[Marketing Trends] Save! Save! Save!

Does posting a coupon or discount offer on your Web site attract new customers, or simply give a price break to consumers who would have called you anyway?

Discount offers and coupons are a regular part of Yellow Pages, newspaper and mailer advertising. They give companies a way to catch the eye of the consumer looking for a particular service, a way to steer him toward your company over a competitor, and give him a reason to buy. But as the Internet becomes the “go-to” information source for more and more consumers, can the same rationale be used for placement of discount offers and coupons? There does seem to be a trend among pest management companies with Web sites to add such e-incentives to their pages; but just who is doing it and what are they learning?

While statistics vary somewhat by source, in general, they show that an average of 70 percent of U.S. adults have Internet access, and this usage is growing rapidly each year. In addition, according to the Coupon Council of the Promotion Marketing Association (PMA), 76 percent of the U.S. population uses coupons.

In fact, explains Lorraine Gallagher, co-chair of the PMA Coupon Council, consumers don’t only use coupons for the price savings, but also for the “deal-enjoyment factor.” The enjoyment people get from hunting out a coupon and feeling smart for using it can be an even greater incentive to purchase than is the amount of money being saved, she said. And it is those with the highest level of education — post-graduates — who use coupons the most.

But, before you rush to tap into this incented market and goad your Webmaster into putting a coupon on your home page, there is one more statistic you should know: According to a 2004 Cornell University survey, although almost 75 percent of respondents said they use paper coupons regularly, less than eight percent regularly use online coupons. Even if this usage were increasing at the same rate as Internet usage, online coupon users would still be a minority.

So what should you do with all these numbers and statistics? We decided that it only made sense to speak with companies in our industry who have posted discount offers or coupons on their Web sites to determine why they decided to go that route and how it is working for them. (See  related story, “Five Best Practice for Online Offers” for some quick tips.)

ONLINE COUPONS. Most online pest management service coupons are redeemed for residential service and most are targeted at new customers, say PCOs contacted by PCT magazine. At Arrow Environmental Services Inc., Sarasota, Fla., about 85 percent of coupon usage is residential, said President George Pickhardt. Like most companies, Arrow targets coupons toward new customers, but will accept the coupon from current customers, although in its case, the coupon is a one-time use offer, so it will only be valid if the customer has not used a coupon on a previous service.

“It’s a good add-on to our Web site,” said Greg Vines, vice president of sales and marketing for Allgood Pest Solutions in Cumming, Ga. “It entices people to visit our Web site.” Allgood has had coupons on its Web site for about two years; they began the practice because they saw that was the direction that both marketing and the industry were heading, and the company has seen a tremendous increase in coupon usage in that time.

“A lot of people, I think, are just more attuned to searching on the Internet.” And once they land on the Allgood site, the coupons add an incentive to buy. “It just entices customers to hopefully pick up the phone and call us,” Vines said. “It’s a lot of good business we probably would not have gotten otherwise.”

Arrow has been posting coupons on the Internet for five or six years “mainly just to see if we were getting any action on our Web site,” Pickhardt said. The company runs ads in the Yellow Pages referencing the Arrow Web site and coupon, and usually by the time a salesperson responds to a call, the new customer already will have been to Arrow’s Web site, will know something about the company, and will present the salesperson with the coupon. “I would say that probably 25 percent of our new customers coming on board utilize that coupon,” he said. In fact, Pickhardt said, no other coupons that Arrow puts out get used as much as their online coupons.

Pickhardt said the online coupon provides additional value to his bottom line, in that a consumer who may be seeking pest control is driven to the Arrow Web site, and then is exposed to the numerous other services the company offers. “(The coupon) gives us some indication that someone has gone there. They’re looking at our site,” he said. “We provide a lot of other services than what the customer initially calls for. It’s another way to get them to go to our site and find out about these.

“Web sites are just sort of a brochure that’s out there in Never Never Land,” he adds. “If you don’t direct people to it somehow, they won’t find it.” On the other hand, when people go to a Web site, they’re looking for something in particular or they have a need, he said. “They’re not going there just because they have nothing else to do,” so the probability of the consumer following through and calling for service — if they like what they see — is high.

