This Weeks Clue: Couponing
| Category: Online Payments | Date: 2003-12-04 |
Many ideas Ive advocated since the Web was spun - HTML e-mail, daily news feeds, and compensation for personal information among them - have become a living reality online. One big idea, however, has not yet been adopted at all, and its time to consider why.
That idea is couponing. The concept is that information leading to a sale deserves its price. When someone has learned all they need on your site to make a purchase, they should be able to download a cookie-like file which, when presented to the target merchant, gives the buyer a discount. An equal discount is then given the site offering the coupon, for enabling the sale. If the coupon gives a buyer 10% off on a $300 purchase, in other words, the site the coupon came from earns $30.
There are close analogs to this concept online. Amazon.coms Associates program is one. If you buy a book through a direct link from an associated site to Amazon, the associate gets 15%. The problem is the purchase must be a direct link. If the buyer makes the link, hesitates, then buys later, theres no payment. (Many associates complain bitterly about this.) Firms like Direct Coupons also offer something like grocery store coupons, but the coupons arent worth much - theres no profit to a small site in it.
The problem is, of course, that the path leading from interest to purchase is complex, and the complexity of that process increases with price. If the issue is a can of soda, brand makes the connection. (Especially if, as Robert Woodruff of The Coca-Cola Co. put it, "every can of Coke is the same as any other, anywhere in the world.") For a book, recommendations and reviews are important. For a car, you also need a close comparison of features, and a lot of price shopping, especially when it comes to the money used to buy the car. For a semiconductor that will go into a million toys, theres a rigorous process, and price is paramount. If the same semiconductor goes into a Boeing airplane, the process is equally rigorous, but other factors dominate.
Every purchase proceeds along its own path, making it hard to break down. Yet in the name of seeking and managing sales, businesses spend roughly 50 cents on every dollar they take in. The budget items are marketing, fulfillment, and customer service. And the Web, unlike all other media, can do all these things. The Web can prospect, pitch, cajole, transact business, fulfill orders and deliver support after the sale. Its potential as a medium lies in its doing all these things.
Why havent editorial Web sites captured their share of this money flow? There are some good reasons. Many manufacturers have taken these functions into their own sites. Others prefer to capture all this value for themselves and for their customers, using brand advertising to bring people inside the tent, then closing on price. As weve seen with the Amazon concept, making the direct link between editorial matter and purchases can be awkward. Most important (and this is a bad reason), journalists are taught to be divorced from commerce - the closer association needed for coupons to work is considered sacrilegious.
But just because few have tried something over time, and theres stubborn resistance to a complex idea, doesnt mean the idea itself is invalid. I submit its more valid than ever. (Now that Web software is available for managing complex supply chains and sales chains , the argument of complexity should go away.)
So break down the commerce equation. Use deep links to bring all the elements together before your targeted niche market. Ask your users to help, by letting you know how they arrive at purchase decisions within your niche. Then take your evidence to your vendors. Point out how, for a little give on price, they can generate X amount of profit from your users. Then, when you get your first deal, track the results thoroughly (coupons are cookie-like files, remember?), and use those numbers on other vendors. Its a long, winding road, but remember this. The proper mix of biased, unbiased, and trusted information is what leads to sales. If youre in the information business, these should be happy days, and if theyre not the fault is not in the stars...
About the Author
Dana Blankenhorn has been a business reporter for 20 years. He has written parts of five books, and currently contributes to Advertising Age, Business Marketing, NetMarketing, the Chicago Tribune, Boardwatch, CLEC Magazine and other publications in addition to ClickZ. His own newsletter, A-Clue.Com, is published weekly.
dana@a-clue.com
http://www.a-clue.com
That idea is couponing. The concept is that information leading to a sale deserves its price. When someone has learned all they need on your site to make a purchase, they should be able to download a cookie-like file which, when presented to the target merchant, gives the buyer a discount. An equal discount is then given the site offering the coupon, for enabling the sale. If the coupon gives a buyer 10% off on a $300 purchase, in other words, the site the coupon came from earns $30.
There are close analogs to this concept online. Amazon.coms Associates program is one. If you buy a book through a direct link from an associated site to Amazon, the associate gets 15%. The problem is the purchase must be a direct link. If the buyer makes the link, hesitates, then buys later, theres no payment. (Many associates complain bitterly about this.) Firms like Direct Coupons also offer something like grocery store coupons, but the coupons arent worth much - theres no profit to a small site in it.
The problem is, of course, that the path leading from interest to purchase is complex, and the complexity of that process increases with price. If the issue is a can of soda, brand makes the connection. (Especially if, as Robert Woodruff of The Coca-Cola Co. put it, "every can of Coke is the same as any other, anywhere in the world.") For a book, recommendations and reviews are important. For a car, you also need a close comparison of features, and a lot of price shopping, especially when it comes to the money used to buy the car. For a semiconductor that will go into a million toys, theres a rigorous process, and price is paramount. If the same semiconductor goes into a Boeing airplane, the process is equally rigorous, but other factors dominate.
Every purchase proceeds along its own path, making it hard to break down. Yet in the name of seeking and managing sales, businesses spend roughly 50 cents on every dollar they take in. The budget items are marketing, fulfillment, and customer service. And the Web, unlike all other media, can do all these things. The Web can prospect, pitch, cajole, transact business, fulfill orders and deliver support after the sale. Its potential as a medium lies in its doing all these things.
Why havent editorial Web sites captured their share of this money flow? There are some good reasons. Many manufacturers have taken these functions into their own sites. Others prefer to capture all this value for themselves and for their customers, using brand advertising to bring people inside the tent, then closing on price. As weve seen with the Amazon concept, making the direct link between editorial matter and purchases can be awkward. Most important (and this is a bad reason), journalists are taught to be divorced from commerce - the closer association needed for coupons to work is considered sacrilegious.
But just because few have tried something over time, and theres stubborn resistance to a complex idea, doesnt mean the idea itself is invalid. I submit its more valid than ever. (Now that Web software is available for managing complex supply chains and sales chains , the argument of complexity should go away.)
So break down the commerce equation. Use deep links to bring all the elements together before your targeted niche market. Ask your users to help, by letting you know how they arrive at purchase decisions within your niche. Then take your evidence to your vendors. Point out how, for a little give on price, they can generate X amount of profit from your users. Then, when you get your first deal, track the results thoroughly (coupons are cookie-like files, remember?), and use those numbers on other vendors. Its a long, winding road, but remember this. The proper mix of biased, unbiased, and trusted information is what leads to sales. If youre in the information business, these should be happy days, and if theyre not the fault is not in the stars...
About the Author
Dana Blankenhorn has been a business reporter for 20 years. He has written parts of five books, and currently contributes to Advertising Age, Business Marketing, NetMarketing, the Chicago Tribune, Boardwatch, CLEC Magazine and other publications in addition to ClickZ. His own newsletter, A-Clue.Com, is published weekly.
dana@a-clue.com
http://www.a-clue.com
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