Sunday, October 12, 2008

'The Promotional Pundit:' More On the Online Coupon Fiasco: Tesco Fresh & Easy's Marketing Department to Launch A New Online Coupon Early Next Week

In my column on Friday, I wrote about Tesco Fresh & Easy Neighborhood Market's marketing department and how it's taken its eyes off the marketing ball by testing the use of its first online store coupon as part of its attempts at viral or online marketing and promotions.

Just click on the headline: 'The Promotional Pundit': Keeping the Marketing and Promotional Eye On the Ball; Fixing A Promotional Fiasco Fresh & Easy Isn't Even Aware Of, to read my Friday, October 10 column.

The Promotional Pundit has now learned Tesco's Fresh & Easy plans to issue a new online coupon early next week, most probably on Monday or Tuesday.

The planned new coupon is to be $6-off of total purchases of $30 or more. It also will have an about three week shelf-life (expiring in three weeks) rather than the four day shelf-life of the coupon I wrote about in my October 10 column. That online coupon was $1-off purchases of $10 or more.

Because of the limited shelf life (four days) and the limited value ($1-off) on that online coupon, we're told very few if any of the online coupons were actually used by customers at Fresh & Easy stores, which tends to be the primary objective of issuing a coupon in the first place.

Fresh & Easy's corporate marketing department meant the $1-off coupon as a test. However, a four day shelf-life isn't really a decent test period. Two weeks -to- four weeks, maybe -- but four days is essentially a waste of effort.

Additionally, since the coupon was only publicized on the Fresh & Easy corporate marketing department Blog and on the Fresh and Easy site on, the potential audience --an audience that only had four days to discover the online coupon -- is rather small. And that's being generous

An online coupon test needs to have the time to get enough potential consumers aware the coupon exists in order to make the conclusions of the test meaningful. In this case the lack of meaningfulness of the test was clear: It's hard to find one Fresh & Easy store where one of the online coupons have been redeemed.

To put it another way: If you put an online coupon online in a very limited way and nobody sees it, did you really put an online coupon online at all?

Of course, even though the test was a non-test, it appears Fresh & Easy's marketing department figured out two important things: First, that the $1-off purchases of $10 or more isn't enough of a value; and that an online coupon with only a four day shelf-life isn't likely to get much play.

Therefore, the new online coupon set to come out tomorrow or on Tuesday will have a substantially higher value -- $6-off on purchases of $30 or more -- along with a much longer expiration period -- three weeks instead of four days, according to my sources.

I suggested both in my Friday column, although I'm not suggesting that column was even read by anybody in Fresh & Easy's corporate marketing department.

Fresh & Easy has been using its famous $5-off purchases of $20 or more paper coupons for nearly a year now. The grocery chain continues to use them. The paper coupons are distributed via direct snail mail and given out in the stores.

It appears the retailer's marketing staff has decided to make the new online coupon in line with that offering, tweaking it a bit by increasing the online coupon's value by a buck in return for shoppers having to spend ten bucks more ($30 instead of $20) to be able to obtain the coupon discount.

This is interesting because Fresh & Easy Buzz has been writing for months about the $5-off-$20 coupons, which represent a 25% deep discount when used on grocery purchases of $20.

One of the things the Blog has written about over the last months is that if Fresh & Easy is going to use such margin-killing, deep-discount coupons, it should at least raise the dollar amount of total purchases required to redeem the coupon. The reason being that at least that way the coupons would serve to help increase the stores' total market basket size or average ring, at least theoretically. If shoppers have to buy $30 worth instead of $20 worth of groceries to redeem the coupon that means every order in which one of the coupons is used is at a total sale of $10 more.

It appears Fresh & Easy's marketers have decided to do just that with the new online coupon coming out next week.

Instead of the 25% savings a shopper gets when using the $5-off coupon on a $20 purchase, with the new online coupon, the shopper will get 20%-off a $30 purchase, which saves the grocery retailer 5% in terms of margin loss in the case of $30 purchases.

Theoretically it also increases the average online coupon users' -- compared to the average $5-off paper coupon users' -- market basket size or store average ring by $10. (The amount the shopper is required to buy to use the coupon and the resulting increased overall dollar sales per order for a given store.)

Of course, the $5-off coupons on purchases of $20 or more aren't going least not completely yet. The online $6-off purchases of $30 or more coupon is merely an online test, and will be in addition to the $5 off paper coupons still being used by the retailer. But the Promotional Pundit believes the test is in part a way to figure out how to eliminate the everyday use of those famous $5-off $20 purchases coupons. Hint: it's already happening.

The Promotional Pundit also believes the $6-off online coupon on purchases of $30 or more is a far better launch than the $1-off coupon scheme was, particularly because the duration of the online coupon is three weeks rather than four days. It appears somebody might actually have thought this one through a bit, which is a good thing.

In fact, the three week online coupon duration is about what I suggested in my Friday column. I also suggested the value of any further online coupons need to be increased. That they need to be more than $1 to have any impact.

