The Standardization of the Digital Coupon… About Time!

by sergiof

The first thing that we need to clarify is what we mean by a digital coupon. Although it might be obvious, here is GS1’s definition:

“A digital coupon is a coupon that goes through the entire coupon process (establishment and communication, presentation, validation, and redemption) without the requirement of manifesting itself as paper.”

At the start of 2012, GS1-AECOC launched their first White Paper about how a digital coupon should be generated in a standard format so they can be recognized by all players in the market; and in January 2015, GS1 and GSMA launched recommendations about the relationships between retailers, brands, and coupon generators for the distribution and massive acceptance of digital coupons based on GS1 standards. To illustrate, here is an example: imagine that you find a digital coupon published on the internet and you decide to head to your local supermarket. Even if the establishment did not generate the coupon, the supermarket should be able to detect whether the coupon is still valid or was used previously. Using the internet, the establishment should connect with the coupon generator and reach a conclusion. Ok great, now how is the coupon surrendered? How does the validation process for the coupon occur? What is the connection between the two parts? Until now, the main problem with creating coupons in supermarkets has been the POS’s hardware. Every time a new couponing platform appeared, the hardware of the POS also had to change to be able to read the coupon and identify the user of the coupon, a costly expense that the retailer would have to incur. The solution to this lies in Cloud Services. Cloud services, permit access to a virtual wallet, at any time and any place as long as the internet is accessible. This enables users to have their coupons stored and ready to be redeemed at the point of sale. With cloud services, two things need to happen in order to make this effective. On one end, an integration of the POS's software with the service and on the other end, the need for the user to identify himself/herself at the POS in order for the virtual wallet to understand where to send these coupons. This can be done in various ways. A loyalty card issued by the retailer (which is the most obvious), but also with a QR Code on the POS, a user identification number, or with NFC. A new world opens up for brands and retailers with these services. Until now the retailer was the sole owner of information generated at their establishments and the brand was left with out of the loop. For example, a brand sells x amount of pallets of a product to a distributor and doesn’t know where the products are sold or what the penetration is in the market. But now, with these new cloud services, the brand knows all the details about their campaign, where coupons were redeemed, and in certain cases even who the user is that redeemed the coupon. Lastly, they can understand what channel is best suited to target and which is the most profitable. For the retailer, there are also great advantages: the activity of all coupons stays registered electronically, there is no fraud, payment deadline reconciliation is minimal, they may reduce the staff required to control the process, they bring discounts to their customers, and also take advantage of a very innovative digital branding strategy. Undoubtedly, by 2016, we will begin to see various players taking advantage of the standardization of digital coupons in the market. Retailers will attract a huge mass of consumers and revolutionize digital investments made by brands. Of course, all that remains is showing the users the digital coupons so they can utilize them, but that’s another story….   Para leer el artículo en Español haga clic aquí.