Feature: Promotions: Vouchers go viral

Consumers have always been savvy in searching out a good bargain, and increasingly the success of a product is determined by the strength of the sales promotion. Shoppers now actively seek out promotions when they go shopping – and many switch from their usual brand if the competition is offering a desirable enough promotion.

Historically, sales promotion has been seen as the poor cousin to advertising, but where advertising may help build the brand, it is the promotion that will make the biggest difference. This is increasingly being recognised by retailers, and marketing budgets have changed to reflect this. In fact, on average the annual spend by companies on sales promotions now outweighs advertising. Online discount vouchers have become the latest phenomenon in sales promotion, with many shoppers turning to the internet on the look-out for discount vouchers.

It used to be the case that shoppers would see a promotion in a store or in a paper, but now emails and websites mean that discounts can be circulated much further and faster. This can be good news for the retailer because, as well as rewarding their loyal customer, the net of potential new customers can be widened considerably.

Christmas 2006 really highlighted this new medium, when Threshers created a 40 per cent off wine and champagne voucher to be used by suppliers and their friends. The voucher became available online and was distributed widely via blogs, email and chatrooms and subsequently downloaded by millions of people.

Initial concerns from the retailer were quashed as queues outside stores delivered a reported 60 per cent increase in sales with many branches selling one week’s worth of wine in a single day.

Recognising the success of this accidental campaign, Threshers repeated the offer for Christmas 2007, making the voucher available on its website. It also spawned many more similar campaigns, as other high-street chains jumped on the band wagon.

Recently there has been an explosion in the number of websites dedicated to tracking discount vouchers. Retailers who do want to issue vouchers for friends and family must be aware that the number of people using the voucher could be many times more than they intended.

Earlier this year, Littlewoods faced controversy after it sent a £25-off voucher to a few specific customers, which was subsequently spread virally through online chatrooms. The retailer demanded that customers who had abused the offer pay back the money, stating that the terms and conditions made it clear that promotional codes could only be used by the customer the voucher was intended for. After much wrangling and anger from customers, the retailer dropped its pursuit for refund as a “goodwill” gesture. Littlewoods maintains that this does not change its future policy and that its terms and condition will have to be adhered to.

Discount vouchers can be a great way of attracting new customers, but if retailers are not prepared for and aware of the possible consequence then it can have a negative impact as Littlewoods found.

Voucher check list

The most important things to consider when issuing a voucher are to:

• consider whether the voucher will still be profitable if it is used by a bigger group of people than intended.
• ensure that there is a definitive period for the promotion so that the start and close date are clear and cannot be abused.
• seek legal advice from a sales promotion lawyer before launching a promotion. There are many things to be considered, including age restrictions and the use of vouchers in conjunction with other promotions. The ISP is a great source of legal advice for retailers considering any sort of sales promotion.