I wouldn't have jumped from a $1-off coupon to a $6 off coupon personally, The differential is too high. It's also a bit eractic. But since very few consumers saw the first $1-off coupon, and few if any of the online coupons were redeemed in Fresh & Easy stores, that aspect is really a moot point.

However, in the larger marketing scheme of things the question remains if offering coupons worth 25% and 20% off respectively is good business for Fresh & Easy at all? After all, the stores are positioned as being everyday low price discount markets. Should that marketing and positioning be in need of a boost to the tune of 25%, like the aggressively-used famous $5-off paper coupons have been doing since the first stores opened last November and December, and continues to do today?

Of course, with both the $5-off paper coupons and the new $6-off purchases of $30 or more online coupon set to launch next week, the hope (by Fresh & Easy corporate) is that shoppers will use the coupons but purchase far more than the minimum of the $20 or $30 required to redeem them therefore making the discount less and the margin hit to Fresh & Easy Neighborhood Market far less than 25% or 20%.

Since it's difficult to only spend $20 or $30 at the grocery store today, even if a shopper is just picking up a few basics, there could be some merit in that hope. But even an average of say 15% overall in the reduction of margin from the coupon use is a tough margin hit for any food retailer.

There's also the danger, in the case of having used the $5-off purchases of $20 or more coupons for so long, as well as in such an aggressive manner, that many Fresh & Easy shoppers will stop shopping the stores once either the value of the coupons drops significantly (which has to happen eventually) or they are eliminated altogether.

Regular and aggressive price discounts like deep-discount coupons are a double-edged sword for a grocer. On the one hand, they can work well if used on a limited basis to generate new customer trial; as a way to introduce shoppers to the stores. That's what a promotion is after all. Special and not ongoing. They also can work well in a limited way as a reward mechanism; to reward regular shoppers for their business. For example a promotion like this: "Spend $50 on Sunday October 12 at any Fresh & Easy store and receive a coupon good for $6-off your next $50 purchase at Fresh & Easy."

However, used too aggressively and too regularly, such deep discount coupons become the norm to shoppers. They mentally build the discounts obtained from using them into their mental calculus (shopper psychology) of how much they should be paying for groceries at the store that uses them so frequently. Because the coupons are used all the time they stop having their promotional value.

Reduce the value of the coupons significantly or eliminate them and those customers mentally determine they're paying more than they should for groceries at that store, even if the fact is the everyday prices at that store are among the cheapest in the market, for example. The result is many of these shoppers will either stop shopping at the store completely or will reduce the amount of groceries they buy at the store (decreased market basket), spending the difference at a competitor's store.

Think about it in this simple way: A grocery chain "trains" shoppers over say a year to save a considerable amount of money at its stores by using deep-discount coupons. The shopper does so and is pleased with the results. Then, as all grocers must do unless they raise the everyday prices of the items in their stores, that grocery chain significantly lowers the value of the coupon, say by 40-50%. From let us say $5-off purchases of $20 or more to $3-off purchases of $20 or more and then two months later to $2-off.

Following that reduction they eventually eliminate the deep discount coupons all together as a regular tool and instead only periodically offer a 10% or 15%-off value coupon, say maybe four times a year for a three week duration each time. [Most U.S. supermarket chains don't even use these types of coupons at all, except maybe for a two week period once a year for a special event. And deep-discount positioned grocers like small-format Aldi or Sav-A-lot don't use them at all. The reason being the point of a deep-discount grocery retailer is to put everything into having low everyday prices in-store -- everyday.]

Does anybody really believe shoppers won't notice the drop in the coupon value and the eventual elimination of the deep-discount coupons? That now instead of regularly saving 20-25% on the groceries purchased at their Fresh & Easy store you now only get the opportunity to save 10-15% a few weeks out of the year?

Since Fresh & Easy has been using these $5-off coupons regularly since the first stores opened, the expectation they will continue is rather strong among shoppers. Just ask Fresh & Easy store employees, who I believe are the retailer's number one asset, about the various reactions some customers have when the store doesn't have any of the $5-off coupons to give out in-store.

As a result, there is a danger of losing a significant number of shoppers. This is particularly true of customers who might have made the store their primary shopping venue because of the deep discount coupons. Take away the coupons and they go searching for another store they think offers better value. Perception is reality in the mind of a consumer after all.

Deep-discount tools like the $5-off and $6-off coupons aren't marketing. Rather, they are promotions. It's always good to keep that distinction in mind. And promotions must be special and irregular to have promotional value. Turn a promotional tool like a deep-discount into an everyday thing and it loses it promotional value.

New online coupon distribution and promotion

I would also expect the Fresh & Easy team would broaden how the new online coupon is promoted online when it's launched next week as well. For example, instead of limiting it to a brief post on the corporate marketing Blog and on the site (both are fine just not enough), I would expect the online coupon to be displayed in an dominant place on the Web site, which the first online coupon was not. The only way you could find out about the first coupon was via the Fresh & Easy corporate marketing Blog or on

Also, why not send out a press release about the online coupon? Fresh & Easy corporate sends out at least one press release each fortnight (every two weeks) even if the release has no news value attached to it.

