You should think coupons are a joke

The premise of coupons is logical from a mechanical, business standpoint in which customers are influencable data points, but customers are humans and should just laugh when they see these things. While I know that billions of dollars have gone into understanding the human brain so coupons and can be "engineered" to appeal to consumers, it still seems silly that more people  don't see how manipulative they are. The goal is not actually customer value unless we are to believe that all businesses are truly and purely motivated by their core belief that their product really does fix everyones problem. While some of them fall into this category, I think that's giving most businesses way too much credit.

We have talked about what a coupon is a million times. A coupon is a tool used by businesses to influence consumer buying behavior by creating a temporary way to alter the perceived value of a good or service. Almost 100% of the time, businesses have pre-negotiated with vendors, pre-planned, and thoroughly mapped out how to change prices without affecting their bottom line.

A good example of this is when business plans on issuing a coupon for a product, so they release it at a higher price. Let's take two hypothetical situations:

1) A book's retail price is $10. The book has no coupons

2) The same book's retail price is $15 dollar's and the seller gives out "$5 off" coupons


In the first case, the customer is presented with a fair and reasonable price for the book. The consumer is left alone to decide whether the book is a good or bad value at $10. This is the way is should be: the consumer is the one with most of the power. The consumer is left to make a decision based on the actual value of the item.

However, let's look at the second situation in which the consumer pays the same price for the same book, but was given a coupon. In the second case, new variables are added into the equation that completely shift power away from the buyer and give it to the seller: perceived value and urgency. First, the normal price of the book is more expensive. This means subconsciously it seems more valuable. Second, the coupon is for $5! That is a huge discount, right? Third, it expires this week so if the consumer wants to take advantage of this exclusive opportunity to have something supposedly worth $15 dollars for $10, they better buy now!

The end result is that the coupon adds false value to the product just for the purpose of lying to the customer and getting them to make a rushed, emotional decision rather than a value-based, rational decision. Am I the only one that thinks that seems unethical?

With that I'd like to leave you with a few questions to think about:

1. Would you rather a business put its best foot forward and let you decide what to buy or tries to manipulate your decision-making process?
2. Do you really want to buy products from companies that would rather trick you than let their products speak for themselves?

Food for thought.

Thanks for reading!

Chris@scannibal

What if you could participate in marketing?

I think most of us would agree that we are pretty much passive recipients of marketing. 99.9% of the "marketing" in the world in flying toward your face at 1,000mph from every single direction. We ran a 5k last weekend and a guy ran the whole race in a giant BMW logo suit...he was most likely paid by BMW. This sounds like an extreme example of throwing ads at customers, but its actually becoming fairly common. Even the replays on the Sunday football games are "brought to you by XYZ Corporation". The point is, it's everywhere and consumers have almost no control over how they are exposed to it.

Let's look at how this stuff gets there. In case you aren't a marketing expert, here is essentially how it works in very broad strokes: Businesses have a general idea of who they think their customers are. They do research to find out where those people go, what they do, and what they like. That company then looks for all the points where they can potentially get in front of those customers. This used to just mean on buses or billboards, but as there are more companies jockeying for space, things get crowded and some of them get clever. This is how you end up with car emblems running 5ks. Some marketing guy decided their "target customer" likes running 5k so they paid some kid to wear a suit and go for a jog. Seems silly, but it obviously got my attention.

Since we are so used to seeing ads, most of us don't even think about it anymore. Ads are just a part of life, a standard decoration on just about everything, and something we have nothing to do with. In fact, this is how most of the free things you use get paid for. Do you think watching football on Sundays is free? Not a chance. The advertising is what pays for the air time. In reality, celebrities and sports stars are valuable because they get people to watch them and thereby create opportunities to put adds in front of your eyeballs. Tricky.

But what if that wasn't how we had to think about advertising? All the companies are trying to get our attention, but something weird is going on. Instead of just asking for it, they are building all kinds  of complex models to predict what we want, how to get our attention, and how to get us to buy. What if they did something really novel to get our attention and...I don't know just asked us for it?

We are building a way for customers to become active participants in marketing. This might sound complex or boring, but its actually pretty simple. We think that instead of businesses throwing things at us, it would be much more efficient for both of us if there was a way to tell businesses what we want. Our whole goal with Scannibal is to make the conventionally obnoxious and tedious world of advertising, coupons, and loyalty programs somethings that actually creates value for everyone. Businesses don't like wasting money on spam fliers anymore than we like receiving them. There is a better way.

We are getting ready to launch our beta in the area near the University of Denver. Sign up at scannibal.com to get an invite!

Thanks for reading!

The Secret Life of Coupons

You are probably a couponer to some degree and that is what brought you here, to this wonderful blog. Whether you are casual or hardcore, I think it would be really valuable for us to take a hard look at where the coupons we are using are coming from and why they are there. First, let's ask some obvious questions:

1. What is a coupon?

2. Who makes the coupons?

3. Why do I use them?

4. Why do the people who make them want me to use them?

These seem silly, I know, but in the highly scientific and highly calculated marketing world we live in, sometime the real answers get lost. With that in mind, lets try to answer them.

1. What is a coupon?

Convention wisdom says coupons are a bunch of pages in the paper that you can use to save money on stuff. You cut them out, take them in, and get a discount. These days this applies to any mobile or internet coupons too, but the general idea is the same. Coupons are ways to save money, right? Wrong. Coupons are a tactic. The truth is that almost every coupons you see has been carefully calculated and the price adjusted to account for the "discount". Buying a DVD for $15.00 using a $5.00 coupon is only a good deal if the movie is actually worth $20.00. But what if the movie is only worth $15.00 and we just got tricked into thinking it was a good value? This brings us to our next question.

2. Who makes the coupons?

Again, seems simple but we rarely think of the "who" in terms of motives. Brands and retailers are the ones who issue coupons. This means the people who want us to buy their products are the ones determining what "value" means. Isn't that a little strange that we are trusting them to set the value AND letting them adjust that perceived value to introduce a sense of urgency or scarcity for their items? These coupons are starting to sound more like optical illusions than ways to save.

