If you’ve been to a few supermarkets lately, you may have heard of
digital coupons. If not, I’ll give you a small crash course in this
stuff, showing how the user signs up, how it may run through a
supermarket’s database, and how the coupon is processed at the checkout.
Though let me first say that I only have a small understanding of
digital coupons. From what I’ve learned about information systems, how
point of sale systems work, and a few of the concepts which string them
all together, I can tell you only an overview of how it all works.
Still, armed with this information, you will be less frustrated when
using digital coupons and the like.
There are supermarkets across the U.S. which require a club card in
order to purchase the store’s items at a sales price. Higher management
at these supermarket chains thought that getting some customer data
wasn’t enough, nor were the store’s services providing enough value. So
they created these digital coupons which were exclusive to their store.
With these digital coupons, a customer opts in to their service (because
just being a club member isn’t good enough), then the customer applies
these coupons to their club card, and they’re usually applied at check
out. How this all works, though, is a bit more complicated than that.
The customer first enrolls in the digital coupon service. In the
supermarket’s system, an entry is made in their database which tells the
point of sale system that the customer uses digital coupons, and to be
sure to check for this. The customer then adds coupons via an interface
(either a web portal or a mobile phone app). The system assigns these
coupons to the customer’s file in the supermarket’s database. At check
out, the cashier scans the items as usual, and the customer’s club card
is applied. Depending upon how the point of sale system is set up to
look for the digital coupons in the company’s database, the digital
coupons may be applied during the order, or near the end of the order.
If it’s near the end of the order, the cashier totals out the order, and
the point of sale system evaluates the order, matching items to digital
coupons in the customer’s database file. The look-up process can be a
bit tedious, because the digital coupon system could be set up such that
the digital coupons are matched against the UPC of the product, and so
it could take a few seconds, especially for large orders. Finally, any
discounts are applied, and the order continues to its end. Is there
anything else the digital coupon system can do? You bet!
The system also keeps track of what the customer has purchased. This
information can then be used in a few ways. For one, the data can be
used to improve the processes and products of the supermarket (though
this has been a part of club cards for years, and not just with digital
coupons). For another, it can be sold to third parties (mind you,
supermarket chains have been monitoring these practices closely so as
not to harm the customer, as well as not increase risk for the company).
To add to this, a company can make a direct connection to how a customer
purchases a product. The company can take this information to the
manufacturer of the product, and negotiate better prices on the product.
Or, the supermarket company can provide a personal discount on the
product because they know that the customer will continue to purchase
the product, and the supermarket company can still turn a profit.
Again, remember this is a simplification. The supermarket company many
do little with the data they receive. The company could merely provide
digital coupons, along with some other perk (such as having a free
product every so often, e.g. a free sandwich). Also, how the supermarket
company uses the data could be very different from what I have
described. For all I know, it could be used in logistics, in
advertising, or even in the layout of new stores. Just know that a
system like this can be complicated, can be a bit tedious, and yet can
also provide a good amount of value. How much are we talking? From my
experience, a customer can gain 4% to 10% more with digital coupons
(though I’m sure it’s mostly 4%).