I would expect to see a press release regarding the new $6-off online coupon since it has some news value attached to it. Plus, even if only a few publications pick the release up, it's still free media and would add to the number of consumers who become aware of the online coupon's availability, which is the point of doing it isn't it -- to create users of the coupon?

There also are numerous other ways to promote the online coupon online using social marketing sites and techniques. But we will stop offering suggestions here. Instead we look forward to seeing how Fresh & Easy's corporate marketing team handles the launch of the online coupon next week.

One more thing though. The thrust of my Friday column wasn't a put down in any way of Fresh & Easy's experiment with the $1-off online coupon. In fact, if your read the column, you will see I said I liked the idea, just that the execution failed and their was no follow-up. By the way, failed execution and lack of follow-up are two sins of marketing that in real marketing-driven companies usually result in at least a trip to the woodshed -- and often far more.

Rather, the thrust of the column was about how Fresh & Easy's marketing team led by marketing director Simon Uwins took its eye off the ball by not deleting the September 25, 2008 post on Mr. Uwins' company marketing Blog, which announced the coupon, after the coupon expired just four days later. It's been two weeks since the coupon expired and the post is still up, directing people to the Web site page where they can get their free coupon, not.

If you read my Friday column and go to the Fresh & Easy corporate marketing Blog, you will see that very September 25 post at the top of Mr. Uwins' Blog. There hasn't been a new post since. On that post is a link to take you to a place on the Fresh & Easy company Web site where the online coupon is located. However, when you click that link and arrive at the Web site, instead of the $1 coupon you are looking for you get a message telling you: "Sorry the coupon has expired."

You also will see in my Friday column the comments on Mr. Uwins' Blog from three not so happy people who did what was asked of them, reading the post and clicking the link, only to be told they were out of luck in getting what was promised them, which was the online coupon. Fresh & Easy Buzz also received a few emails from readers complaining about the situation in the same way the three commentors on Mr. Uwins Blog complained.

In my Friday column I published three comments (out of a total of six comments that existed on the post that day) published on Mr. Uwins' marketing Blog by unhappy people about the way Fresh & Easy has handled the online coupon promotion. Guess what? today, just two days later, there are more. There now are 11 total comments on that post on Mr. Uwins' corporate marketing Blog. All but one of the five new comments are negative ones about the online coupon fiasco, from unhappy consumers.

Below are those four new negative comments (as of Sunday evening, October 12) from Mr. Uwins' September 25 post which announced the online coupon promotion:

1. Hydeman family said...
We shopped almost every other day at the F&E stores in our neighborhood, but since the exit of store coupons, and the unavailable online coupons, it has been a month since we have been back. We love F&E but are also on a super tight budget...since you don't honor other coupons, we are at a loss! Please make the online coupons available or bring back store coupons. Thanks for listening, take care.~Jenn Hydeman - Arizona
October 7, 2008 9:27 PM

2. LISA IN ARIZONA said...
October 8, 2008 8:29 PM

3. Anonymous said...
I agree with many here, on-line coupons would be nice, especially updated so they are not expired. And did I read right??? No more coupons given at the store????? Nooooooo!!!!!!! Please bring them back, please, please, please :)
October 10, 2008 11:16 AM

4. Romeo said...
When will the coupons be online and not expired?
October 12, 2008 3:39 AM


Fresh & Easy trying to eliminate the now 'overly famous' $5-off coupons

Notice the comments above from the Fresh & Easy store customers about being unable to get the $5-off purchases of $20 or more paper coupons at the stores? Good. Now scroll back up a bit and read the paragraphs I have in italics a second time. [Yes, that's why they in italics.] [Note Jenn Hydeman's comments above. She is refering to the fact Fresh & Easy stores do not accept manufacturers coupons like all other U.S. supermarkets do.]

Tesco's Fresh & Easy is attempting to dramatically cut back on the number of the $5-off $20 or more coupons it gives out, especially at store level but also via direct mail as well.

In fact, Fresh & Easy has eliminated giving out the coupons completely at some stores, along with mailing them out to customers in various store neighborhoods, just like I wrote would happen in my column on Friday and just like Fresh & Easy Buzz has been saying would happen since about March of this year. Part of the thinking behind the grocer's experimenting with the online coupons is that they can replace the regular use of the $5-off paper coupons, using the online versions less frequently of course.

And its not just the consumers above who are unhappy and restless over being unable to get coupons in the stores they mention. I have reports from numerous stores the situation is the same.

Keeping the marketing eye on the ball

In my column on Friday I suggested a simple solution Mr Uwins' could have made sure happened to avoid all this consumer angst over the online coupon fiasco. That solution: simply delete or have deleted by a marketing staffer the post in his Blog the day the coupon expired. Then delete the coupon from the website as well.

The Promotional Pundit doesn't believe in marketing or promotion by offending, which is what the marketing team at Fresh & Easy is doing with this issue.

We would hope for the sake of the consumers and customers, Fresh & Easy takes the five minutes required to delete the post on the corporate marketing Blog and the coupon on the website when the new online coupon coming out shortly expires in three weeks.

The first credo of marketing and promotions is, after all: "First thing, do no harm."

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