify test groups, and recommend experiments that have a high likelihood of success. It must support multiple experiments in parallel while measuring outcomes instantly.

3.   Deliver coupons in near real-time because the opportunity to drive value can fluctuate hourly as inventory changes or as new competitor programs are discovered.

4.   Support individual and household-level learning. It should create and update promotional sensitivity scores, understand brand-switching receptiveness by category, calculate price sensitivity scores and channel preference scores. These scores can then be used to test and measure different promotions that are tailored to each customer.

Fulcrum’s Digital Fusion was designed for this purpose and with the capabilities outlined above. By using multi-level transaction data with modern data science and digital delivery techniques, grocers and other high-frequency retailers can design programs that support the fluctuating strategies and tactics of their business.

Fulcrum’s data science and application development expertise helps grocers create effective targeted digital coupon programs. We work with each grocer to understand the types of offers available and the mechanics of their existing loyalty programs. Our analytics engine optimizes the right set of coupons for each consumer based on historical transactions, online behavior, demographics, coupon availability, and item profitability. We then develop an application that integrates the offers into existing loyalty cards or mobile apps. Finally, we apply a rigorous test and learn framework so that our grocer’s couponing program keeps improving – increasing customer loyalty, store traffic, and bigger shopping carts. We’ve delivered results for some of the leading grocery chains in the U.S and can help you leverage your data assets to unlock new profit from a personalized digital couponing strategy.

For more information, contact us today.

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