Cybercoupons open the door to one-on-one marketing - SaveSmart Inc.'s online SaveSmart Club and Interactive Coupon Network

Discount Store News, Nov 4, 1996 by Robert Scally

NATIONWIDE DSN REPORT -- Two new Internet-based services are taking very different approaches to changing the way that retailers and vendors deliver money-saving promotions to consumers.

In Mountain View, Calif., SaveSmart Inc. launched its SaveSmart Club promotions system on Oct. 14, located at www.savesmart.com on the World Wide Web.

SaveSmart's cyberspace promotions system is starting out with about 400 participating retailers and restaurants in and around the Silicon Valley area, including McDonald's and Domino's, according Ted Bohnen, SaveSmart's executive vp of sales and marketing.

Targeted to local communities, Savesmart delivers promotional offers from merchants in categories including apparel, home furnishings, entertainment, automobile repairs and sporting goods.

Consumers sign up for the free service and receive a magnetic-stripe card, similar to an ATM or credit, that is used to redeem promotions at SaveSmart-affiliated merchants.

Consumers with an Internet account and Netscape 2.0 browser software can browse the SmartSave site, and when they locate a promotion they want, they can reserve it and redeem it at the merchant selected by using SaveSmart magnetic card. No actual "coupon" ever changes hands.

Meanwhile, Chicago-based Interactive Coupon Network is taking a different track.

Netizens visiting ICN's home page at www.CoolSavings.com after it launches in late November will be asked to register for the free service. Then they must download proprietary coupon-printing software that works with laserjet and deskjet computer, printers, said Hillel Levin, ICN's president.

The user browses the site, chooses coupons for savings from a variety of nongrocery stores and restaurants. The coupon, which is encoded with a unique number to ensure authenticity, is then printed out. The service will focus on national and regional stores and products. I twill carry promotions from vendors as well as retailers, Levin said.

ICN's CoolSavings site was not yet up and running at press time, and Levin said he could not yet name some of the companies that would be participating.

Both systems face obstacles to adoption, but each represents a step on the road to the development of widespread electronic commerce.

Who will use the Internet to find a coupon?

"The initial market is obviously techno-savvy, time-pressed individuals. You could call them plugged-in yuppies, perhaps folks who are on the Net and typically wouldn't be caught deal clipping paper coupons for an hour on a Sunday afternoon," said Art Hutchinson, senior consultant, Northeast Consulting Resources, Boston. The ultimate target market will depend on a co-evolutionary dance, e.g. which retailers sign up determines who's interested, which in turn determines which retailers are interested.

"Convenience will make or break this in the long run."

SmartSave's locally based strategy will have a big influence on its development.

"A critical mass of merchants and users is necessary for adoption. The large retailers will not start a national campaign unless the cards are ubiquitous, and the cards will only be adopted by consumers if enough local merchants use them to improve their lives," said Chris Stevens, electronic commerce research analyst for Boston-based Aberdeen Group Inc.

SaveSmart will expand its service to Boston, Los Angeles, San Diego and several other large cities in 1997, Bohnen said.

While both systems are taking different technical and strategic paths to enter the realm of cyberspace retail promotions, both systems appeal to retailers with the promise of reaching qualified customers through the use of detailed databased while also giving the retailer the ability to know exactly how many people responded to a particular promotion and who those people were.

While it remains to be seen how well either system can deliver customers to retailers and match retailers with customers, they are significant in the development of one-to-one marketing.

"I think it will take time for merchants operating in this environment to figure out the optimum combination of data-mining analysis vs. return," Hutchinson said. "I don't know that anyone knows the answer to this question yet, but it's certainly a concrete move in this direction [toward one-to-one marketing]."