3. Why do they want me to use them?

The first thing that might roll off your tongue is "They want me to save money on their product so I'll buy it instead of something else." This is somewhat true in a very broad sense, but we would need to change it to "They want me to THINK i'm savings money..." As we said before, it's just a fact of life that businesses have promotional budgets and adjust prices to cover discounts. Aside from clearance, big discounts just mean the price was over inflated to begin with.

So with our understanding that coupons are budgeted tools to change our perception of a product without affecting the actual value of the good, why do they want us to use them? The answer is exposure. For instance, say you hear that there is a coupons to get a $100.00 pair of headphones for 50% off. We don't really need headphones and aren't even considering any that are regularly $50.00, but these are 50% off! You scour the papers and internet looking for this coupon because the headphones are half price! Well we know that the actual value of the headphones is probably well below the full retail, the business wouldn't sell them to us otherwise. 

Once we spend half an hour, we find the coupon and go buy the headphones and think we got a steal. That coupon has done three things: 1) effectively driven us to make a purchase we didn't plan on and didn't need 2) effectively changed our perception of $50.00 from being expensive, to being cheap 3) gotten us to willingly and actively engage with their brand for an extended amount of time. The key is the last one. Getting someone to think actively about your brand for half an hour goes miles toward building a repeat customer. Interesting, isn't it.

4. Why do we use them?

This part is key because there are two major categories of users when it comes to coupons: "Savers" and "Engagers". As we look at each I encourage you to be honest with yourself about which one you are. Your motivations are likely very different for one versus the other. 

"Savers" are the people who are after that discount. They tend to like more general and easily accessible coupons. This is the lower involvement, more casual of the two whose primary driver is to increase the sense of "value" they get from shopping. Sometimes this will mean using a coupon only on big purchases or only ones they just happen to see, but the key is that "savers" use it to supplement shopping rather than use coupons to define their shopping. 

"Engagers" may often think they are using coupons to save, but are likely driven more by the engagement they feel with the brand through the use of the coupons. These people are the ones who spend hours looking for very specific coupons and pride themselves on maximizing the amount they save. While these people will likely save more, I would argue that their motives have nothing to do with money. The engager seeks the sense of empowerment and superiority they feel over the brand by having "beat the system". The time spent is often a good indicator. There are very few instances in which the savings from intense coupon usage will outweigh the value of the time spent (in a conventional sense). It's important to note that there is nothing wrong with this reasoning. There is more to life than money and engagers do it because they enjoy it, just not for the reasons we would suspect. 

After taking a shot at figuring out which one you are, how do you think that relates to your personal coupon habits or shopping habits in general? What are your real motives?

Conclusion

With all of this in mind, the important things to think about with coupons are being aware and balance. Focusing on the first will make the second come naturally. Next time you are cutting or printing, think about how and why the brand is trying to connect with you. Think about what you want out of it and what they want out of it. Paying attention to these things could save you tons of time and money while also making you a much smarter shopper. Coupons are often not what they seem and just being aware of that will be helpful next time you head to the store.

Thanks for reading!

Chris@scannibal

 

Review of Cartwheel, the savings app by Target

If you are not familiar with it, "Cartwheel" is the savings app owned by Target. They took a little bit of a different spin than most of the other apps out there. While most revolve just collecting coupons or earning points, Cartwheel works a bit differently.

How it works

When you first open the app you start off with a certain number of slots to put "offers" in. You are able to search through the variety of offers and add them to one of your slots. The catch is that you can only have as many offers as you have space for. While there can be a wide range of items depending on the day you are looking, some of them can be rather narrow (buy this specific color or this specific size). However, the trade off is value for selection. The branded items tend to be more specific but much larger discounts (up to 50% off) while the more generic things like Target-brand milk or eggs, are much more open but have smaller savings (ususally 5%).

  

Once you have collected all of the offers you want, you go back to your home screen. The app generates your own personal bar code that the cashier will scan at the register. This is cool because it saves you the trouble of scanning all the individual offers. Each offer in your slots is all tied back to this one bar code so you have just the one code to scan no matter what your offers are or how many you have.

After the cashier scans the code, the dollars come right off of the actual transaction while it happens. Being able to do this in real time is something that most of the other apps cannot do. It is convenient, but the only reason they can do it is the ability to tie so directly into their sales software. This means that this same kind of "real time" savings is almost impossible for any app that crosses over retailers. Since this app is just for Target, it's convenient but is obviously limited in terms of usage. Every time you use an offer, the amount you save will be added to your total so you can see how much you have saved over time. As you save, you earn more slots for offers and you earn badges as you reach certain levels.

The Good

There are definitely thinks I like about Cartwheel and it is probably my most used savings app. I like that there are certain items that are huge discounts. I have been using it for six months and saved about $500 but that is because I caught Rosetta Stone and a smart watch for 50% off. If you are an opportunist, these can be great.

I also like that everything is on one bar code. While you still need to put the time in to find the offers, you can at least easily redeem them (if you can find the items and remember to scan). This is definitely a step in the right direction from coupons. On that same note, having it on your phone is nice so you can search, select, or change the offers right in the store (while not being convenient, it is useful)

The Bad

There are also things I do not like about the app. First, the relevance of offers is sometimes just not there. I see a ton of items that I'm guessing are going to be clearance soon and this is a last chance to move them. These are things like kids movies or baby food. While many customers do want these, I'd expect my app to understand the things I buy a bit better.

