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Oct 31, 2002
Case Study

Goody's Chain Store Tests Emailed Coupons

SUMMARY: If you have been considering emailing discount coupons to your
customers to see if you can drive some brick and mortar store
traffic, absolutely check this Case Study out.

It includes some stunning metrics regarding average shopping cart
size. We worried discount coupons might cannibalize normal sales.
We were completely wrong.

Bob Goodfriend CEO of Goody's Family Stores, a chain
of 332 apparel stores in the Southeast, wanted to make more money
from his Web site without actually turning it into an ecommerce
site with all the attendant logistical headaches.

He tasked his Director of Marketing Wayne Walters with finding a
way to use the Web to drive more customers to regular stores.

Goody's already had a pretty complicated Web site, with some fun
bells and whistles such as the ability to manage your Goody's
charge card account, ask "Gigi" questions about style, and Walters'
favorite, a virtual mannequin you could dress up in Goody's
apparel. (Link to sample of old site below.)

What more could he add to the site to make it work harder for the
bottom line?


Instead of adding anything to the site, Walters decided
to take things down. Lots and lots of things, even including the
virtual mannequin.

Walters explains this radical pruning, "We had to make room for
functions related to actually making a sale, and prioritize it
towards driving people to the store."

Now, instead of a content and function-rich site featuring many
options, visitors saw one overwhelming primary option, print out
a coupon and take it to the store nearest you. (Link to new site

The new home page features a graphic of what looks like a
traditional newspaper insert colored coupon complete with dotted
edges to indicate "cut here" and an expiration date. To get a copy
of the coupon suitable for printing, visitors must join Goody's
email list.

Then every two weeks they get another virtual coupon in their email
box. These again look just like old-fashioned print coupons.
(Link to sample below.) Although he worries about being filtered
out, Walters uses classic sales copy in the coupon mailing subject
lines, such as (typo ours):

"F*REE COUPON. Save add'l 20%. Expires Nov. 7."

In order to grow his opt-in email list, Walters also uses three in-
store tactics:

1. Clerks prompt customers to fill out a printed form (link to
sample below) and stick it in a "ballot box" near the register.
The form invites customers to hear about “Bob’s exclusive
coupons and sale previews,” and asks for three simple things:
name, email, and zip code. Customers can also check off the
sizes or styles they’re interested in.

Then, employees type the information into the main email
database via Goody's intranet.

2. Blue and orange posters are set up throughout the store
prompting email sign up, “Bob will email you incredible
downloadable discounts.” (Link to sample signage below.)

3. There is also a voiceover on the PA saying: “Got email? Bob
wanted to send you free coupons twice a month. Sign up for
Bob’s downloadable discounts today right at the front of the
store. It’s that simple.” (No we did not include a sample of
that, so you will have to use your imagination.)

In order to measure coupon results, a barcode is assigned to each
coupon. Then when coupons are redeemed Goody’s can record who used
the coupon and whether they got it off the web site or from email.

Everything is captured in a relational database; including, coupons
redeemed, the average basket size, average discount, payment type
on the purchase, and the department code.

When the revamp and new virtual coupon program launched three
months ago, Walters' goal was an ROI "of around 50%."


Walters was blown away when he found his ROI was
over 150%. Goodys generated 68 cents of revenue per
email address mailed in its last completed campaign.

More metrics:

- Customers redeeming a coupon tend to spend at least 50% more
per total shopping basket than customers who do not have a coupon.
The normal Goodys customer basket is about $50, the average
Goodys coupon redeemer is buying at least $74 and sometimes as
much as $130.

- Goodys has tested a variety of coupon levels, from no minimum
purchase to a required $150 purchase for discount. Redemption
rates have thus far proven to be fairly elastic. Jack Feuer at
Hanft Byrne Raboy & Partners, Goodys' ad agency, says, "We
haven't found a bit of diminishing return yet, but we're probably
getting close to the point where higher minimums will reduce
response rates."

- The coupon test that got the highest redemptions on any single
day did not have a minimum, but it was only good for one day. It's
average cart size was around $75, not bad for no minimum.

- Goodys has tested sending coupons on Tuesday mornings and
Thursday mornings. Thursdays won hands down. Feuer explains,
"These are offline coupons you have to use in a store. I think
people on Thursday are getting ready for the weekend, and Friday,
Saturday and Sunday are traditionally the biggest days at these

- Even though shoppers are printing out their coupons on often
less-than-optimal home printers, just 13% on average have bar
codes are not scannable. In that case the store clerks type in a
special keycode also printed on the coupon. This way Goodys
database can track that a sale came from a particular offer, but
not exactly which customer redeemed it.

- Unlike consumer packaged goods marketers who fear duplicate and
fraudulent coupon redemptions because coupons are loss leaders,
Goodys hopes people will print out two copies of their coupons
because every one redeemed is profitable.

Currently the chain gets an average duplicate redemption rate of
just under 10%. "I tend to see more of it towards the end of the
expiration period," says Feuer. "People think 'If I'm going to
use it again, I'd better use it now. If someone wants to send it
around to all their friends and use it 12 times at $125 a piece,
God bless them. That's the point."

When we asked Feuer if he was afraid of cannibalizing sales
Goodys might have made at full price, he answered firmly, "If we
can boost shopping frequency and the average basket size, it's
great incremental revenue. To me the cannibalization argument
doesn't make sense. If you're not going to cannibalize yourself
with better marketing, then your competitor is going to
cannibalize you."

Useful links:
Samples of coupons, old site home page, in-store cards, etc.:

Current home page:

Hanft Byrne Raboy & Partners (Goody's agency for both online and
off, who helped create the coupon campaign and revamped site)
See Also:

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