How has Discount Purchasing Changed Your Purchase Behaviour

. . . by Jeff Haltrecht

Jeff Haltrecht is a principal Leadership Coach at the Polaris Learning Academy and the Facilitator of the Polaris Alumni; he is a regular contributor to Polaris Digest

Admit it.  You or someone you know is addicted to coupons: the highly sought after ‘$1 off your favourite product at the grocery store’ coupon.  Collect them by flyer, in your mail, or in-store and you could add up savings of $20 per shopping trip.

The shift in purchase behaviour with these coupons is small – roughly 1% to 3% of all coupons issued actually get redeemed.  Still, they are effective in getting you to buy one brand over another when you are in the market for that product.

Coupons themselves have been around a long time, at least as far back as when I was a child and I’m sure well before that.  As a product, once invented, the coupon changed very little.

Then two forces collided!

I recall getting my first business laptop back in 1995 while a product manager working on the Valvoline oil brand.  The Internet was getting going and a supplier of advertising services said he was going to ‘email’ me our artwork.  ‘You’re going to what?’ I asked.

The Internet – the first force – has been, and will continue to be, one of the most prolific change agents for business (and personal life, too!) of modern time.  Entire industries are being rewritten because the bricks and mortar business did not understand how a digital company could be a direct competitor.

  • Amazon is a leading book retailer, while Border’s files for bankruptcy
  • Google has over $30 billion in cash, while Yellow Pages is trying to find a new identity
  • iTunes and Netflix are soaring in popularity, while HMV starts selling cell phones and Block Buster restructures

Then came the recession of which we are still slowly climbing out of.  This second force made consumers step back from their spending spree, preferring frugality vs. indulgence.  This shift particularly occurred in the middle class level, where they chose price over quality, or a discount on the same level of quality.

This behaviour change has been the fuel behind a brand new business model for coupon companies.  Have you heard of Groupon, Living Social, or WagJag?  If you have, congratulations – you are a part of the latest on-line craze.

Want a shock?  Groupon turned down a $6 billion purchase offer from Google because they think they’ll be worth more in a couple of year’s time.  And Groupon did not exist before the recession.

The impact of the recession, coupled with a young internet entrepreneur’s vision of electronically pushing coupons to you on a daily basis, is changing consumer’s purchase behaviour unlike any coupon ever before.  How?  By getting people to buy items they were not even considering buying with discounts worth $50+ on a single item!

Think about that.  Traditional coupons made you switch brands when you wanted the product.  Electronic coupons pushed to your in-box with a time limit to ‘buy’ are getting people to buy products and services that they had no intention of buying when they woke up that morning.  Now that is change!

It’s not surprising, once again, that the brick and mortar coupon companies missed the opportunity.

Step back right now and think about how the Internet may change your business model.  Don’t think that having a website is being on-line – that’s like handing a business card to a prospect and expecting a million dollar order.

Are you doing business on-line?  Can your customers – existing and new ones / business to consumer or business to business – interact with your people, buy products, learn, share and participate in the experience?

There is no better time than now to start leveraging the Internet’s reach to change your customer’s purchase behaviour.

As the old saying goes:  ‘Change brings opportunity.’