The amount of effort need to find offer is also something to consider. Here is how my usual trip goes:

-10 mins filling slots with offers (say 15 slots)
-30 min finding the specific items in-store
-half the items are out of stock or I cannot find them
-15 min in-store looking like an idiot on my phone trying to find different offers
-15 min finding the new items
-Cashier won't remind you to use Cartwheel so I forget to scan about 25% of the time

As you can see, it can easily turn into a lot of time. I have not had a trip yet where I was able to easily and quickly find the items that corresponded with the offers I had selected. The only time it goes quick is if you spot something ahead of time and go in for that one specific item, like I did with this G Watch.

In Conclusion

Overall, I do think Cartwheel is one of the better savings tools out there. I think it has potential to save you lots of money on the right things, but I would suggest browsing through to catch that one or two big items rather than try to nickel and dime the daily items. For me, it just isn't worth the time or effort to use regularly. I do look at it regularly to keep an eye out for smoking deals, but I stopped using it for milk and eggs. If you decide to start using Cartwheel, I suggest you look at it as a way to get a great deal every now and again rather than a long-term way to decrease grocery expenses.

Thanks for reading!

Chris@Scannibal

What is your time worth?

Have you ever thought about how much time it actually takes to save money on anything? For the most part, it takes a good amount of time to see any sort of savings when you go shopping. This is absolutely by design. The brands who are making the coupons are focused on how long they can "engage" you. Did you know that the ads you see on pretty much every website on earth pay based on the number of seconds a person views it? Seems crazy, doesn't it? Same goes for the coupons in the paper: the goal is exposure.

Repetition, repetition, repetition

The idea behind focusing on exposure is the good ole' principle of repetition. The more we see or experience something, the more of a spot it carves out in our subconscious. Have you ever seen those scary clips of the guy with his eyelids help open being shown propaganda films? You may think that is extreme, but it's the exact same psychology that is behind advertising: the more you see it, the more it gets ingrained.

Passive v. Active

Now, while this applies to all advertising, the engagement we are talking about with coupons is a bit different. In the case of the ads on TV or on websites, they are all passive. You see them (often not even realizing you saw them) and that touch point is their key purpose. Sure they are trying to encourage you to "buy" or whatever the case may be, but they are not looking for the same direct, immediate action. In the case of coupons, they ask much more of you. You actually need to seek them out.

But what does it cost?

Let's take the Sunday paper for example. Everyone loves thumbing through the ads. There are hundreds of hundreds of great deals in there! You might be tempted to think "there is so much value in here! of course it's worth clipping!", but we will look at all the steps that go into the process from beginning to end and then let's do some math.

Steps in couponing

1. Get a paper
2. Look through paper to find ad sections
3. Identify coupons of interest
4. Cut coupons
5. Read coupons for limit, exclusions, conditions, etc.
6. Go to the store
7. Remember to bring coupons
8. Find specific product the coupons pertain to
9. Make sure to buy in accordance with the coupon rules (see #5)
10. Remember to use all coupons when checking out

...That is a LOT of steps...

Now some math

Let's say there are 200 coupons in a given paper, you are actually interested in 5% of them (10 coupons), and the average discount is $1.00. So in theory, this paper is worth $10.00, right? This would be true if it were as easy as just having the coupons in hand, but unfortunately there are lots more steps between you and that $10.00. At this point you should be asking questions like "How much time will it take to get the coupons? How much is my time worth? Will I actually be able to get all $10.00 in discounts?"

Here are some quick estimations of the cost in our scenario (I used the average hourly wage as an estimate of the value of time):

1. Buy the paper ~ $1.00
2. Time to locate and clip coupons in paper ~ 15 min @ $25.00/hour =  $6.25
3. Extra time in the store searching for specific coupon items ~ 15 min @ $25.00 = $6.25
4. Additional dollars spent to reach minimums or limitations on the coupons ~ $2.00

Wait a minute...

In our quick example the total cost of those $10.00 in coupons is $15.50! That means using the coupons is actually costing us $5.50! Even looking at just the time involved, we would have been off spending those 30 minutes working (we would have earned $12.50 which is still $2.50 more than the $10.00 in coupons). That doesn't even account for the fact that the chances of being able to use all 10 coupons is slim. Plus, remember back to the goal being exposure? In our scenario you have now spent at least 30 minutes directly thinking about and engaging with the brand that sent out the coupon WITHOUT savings any money...Sneaky Sneaky

At the end of the day, the question is whether or not the coupons are worth the time it takes to use there. There are some instances in which they do, but for the most part I would argue that conventional coupons amplify the amount of time you spend thinking about a product without actually saving you a proportionate amount of money.

What do you think about the time coupons take vs. the money they save? Do you think they are a worthwhile pursuit? 

Thanks for reading!

Chris

Is "Loyalty" actually a good thing?

Loyalty used to be great!

Loyalty programs started out as a great thing. It used to be that a few businesses offered  what we would now call "Loyalty Programs" and they were often businesses where we didn't shop that often. They usually sold things that you wanted rather than needed and earning something felt like a treat. This makes sense. They want to encourage you to buy more than you normally would to earn the reward. At a time when there were fewer programs, earning that reward meant something.

Even if you ended up buying a bit more to earn that free item, it felt special. It was almost like you were one of the VIP customers who the business wanted to have a relationship with. It made you feel valuable as a consumer. Unfortunately, we have advanced to a place where "loyalty" has turned into a key marketing metric for almost every business. This means everyone has "rewards" and everyone wants to create repeat customers. This isn't always bad, but lets look a bit deeper.

Loyalty is everywhere

Loyalty programs encourage you to become habitual. Each business wants a bigger percentage of the dollars you spend. But what happens when every single business is offering their own program? Now, as customer, you need to keep track of everyone's individual card or points or rewards. The rewards themselves become somewhat commoditized and rewards become a de facto part of buying something. Don't worry, those discounts get planned into the prices and we just end up paying a higher price to compensate for the reward we think we earned.

How do customers win?