Kevin Kordek, president of A-Active Termite & Pest Control, Virginia Beach, Va., has had online coupons for as along as the company has had a Web site. “People go to our Web site, and we get quite a few leads,” Kordek said, “but I don’t think we get three e-coupons a year.” Kordek said that this is, at least in part, because of the way the company has positioned itself and the characteristics of its target customer. “We’re not a coupon-shopper type of company,” he said. Rather, consumers tend to call A-Active when they’ve had a bad experience with another company and they’re in a situation in which they need quick, reliable, trustworthy service, “so when we’re coming in, they’re not always as price sensitive as you might think,” he said.

While the Yellow Pages remains A-Active’s highest source of leads, it has the lowest closing percentage; on the other hand, Kordek said, “closings on the Web are higher than anything else — even referrals.” Thus the company’s primary goal is to drive people to its Web site, a goal that he sees as the future of the industry. A-Active’s ideal customers — those who are educated and informed — also are the ones who use the Internet the most, Kordek said. Once they hit your Web site, they’ve generally narrowed their selection to two or three options. So when they then make the call, “they are ready to sign with us as long as we live up to the Web site.”

Kordek is able to track Internet leads because most new customers do use the site’s appointment scheduling option, but although all they would need to do is “hit print,” they just don’t tend to download the online coupon. “I can tell the day the phone book hits the streets, we see the Yellow Pages coupons come in (to the office) in droves,” but while the e-coupons may be spurring the customer to call, when it comes down to it, they just don’t use them, Kordek said. “There is definitely a difference between the Internet shopper and Yellow Pages,” he said.

While consumers won’t necessarily be driven by a discount offer, if a customer has a need for the service, the coupon can spur them into making the actual purchase, said Atlanta-based Orkin’s Rob Crigler. Crigler was hired into the new position of director of interactive marketing in 2006, reflecting the company’s increased focus on all facets of interactive marketing. In addition to the coupons which can be found by going directly to Orkin’s Web site, clicking a link to Orkin from a search engine routes the user to its coupon page and a “schedule now” option button.

The company has had a standing online offer for about two years, Crigler said. “We try and use a call to action, but with Orkin being the brand that it is, we don’t use massive discounts.” He believes that the coupons act as a “minor push” — a call to action to make the purchase.

PAYING ONLINE. Along with discount coupons that consumers print out, some companies are finding that it makes sense to offer a discount for online scheduling and payments. Internet usage still is evolving as a whole in the pest management industry, with a 2006 PCT Readership Survey reporting only:

• 38 percent of respondents have company Web sites,
• 21 percent of these offer online scheduling,
• less than 6 percent provide the capability for online payments.

However, those companies that have tapped into this evolving practice are finding that it can save money for the company and the customer.  When a consumer goes online, finds a service, then schedules and pays for that service all through an automated system, it saves the company money which can then be passed back in discounts.

“Our Web site is a pretty good salesperson for us,” said Greg Clendenin, president and CEO of Middleton Lawn and Pest Control, Orlando, Fla. The company has had its interactive Web site since 1999, which “was and is today a complete online transaction,” he said. “We wanted to have this presence because looking down the road, we could see this growing.” The site allows for online purchasing and scheduling, and gives a discount for doing so. What services would you like information on? the page asks, to which the consumer can select Lawn Care, Pest Control, or Purchase both Lawn Care & Pest Control to receive a $25 discount in addition to the 7% discount you will already receive for ordering online. Once the customer selects the option, he or she then enters information about the situation, structure, etc., and the system then provides a price, with the discount detailed, and provides a further option for online payment and scheduling of service.

As far as return on investment: “We’ve long since paid for the dollars it took to develop the site,” Clendenin said. In addition, Middleton does not have to send a person out to make the sale, there is no vehicle expense, “it never calls in sick, never has a workman’s comp claim, and never goes on vacation,” he said. “All those things are costs.”

Despite his tongue-in-cheek description of the savings, Clendenin also makes the online process beneficial for employees, as the sales person for the area gets commission for online sales. “I did not want there to be a bad feeling among salespeople,” Clendenin said. “I want them to promote the Web site. We really want everyone to feel it is just another enhancement.” There also were internal fears that the properties would not be properly priced, but, in fact, he said, the quoted prices adhere very closely to the company’s standard price list. “I think the Web site probably prices as good as any of our salesmen, and it sells about as much as a real good salesman sells every month,” he said.

