Tesco Coupon Trial Case Study

To help influence future coupon adoption across the UK, Tesco developed a mobile coupon solution and ran a “test and learn” campaign.

Review of the Case

  • A supermarket chain is doing a “test and learn” mobile voucher campaign. Conducted a three-part test campaign at a London shop.
  • Demonstrated the effectiveness of geo-fencing in evaluating foot traffic, hence allowing for more targeted advertising
  • The campaign was successful, yielding essential insights shaping Tesco’s nationwide mobile vouchering approach.

The Problem

Targeted location marketing activity was implemented to increase foot traffic, brand recognition, and coupon redemption among residents and commuters of the Villier Street catchment area.

Walking into store

Due to the novelty of the store’s premise, it was essential to consistently reach out to residents to maintain relevance and limit waste. We’ve used location technology to target adults in their 18s and up in real-time and create a custom market group.

The initial test ran at a Food To Go Tesco concept store on Villiers Street in the heart of London.

Insights were acquired in the following six areas before the effort was initiated:

  • The functionality of new point-of-sale scanners, both self-serve and at checkout/till.
  • Staff understanding and working knowledge of redemption.
  • Customer experience.
  • Application within the new concept-store environment.
  • Application of first-party audience and location data to improve targeting and engagement.
  • The comparative effectiveness of broadcast location messaging versus real-team area messaging.

Tesco could use this data to target their mobile coupons to specific groups of customers, such as those who work nearby as opposed to those who were passing by.

The campaign’s goal was to demonstrate the efficacy of mobile marketing by increasing brand recognition and customer foot traffic through unique mobile coupon redemptions.

It optimizes identifying and extracting the most critical insights to optimize future campaigns. For example, store visits, employee interviews, geofencing to analyze customer foot traffic, customer research and campaign clickthrough rates were all planned as success indicators.

The Solution

We’ve conducted a three-stage trial campaign at the Villiers Street site using a first-party verified customer base, proprietary location data, and geo-fence capabilities. For insights to be isolated and in-campaign optimization to be possible, phased mobile optimization is required.

In the first stage, we put Tesco’s in-store scanning technology to the test and our custom-designed and coded coupons and URLs. For a week, 100 people were targeted with a text message that led them to a discount coupon good at any Tesco location inside the M25.

The geo-fence around the Villier Street location was set up in Phase 2 to analyze foot activity for two weeks. We’ve studied a segment of 10,000 people who work or live in the area by identifying consumers who were observed more than six times in the geo-fence. Information and comparisons were gained by profiling this part of the market.

In the third and final round, over two weeks, 40,000 mobile coupons worth £1 off in-store were sent by text message. Two different strategies for identifying and sending specific SMS messages were employed:

  1. Broadcast messaging: on the first day of the campaign’s second week, at 11 a.m., a message was broadcast in a single burst to the audience segment that had been spotted entering the geo-fence in Phase 2 more than six times.
  2. For the second part of the campaign, real-time location messaging was used. During the two-week campaign, this message was sent to anyone over 18 who entered the 500-metre geo-fence around the Villier Street store between 8 a.m. and 8 p.m. This did not include any of the six-plus-time visitors who were sent the broadcast message.

The use of coupons via mobile devices is still in its infancy. However, retailers and businesses that provide promotional discounts often see a rise in consumer traffic and retention rates due to these efforts. The distribution, redemption, and awarding of loyalty points are all areas where retailers see potential in the rise of mobile commerce.

For example, smartphone users are likelier to use and redeem coupons sent to their devices. In addition, loyalty programmes that back mobile discounts could simplify for retailers and brands to collect the information they need to get to know their customers, provide a more personalized experience, and evaluate customized marketing initiatives.

What we found

The campaign’s significant insights and findings heavily inspired Tesco’s nationwide mobile vouchering approach.

Essential insights into the primary test campaign’s logistics were gained during Phase 1.

  • Training employees requires direct observation. Although mobile coupons are straightforward and comparable to paper coupons in function, some scepticism existed; the wide range of client devices amplified this.
  • Self-service customers require lucid point-of-sale (POS) displays. People hoped that mobile coupon scanning would work differently than traditional paper coupons. Directly next to the cash register/barcode scanner, an illustrated how-to manual is necessary.

Before releasing a product, it is essential to test the unique codes using retail scanners. The particular codes must be associated with the appropriate product offer in the system. This linkage must be checked on a scanner in a real-world setting to guarantee that the proper request is displayed and the applicable discount is applied.

Phase 2 was essential for continuously profiling and retargeting audiences. For example, young, well-off men disproportionately made up the Villiers Street geo-fence. This showed how identifying location-specific subtleties in foot traffic and applying this to boost message relevance is crucial, as the audience was very different from the conventional London catchment target.

During Phase 3, both messages were above the supermarket category standard. However, broadcast messaging was the most effective delivery and targeting medium. The 2.2% CTR it achieved was three times the industry average.

Maximum relevance to a predisposed audience, at an ideal time to influence lunch decisions, was achieved through a combination of targeting known consumers who had been seen in the geo-fence more than six times before (and thus presumably work and live in that area) and the timing of the 11 a.m. blast message.

The real-time location targeting and delivery technique, in which coupons were sent to anybody 18 and older who entered the geo-fence between 8 a.m. and 8 p.m., wasn’t the best fit for this campaign because the offer was most relevant during lunch hours and to regulars at the restaurant.

The following favourable findings were found in a poll conducted after the campaign with 20,000 people who received the mobile coupon:

  • 68 per cent of consumers recalled receiving the text message promoting Food to Go.
  • 90 per cent were not previously aware of the Food to Go promotion.
  • 29 per cent said they were more likely to visit the Tesco Villier Street store.
  • Those who recalled the messages were over three times more likely to redeem their coupon or plan to save.
  • 20 people took at least one other positive action after receiving the message.

Here are some of the most important conclusions drawn from the trial thus far:

  • Geo-fencing helps businesses better understand their customers by tracking foot activity, targeting their promotions and offers better.
  • Recognizing regulars who are frequently spotted near the store improves relevance and engagement.
  • Messages are more effective when sent at opportune moments directly related to the promotion.

As a result of the campaign’s success, Tesco made substantial adjustments to its nationwide mobile vouchering strategy.

Read more on Coupon Case Strategy: Zalando Coupon Strategy Case Study

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