So what do we have now? We have a type of reward system that is no longer special because everyone uses it, customers who laboriously keep track of points or rewards across zillions of different mediums, and, worst of all, a shifting mentality that making customers repetitive is a good thing. This should scare us all as customers! It does't feel great being described as "repetitive", does it? The result of us being "repetitive" is that businesses can accurately predict what we will do and therefore they don't need to offer us much value to keep us coming back. They have us on the hook. So we are getting less value while being encouraged to minimize our choices. Am I the only one who is a bit uneasy about that?

Businesses should get better, not sneakier

Call me crazy, but doesn't it make more sense for the whole shopping environment if business are continually trying to improve their good or service as a means of retaining customers? Is it a good thing to have loyalty programs are used to try and compensate for businesses that have a hard time innovating or don't want to innovate? It might sound a bit dramatic, but in general I would say that as a customer, the kind of loyalty generated by conventional loyalty programs is driving value down, not up.

What do you think about loyalty? Please leave a comment!

Thanks for reading!

Chris

What is the point of marketing?

What is the point of marketing?

That sounds like a silly question, but I'm serious. What is the point of marketing? You might say "well that's obvious. The point of marketing is to sell products" and you would be partially correct You might think "marketing is how companies tell people about the products they make" and this is part of the story, but not the whole enchilada.

The real purpose of marketing is to separate emotions about products from the actual utility they provide.

Think about that for a second.

But wait...

Aren't most of the ads you see trying to create a feeling rather than give a holistic picture of what the product can actually do?  Every once and a while you see one that explains something, but for the most part the goal is to pique your interest by what they DON'T tell you and by evoking an emotional reaction. I often wonder why we don't look past these tricks and see the real motive.

I must say, I'm a bit biased being something of a pragmatist. For me, things are about function above all. I realize not everyone looks at the world this way, but for me this makes most of the ad and marketing realm feel squishy and sneaky. I never quite feel like I can trust what I'm hearing or what I'm seeing. We are not exactly talking about an industry with a track record of honesty. Most ads I see make me ask "what are they really trying to get out of this?"

"IT'S A TRAP!!"

Like we said before, the real motive is to separate feelings about a product from the function of a product. Put simply, marketing's goal is to make what should be a need-based or value-based decision and make it an emotional decision. With a good marketing campaign, you can easily cover up any shortcomings with the actual product. They have also come to find out that influencing emotions is much easier than improving the product. This makes the equation pretty scary for consumers.

This creates a world in where quality and value of a product have less influence on a purchase than does the impact of the emotional context they stick it in. For instance, let's say Starbuck coffee is average (IMHO). There is nothing special about their product yet they have grown to dominate the coffee market. How is this? Why aren't the places with better coffee winning? While there are a huge number of factors that come into play, marketing is a huge one.

We are talking about a business that has been able to use billions of dollars and a complex understanding of how our minds work to engineer emotional responses to their brand. All the sudden you have people selecting inferior products (often for more money) and ignoring products that offer a better value or would better meet their needs. Doesn't that seem irrational? It should. once a brand hits this certain "critical mass", the consumers stop really "choosing" because that brand has created an addict of sorts.

"If it ain't broke, don't fix it. Wait..."

With that in mind, I want to know why we don't have a better way to regulate the impact of marketing. It's great for businesses to be able to promote their good or service, but what happens when they get beyond promotion and into the realm of having consumers hooked or psychologically stuck? Shouldn't there be a way to help keep the balance of power when it comes to branding? How do we keep some semblance of consumer choice and decision making power when brands have such a dramatic ability to influence our behavior through driving emotions?

I will leave you with this final thought and I would love to hear opinions.

If the goal of marketing is to get us to make less rational decisions, why don't we change it?

Thanks for reading!

Chris

Rethinking Coupons

If you are anything like me, you look through coupons regularly. There are lots of ways they get distributed and it's a full time job trying to actively use them. When you think about the myriad of offers, the variety of mediums, and the vast number of retailers or products trying to get your attention, its not surprising that the majority of these get missed. This is particularly true if you are like me and end up grabbing one or two coupons you just happen to see. The fact is that, for most of us, 99% of coupons are useless.



Coupon distribution is changing

The way companies are sending out coupons has changed dramatically over the last few years. Gone are the days of the classic print inserts you used to make your Christmas list as a kid. I spent a few years working for a major retailer and I've seen the dramatic impact of how quickly these are becoming obsolete. While right now only 10% of coupons are digital, the use of online and mobile coupons is growing faster than any other segment.

Digital creates new challenges

The exciting thing about the transition of coupons from print to digital is the new found ease of access than many customers are experiencing. Its easier than ever to search for coupons you want and use them on your phone. In fact, there are many sites and apps that are aggregating digital versions of all the coupons that used to be (or still are) in print. Google "Best Buy Coupon" and dozens of codes and coupons are bound to show up. This does, however, create a new problem.

With the old print news papers, the only way to have an old coupon was to have an old newspaper. This make it much less likely to have an expired coupon as most papers are disposed of within a week of being received. However, in the case of digital coupons the lifecycles longer without the natural purging that came with print. Once a coupon is out there, it is much more likely to stay posted and in circulation long after it has passed expiration. This means customers have to put in the effort to make sure the offers they are collecting are valid. Believe me, it's a ton of work.

Digital coupons are still not easy to use

While there are many benefits that have come with the advent of digital, there are still challenges. It is still a ton of work to search for and collect coupons from a vast number of sites and apps. It is still a toss up whether the coupons you got are going to be valid. It is still a matter of taking lots of time and coordinating tons of  moving pieces for an often immaterial payout. There has to be a better way.

With all that in mind, I put a question to you: would you use more coupons if they were automatically generated all in one place, specifically for you, right on your phone? This means you would never have to cut, search, clip, or collect coupons every again. Personally, I need a way to take advantage of all the benefits and savings that coupons offer without all the effort. In that respect, I'm lazy. I want to sit back and let my coupons come to me. I want them to be valuable, I want them to be easy to use, and I want them to be relevant.