While not all companies offer discounts for paying online or can provide online scheduling, there are a number of PCOs who do offer online payment options, such as Allgood. “Our customers who use it really enjoy using it,” Vines said. Utilizing credit card payments, customers find the system quick and easy to use, he said.

Arrow has an electronic payment system through which a credit card is posted to the account and automatic payments are made. “We deal with so many customers that send us small amounts that anything we can do to speed up the process and reduce labor helps,” said Pickhardt. About 25 percent of Arrow’s customers are on the auto-payment plan. “I don’t think there’s any question that it’s helped us,” he said, and, in fact, he adds, “it would probably have an effect on business if we stopped posting online.”

A-Active is a member of Associated Pest Services, a network of regional pest control companies. Associated had an online payment system through PayPal, but cancelled it after evaluating it and finding that not enough customers used it to justify the cost. They did call each client who’d been on the system to let them know they were terminating the service, he said, and all were fine with the change, with some deciding to provide a credit card for regular charges instead. More and more people want to communicate online, Kordek affirms, but the PayPal system was not one that worked for them.

Orkin does not have an online payment system at this time, but does have an autopay option. As the company continues to increase its interactive capabilities, however, they will be assessing such systems as well as complete interactive capabilities. “It’s really something that Orkin is beginning to focus on as a logical extension of our business,” Crigler said.

One attraction of the Internet is its ability to accommodate the busy schedules of today’s homeowners. Whatever companies can do to play into this and make life easier for its customers can help make your business more profitable. Such is a basis for Middleton’s complete online transactional capabilities. As Clendenin said, “If you’re in business, you should not make it difficult for people to give you their money.”

The author is a frequent contributor to PCT magazine.

5 Best Practices for Online Offers

Internet coupons are catching on, but they still represent a very small percentage of overall distribution and redemption of coupons, said Matthew Tilley, co-chairman of PMA’s Coupon Council. Though the council works primarily with and tracks coupons for consumer packaged goods (CPG), Tilley is also seeing some non-CPG industries using Internet-coupons successfully.

To continue to be successful, however, he cautioned that companies need to consider today’s audience. Overall, redemption of coupons has been dropping steadily every year, much of which he attributes to the fact that the consumer has changed significantly. Today’s consumers are younger, more ethnically diverse and have a great deal more choice of media — a growth with which coupon distribution methods haven’t really kept up, Tilley said. In fact, 90 percent of all coupons still are distributed through freestanding inserts (such as newspaper sections), while today’s consumer is more attuned to electronic media, such as the Internet, cell phones and iPods.

“Figure out who it is you are trying to talk to; figure out what media they are trying to consume, then match up those methods,” Tilley recommends. Other recommendations from Tilley include:

1. Freebies. Be careful with “free” offers. These can come back to hurt a company if consumers take advantage of the freebie without additional purchases. In CPG, Starbucks felt the sting when it offered a free coffee coupon, which consumers made multiple copies of and sent on to their friends. In the pest control industry, some companies have found that inspections can have such high labor and gas costs that instead of “free,” they charge a fee for the service, then discount or credit the service by that amount if the customer opts for the service.

2. Fraud. While it generally is more crucial that CPG industries use the services of reputable distributors to protect themselves against forged or tampered coupons, PCOs also should take the message to heart. With today’s electronic capabilities, PCOs should make sure their employees are aware of all valid offers and be able to “flag” any offers that seem out of line. A “7 percent off” offer could easily take you for “70 percent off” with the tap of a key.

3 % or $? When deciding between percentage and dollar savings, go with the higher perceived value, Tilley said. Percentages of 25 percent  or greater and dollar values of $10 or greater generally have the highest attraction, using the higher value if both are above. When the potential price has a great deal of flex, though, you may need to stay with a percentage off — for both your own finances and customer value.

4. Target. Taking this a step further, though, it can depend on whether you are targeting new customers or rewarding loyal, long-term customers. While higher value offers are important to get the attention of new customers, maintaining customers or getting them to add additional services, a lower percent-off offer can be appealing and provide all the spur needed for them to try the new service.

5. Changes. There are pros and cons to changing your offer, Tilley said. Retaining a standard offer can be a dependable, predictable stance, “a reliable branding tool.” Recurring promotions can ease tracking and estimating of return, but it can also get stale and competition can pick up on it. Tilley recommends that companies  change their offers, but infrequently, depending on the buying cycle. Even an annual change, proposed as “our 2007 plan” can be enough.