There is a better way

We are trying to build a way for you to anonymously use your spending history to create you own coupons in one single app. As you shop, you will earn coupons to the competitors of all the places you shop. For example, say you spend $100 at Wal-Mart. Scannibal would let you earn a percentage of that $100 back to other grocery stores in your area. What if you could spend $100 and earn back a full $100 in discounts and now have valuable coupons to every other grocery store within 10 miles? We think that would be pretty cool.

We want to hear what you think!

If you are someone who uses coupons of any sort, we would love to hear the good and bad parts of your coupon experiences. If you are someone who doesn't use coupons, we would definitely love to hear why you don't. If you are someone who is just a coupon and clearance shopping nerd like me, drop a line and lets talk savings!

Thanks for reading!

Chris
chris@Scannibal.com
http://scannibal.com

We are chugging along and want you to come with us!

I'm very excited to report that we are making some great headway on the development of Scannibal! We are currently building our initial platform and planning to be able to start testing with live transactions within a month or two! If you have checked out our site or talked with me around town (Denver) and think what we are doing in interesting, we would love to have you as a tester!

We are looking for two categories of testers: Users and Businesses

Users

We are hoping to get 100ish users for our initial pilot. This is really exciting because we are going to be asking for tons of feedback from these first users. It is a great opportunity to have a real impact on the design and function of the product. How cool will it be in a couple year to be able to tell people you were user #1 for Scannibal? For this group we are looking locally since our business testers will also be local. We will make sure to let you know which businesses we are testing with and we will ask that you make at least a few qualifying transactions just for testing.

What makes a good User (for now)?

The only real requirement is that you have to be local or at least in the Denver area. Ideally you will also buy goods or services in the industries with whom we are testing (we are narrowing this down but starting with coffee shops and liquor stores). Since we are looking for local businesses as testers, having test users elsewhere won't be much help yet. However, if you are not local and are interested, send me an email and we will get you in the beta!

What we need from a good test user

Feedback is the name of the game! If you want to send me 10 emails a day telling me every single thought you had about why it sucks or why its awesome, I would love that! Seriously, we are looking for people who like trying new tech, like to save money, want to try new businesses, and want to be part of a cool project where you can make a difference.

Businesses

For those of you out there who are local business owners here in Denver, I have a couple questions for you. Do you need more traffic? Are you having a hard time competing with a major direct competitor (especially a huge corporate one)? If so, read on...

Scannibal will be the simplest and most direct way for you to run  your loyalty program and your customer acquisition program (odds are you didn't have one. Not anymore!). We are offering you a way to market directly to your competitors customers on a transaction per transaction basis. This means maximum efficiency in terms of who sees your marketing.

What's in it for my business?

Let me start by saying that if your business qualifies, we meet with you and it feels like a good fit, you will get access to the Scannibal platform for free, forever(for the most part. If you are interested, lets chat). This can be a huge long term competitive advantage for your business. This could mean you have access to a marketing tool your competition will be paying for.

What we need from a good test business

Feedback and participation are key for a good test business. We are looking for businesses that are interested in a new way to interact with customers and want to be on the leading edge with their marketing strategy. Since we are building a completely new model, It will be important to have active participation from the business as well as regular communications about how things are going. In addition, we need businesses that will help promote to their customers. We will provide a window sticker, a counter sign, and information sessions for employees on how to educate customers. That might sound like a lot of involvement, but think of it like having your business be a co-founder in our start up. We are offering a tremendously valuable deal with the free access.

How to reach out

If any of this sounds interesting or if none of this sounds interesting, get in touch via email at (chris@scannibal.com) or tweet me at@scannibalapp . I'd love to get thoughts, opinions, and any feedback on the blog, testing, or our project in general. Heck, even if you are just nerd who likes to talk about coupons and bargain shopping as much as I do, bring it on! For more info, check out http://scannibal.com.

Thanks for reading!
Chris@scannibal

An Unfair Fight

I've written briefly about consumer behavior and how we are all creatures of habit, but it's hard (if not impossible) to quantify the true impact of our habits from a shopping perspective. What most of us do not realize is that each of our purchases does not exist in a vacuum. Each purchase is part of a much larger picture big  business is building to understand and influence your future purchases. In addition, each of those purchases can have a dramatic influence on our internal decision-making process.

We will almost always be more likely to repeat a behavior once we have engaged in it a first time. This means the first purchase is the hardest for a business to generate (we plan to fix that) and if you are a small or new business, most if not all of your customers are going to be first time buyers. This is also why loyalty programs for huge retailers want to trade reward points for second and third trips to the store. It's like a drug: the retailers know you have already overcome the huge obstacle of the first purchase and now you just need a tiny nudge (your reward points) to keep coming back for more.

It makes sense, therefore, that over time as we continue to accept the reward in exchange for the additional purchase, we become more engrained and predictable in what decision we will make when it comes to that particular good or service. Over time, the "decision" erodes away to a default, learned behavior that has been engineered by that large business. Once they have created a predictable usage pattern like this, they can slowly pull away the actual value (the purchasing power of those reward points) without most customers noticing. Now they have the best of both worlds: a repeat, predictable customer who is also paying full (or nearly full) price. How is that fair?

So what's missing? If you are a small business owner, you may say "well that's true for big corporations but not for us!" and you are most likely right. The fact is that there are thousands of small or new businesses that cannot compete with the large corporate players. Some will differentiate and some will offer higher service standards, but they are all still facing the challenge of the first time customer, a problem that the corporations have a billion dollar head start on. They already have nice cozy spots carved out in the minds of almost all consumers. How to you compete with that?

That sounds bleak, but we have a solution. There will always be major players, huge marketing budgets, and engrained consumers psychology to make succeeding an uphill battle, but we intend to make it a significantly more fair fight. Scannibal provides your business with an opportunity to access new customers and drive that first interaction and transaction in a completely new, direct, and measurable way. We think small businesses are creating tremendous experiences, amazing products, and unprecedented value. We think it's time to provide a gateway to all the spectacular things small business has to offer.

Thanks for reading!
 Chris @ Scannibal


Follow us on twitter:
@ScannibalApp

Or check out our site for updates on development:
Scannibal.com

Getting a Competitive Edge

Scannibal is a completely new mobile rewards platform that based the rewards you earn directly off of where you already shop(this is only kind of a plug. I have a point, I promise). The goal is to create a more efficient way for customers to earn, store, and easily redeem any discount they may receive while also providing value to businesses. While most of us hate advertising, businesses spend a lot of money trying to get and hold your attention. We are creating a way for both the customers and the businesses to win. Let's look at each perspective:

Customers

We are all customers, so this should be easy. What are the key things you care about when it comes to spending your money? Here are a few that come to mind (in no particular order)

1. Value - is what i'm getting worth what i'm paying?
2. Service - did I enjoy my experience with this business?
3. Convenience - how easy was making the purchase?
4. Speed - how quickly can I get this item?
5. Price - how much do I need to spend to get this item?
6. Quality - is the item high quality or is it cheap?

Think about how each of these plays into every single purchase you make. These are some of the key drivers of why we buy what we buy and where we buy what we buy (try saying that 5 times fast). So if we were to sweeten the deal on any given purchase, what is the best one of those characteristics to focus on? We think all of them.

Scannibal isn't just about getting a lower price or about getting more value for your dollar, it's also about experiences. When we get into habit or we get pulled in by loyalty points a business gives us AFTER we spend money, we start to limit our options. We get pulled into the big chains and the corporate warehouse stores which isn't always a bad thing, but they are spending lots of money to keep us from seeing whats out there. 

Take People's Market here in Denver. One of the freshest, friendliest, most affordable little grocery stores in Denver and they have to compete with huge stores. Our goal isn't to keep you from shopping at large corporate chains, but rather to enable the small businesses with better goods and services to give you an invitation to break out and try something new. 

Businesses

Business seems fairly cut-and-dry on the surface: make money. That is the ONLY goal, right? Wrong. While making money is important, the people that involved in making that business happen are far more important. Think about when you go to work all day. You work, they give you money. For you it is a positive cash flow transaction but for everyone else, the place you go to work is just a business like any other. Businesses want and need to succeed not only to make a profit and grow, but to support the family of employees they have making it tick. At their core, most businesses are about people and we think helping businesses succeed is about as close as you can get to helping the employees directly.

However, It's easy to think that anything that creates competition is bad. In reality, competition is actually vital to how our economy and our society work. The reason why competition is such a great thing is that it creates value and innovation. almost 100% of the things you see at your desk as you read this are a result of innovation driven out of competition. 

For example, lets say in a fiction town there are only two factors in buying cookies: flavor and price. If every business had the same flavor of cookies and charged the same price, consumers would have no reason to buy them one place versus another. Without competition, businesses (and the livelihood of their employees) is left up to chance. Creating competition pushes businesses to realize their potential and grow into stronger, more mature companies. 

At the end of the day, when a business is working around the clock to figure out how to win, all there competition has to be doing the same or they will lose. This is the equation that brought us all the amazing things we have today like computers, iPhones, and televisions. Our goal is preserve this equation by enabling the businesses looking for a new way to compete. Customers save and explore, businesses compete and grow, and the world spins madly on.

Thanks for reading! 

Check us out online and sign up for release updates:http://scannibal.com/

And follow us on Twitter:@ScannibalApp 

Chris

 

Coalition Loyalty

The idea of a "Coalition Loyalty Program" is something that has been prevalent in other countries for many years but is brand new to the US. Coalition Loyalty is when multiple business essentially join together to create their own rewards points. Customers can then earn rewards at any business member and redeem them at any other business member. As part of joining, a business will share there customer information with the other members. There are good and bad aspects of these programs from both a consumer and business standpoint.

Customer Benefits

• Loyalty Flexibility - You can earn one place and reward somewhere else
• Breadth of Earning - The number of places you can earn is greater than a normal, in-house loyalty program
• Industry Diversity - The places you can earn and redeem spans multiple industries

These are all great things, but there are also some downsides to keep in mind.

Customers Concerns

• Data Usage - As part of these programs, the business that are members share your information with the rest of the members so they can market to you.
• Narrow Options within Industries - By nature, these programs want only a single business from a single industry (having more then one would create unwanted competition). This means while your rewards can span industries, you likely only have one choice per industry

These are options you will need to weigh in decided which programs to be a part of. Are you someone that has specific places you like to shop within each industry? Do you mind being constrained to a few businesses with your rewards point? Are you OK with you information being shared? 

From a business perspective, there are other benefits and concerns to these programs

Business Benefits

• Lower Initial Investment Cost - The cost of the program is distributed over all the members, making it more accessible to small and mid-sized businesses
• Customer Data - Being a member offers access to consumer data and a pool of customers larger than the business could gather on its own
• Positive Rewards Transactions - Customers shop at your business to earn rewards (at full price) but redeem them somewhere else (at a discount). You get the benefit without margin hit. This is the ideal situation for a business member
• Limited Competition - By design, there will likely only be one business per industry so it is likely that you will be the only option for customers in that program to buy your type of products.

Business Concerns

• Customer Data - The sharing of consumer data goes both ways. You can see theirs and they can see yours
• Other Business Members - The other business members can have a large impact on the customers the program attracts. For example, joining a coalition program that includes Walmart is likely going to be more beneficial than joining a program with a local bakery.
• Negative Rewards Transactions - Customers earn their rewards (paying full price) at one of the other businesses and redeem them at your business (at a discount). In this case, you get the negative margin impact without the full price transaction to balance out.

Overall, these programs are good step toward the way rewards should work, but they are not quite there. Customer data is still shared which does not respect the privacy of the consumer. While there are more options, the rewards are still not as versatile as they can be. Customers are limited to only the businesses in that program with very limited options within any given industry.

Our goal at Scannibal is to completely break down the walls between where rewards are earned and where they are redeemed. We are literally re-writing the rules for how you earn rewards and we are very excited to take some of the basic ideas of "Coalition Loyalty" and turn them into something revolutionary!

Thanks for reading!
Chris @ Scannibal

Follow us on twitter: @scannibalapp or online at Scannibal.com

"Percent off" VS. "Dollars off"

The biggest key to what makes a coupon interesting to the majority of us is perceived value. This is the "Wow" factor when you cannot believe they would give you this kind of deal. Part of you knows its may be too good to be true (and often is) but they got over the first hurdle and they got your attention. One of the tricks marketers with use is using a percentage off versus a specific dollar amount off.

Percentage off

• Customers generally like percentages off because this can translate in to a large dollar savings on a bigger item
• Businesses usually dislike percentages off because they are more difficult to plan for (if you buy a pack of gum at 50% off, it may cost them $.50 but if you save 10% off a TV it may cost them $100)
• Can be very valuable on big purchases but can be deceivingly low value on cheap items
• Can be off of a single item, entire purchase, or individual product
• Often used as headlines to grab your attention
• Make sure to check exclusions for exclusions and limitations
• The more you spend, the more absolute value they have

Dollars off

• Many Customers do not like them as much because they feel like their savings are limited (and they are)
• Businesses love these because they are much easier to account for in a budget since they have a defined value
• Often have stipulations that you need to spend a certain amount to get that discount
• Can be off a single item, entire purchase, or individual item 
• Can translate to a huge percentage savings on smaller items, but may be a drop in the bucket on bigger purchases
• The more you spend, the less relative value they have

Pay close attention to each of these as they can vary greatly based on what you buy. Marketers know that and will distribute coupons based on a specific behavior they are trying to get out of you. They may show "50% off!" in giant letters at the top of an offer to get your attention. Once you read further you may see that you only get 50% off the second item or on your next trip. Not noticing these details can make all the difference. Understanding some of the basic differences can help you know when to use which kind so you can maximize your savings.

Dynamic Earning and Loyalty Programs

One of the key pieces to what makes Scannibal different from anything you might be using today is what we call "Dynamic Earning". This means you re able to earn rewards to places you are not shopping and you can earn rewards to multiple businesses with one transaction. By allowing rewards to be earned in a totally new way, we are trying to provide customers with a single, effective, and most importantly,  seamless way to earn and redeem their rewards with almost no effort. Think about all the benefits of being able to earn rewards dynamically:


1. You can earn rewards while shopping at businesses that do not offer a rewards program.


2. You can earn rewards to multiple businesses with a single transaction


3. You are expanding your horizons by generating valuable incentives that encourage you to try new businesses.


4. You have the ability to earn a new gain on a purchase transaction.


While these are important, the last is possibly the most exciting. While I cannot get into details yet on exactly how, we are building a model that lets you earn more in total rewards that you spend on the transaction to generate these rewards. Imagine you spent $20 and earned a total of $30 in rewards. This new rewards value equation will change the way you view retail. This model means you save far more than any other couponing or rewards method short of someone giving you a product for free. This is part of strategy to create the world's first "Coalition Anti-Loyalty Platform". Below I'll discuss some of the current methods being used.


In-House Loyalty


These are the most common and growing quickly. These are the programs businesses put together and run under themselves. The problem with these is simple. Customers must spend and get rewards all within the confines of a single business. This makes sense for the business as they want to keep you coming back, but does it make sense from a user standpoint? We would argue that customer actually lose out when using these programs because they end up spending more money at the business even if the "rewards" make the consumer feel like they are spending less and because consumers lose choice. They begin to feel like they need the rewards to afford the goods they buy and get into a rut of buying the same things at the same places.


Coalition Loyalty


Another concept that just emerging in loyalty in the US is "Coalition Loyalty". These are programs where multiple businesses in different, and often strategically aligned industries allow users to earn rewards by shopping at one and redeem than at any of the members. While this is still far better than the completely silo'ed, one-dimensional, internal loyalty most companies use, it still have strict limitations. For example, these programs can only support one business per industry. They would never want multiple businesses within an industry in one coalition group because now those companies have to compete. Despite a potential bad connotation, competition is actually very good for business and for customers. Competition creates value and innovation. While these type of programs are just launching in the US, they are widely available elsewhere. They are still not getting it quite right.


In conclusion, there are plenty of options out there but none of them have been actually designed to optimize the "reward" concept until now. Using a new model, we will save every consumer, both users and non-users, money by creating a new and competitive retail environment in which each transaction is view as a valuable and sought-after commodity. We envision a world in which customers drive retail, not retailers dictating to customers.


What do you think? Leave a comment or follow on twitter @ScannibalApp.


Thanks and happy bargain hunting!

Coupon Challenges

Coupon Challenges

As we all know, there are tons of mediums through which to get coupons these days. Here are just some of them:

• Newspaper inserts
• Direct mail
• Email
• Manufacturer in-store
• Retailer in-store
• Online
• Apps
• Valassis (the things that print when you check out at the grocery store)
• Receipts

With so many different ways to find coupons, figuring out how to find, manage, and use them all is a full-time job in itself. The coordination needed to track all the different type, products, valid dates, redemption values, exclusions, and all that jazz is a ton of work! Its all about the cost/reward balance. The time and energy it takes to do all that is often not worth the actual savings. In this post I'm going to discuss some of the different challenges that arise in the current coupon environment.

Key challenges

• Steps in Redemption

By far the biggest obstacle in using a coupon is the shear volume of actions that go into using one. Lets break down the whole process of using a newspaper coupon, from start to finish.

1. buy a newspaper
2. flip through the adds to find the coupon you want
3. cut it out
4. go to the store
5. select your item
6. check coupon validity
7. go to checkout lane
8. give coupon to cashier
9. pay 
10. go home

That may sound silly, but to use a newspaper coupon, those are all absolutely necessary steps. The fastest way to more savings is by cutting down those steps to as few as possible.

• Coordination of Different Mediums

As mentioned at the beginning, there are tons of different mediums through which to get coupons. It may seem simple, but the logistics of using coupons when they are all over is quite complex. Think about  getting a mobile, email, and in-store coupons that you plan to use on one trip. First, you need to print the email coupon and remember to take it. Next, you need to make sure your phone is charged and with you on the way to the store. Finally, once you get your in-store coupon, you need to take a minute to read all the exclusions and make sure they are all going to work. The chances of all these steps working flawlessly and you saving as much as possible is not very good.

• Exclusions

Exclusions are something I have dealt with extensively in my professional experience. Exclusions are often one of the biggest reasons people get frustrated with coupons. So often people take all the right steps to get the coupons, check dates, and all that fun stuff just to find out at the register that the one thing they wanted is excluded in size .005 font way at the bottom. Unbearably frustrating. 

The reason exclusions are put on coupons, especially at retailers, is the many of the brands that store carries have specifically stated that they DO NOT want customers to ever receive a discount on their product. I find it a little pretentious, but that's just me. Most of the time, the discount doesn't even affect how much the brand gets paid and the discount only affects the retailer (who gave you the coupon). The result is generally a coupon that goes unused and customer who has now had a bad experience.

• Purchase Stipulations

This is one of the smaller redemption challenges and some businesses are good about not using them. Purchase stipulations are when the validity of a coupon depends on purchasing multiple items. It may be more than one of a single item or a set of different items. The idea behind these is to pull you in with the promise of savings and get you to spend more total dollars. In some cases, the deals can be so good that they warrant making a big purchase, but be careful in determining if you actually want the other required products or if you need as many as you are required to buy to get the savings. Again, it's all about weighing what you give for what you get.

• Limited Validity

Limited Validity is when a coupon is only good for a specified amount of time or in a specific location. The biggest problems resulting from these is trying to use a coupon that has expired. We have all done it. Some places are good about honoring the coupon even if it is expired and others are very strict. These add to the complexity of coordination since almost none of your coupons will have consistent validity periods (number of valid days) or overlapping valid dates (calendar dates on which they are usable).

• Limited Applicability

Limited Applicability is when a coupon is only good on a very specific purchase such as purchasing a 20oz Sprite. If you try and buy a 12oz can, the coupon is no good. The idea is that they are trying to get you to purchase a specific SKU (Stock Keeping Unit). This may happen when a business is trying to promote a specific item or is trying to speed up sales of an item. Since it is possible that these may be a clearance strategy, keep in mind if that specific item in that specific size, color, flavor, etc., is something you will actually use.

Conclusion

These are a few of the different challenges you may run into while attempting to save money using coupons. The more you are able to avoid or leverage these, the more money you will save. Remember, the key to savings is reducing the friction between getting and redeeming a coupon. If you can find a way to streamline your process, you will be rewarded.

We are Creatures of Habit

At a start up networking panel today I happened to bump into an old acquaintance from the college days who has since gone on to manage multiple different projects and is now an investor. We caught up and got into talking about Scannibal and the idea of customer purchasing patterns. It got me thinking about an angle of the shopping experience that is often overlooked. Until now, coupons, ads, and marketing in general has been an attempt to create consumer patterns. A big part of Scannibal is creating an easy way for us, as customers, to do exactly the opposite. Our goal is to help break patterns.

Buying Patterns

First, answer these two questions

1. When you go shopping, do you usually go to the same few places?

2. What do you actually get for your loyalty?

If you are like most people, your answer to the first question was "Yes". Although many of us think we are thrifty, clever, diverse shoppers (yes, myself included), the fact is that over 80% of people make the majority of their purchases for a given type of good from one place. For example, if you buy groceries at Target, chances are that you almost always shop there for groceries. You are used to it, you know what to expect, and it's predictable.

For question two, think about all the loyalty programs you are enrolled in and all the cards, key chains, and email coupons you need to make them useful. What is the goal of these programs? These programs are all intended to try and funnel you into a purchasing pattern. The most useful info in the world for any business is being able to know who will come in, when they will come in, what they will buy, and how much they will spend. This means that being a predictable, traditionally "loyal" shopper gives businesses a virtual crystal ball.

Are they worth it?

When businesses have this much information and know what you will do, it gives them all the power. It leads to customers feeling like they owe these businesses for caring about them enough to give out a few rewards points. This seems backwards to us. Shouldn't the customer's needs and decisions based on all the options available determine where and how we shop? Big companies are spending billions of dollars to get you into these patterns and keep you from being able to actually make your own choices about how you spend money.

This all leads to the question of whether loyalty programs are actually saving us money, or costing us money. The fact is that the minimal savings you get as a reward is almost always outweighed by the additional money you spend because you got the reward. Wouldn't it be great if we had rewards that were meant to help us change our habits rather than rewards that try to reinforce them? When you think about it, the businesses are trying to use the same psychology on you that you use on your kids when you want them to clean their room. Don't fall for it!

Let's fix it!

 We believe that both consumers and businesses will benefit from a little more good-spirited competition. Our goal is to provide a platform to help level the playing field across all levels of purchasing, from buying lunch to buying a new TV. When businesses compete, customers win. Goods become cheaper, service becomes better, and those competing businesses grow and adapt in to much more responsible and healthy businesses. While the buying patterns that big marketing budgets are intended to create are good for a few big businesses, the customers ultimately lose out as their choices narrow and when choices narrow, the few choices that are left can charge whatever they want. Scary.

Stay tuned and thanks for reading

Hello World!

Hello World!

My name is Chris and I am the founder of Scannibal, a completely new way to think about getting rewarded for shopping.  Prepare your self for the future of spending money!(insert dramatic drum roll here)

more to come soon