Getting customers to share coupons with their social networks (e.g., “Share the love with a friend, and you both get 20%”) has become a vital coupon distribution strategy to leverage the social influence of customers and provide cost savings. Some recent examples include Alibaba’s “skyscraper building” campaign, where customers invited their friends to form teams, cheered each other on, and built virtual skyscrapers together to win coupons; the Italian brand Raffaello’s initiative to invite customers to create postcards with their loved ones to earn coupons; and the e-commerce company Pinduoduo incentivizing consumers to share and buy products on the platform through online games and interactive challenges among friends.
Studies show that coupon sharing occurs among 90% of millennials, of whom 43% use social media to share coupons with their networks. On the receiving side, 92% of consumers trust referrals from people they know, and 71% buy based on social media referrals. In a new Journal of Marketing study, we investigate shared coupons, which combine two components: economic savings and social sharing.
Transform Shared Coupons into Relationship-Building Tools
Which coupons are customers more likely to redeem: coupons shared by friends (shared coupons) or coupons distributed directly from businesses (direct coupons)? On one hand, the social nature of sharing may increase perceived relevance and trustworthiness of a shared coupon relative to an equivalent direct coupon. On the other hand, consumers may perceive it as inappropriate to mix a coupon’s economic nature with social relationships (“no money talk with friends”), which could create conflict with the norms of communal relationships.
We propose experience cocreation as a novel strategy to transform shared coupons into a tool to advance relationship building. That is, we urge companies to set up situations where the coupon giver and coupon receiver invest their joint efforts to create a shared experience before redeeming the coupon. The combined activity customers undertake could be to develop a tour plan, design a coffee mug, or play a game. Our research suggests that experience cocreation could boost social goals (e.g., building friendships), alleviate norm conflict, and thus increase the appeal of shared coupons such that customers are more likely to share and redeem them. In other words, we believe the act of coupon sharing can be perceived as a means of promoting social bonding between friends.
The concept of shared coupons with experience cocreation is embedded in the emerging trend of social commerce, which integrates e-commerce with social media. The global social commerce market is increasing at an estimated annual rate of 31.4%, and Facebook launched Instagram Shops in 2020, which blends e-commerce with the Instagram social network. Sellers can create interactive, shareable, and immersive cocreation experiences on social media to promote e-commerce among consumers.
The Value of Reminder Messages to Redeem Coupons
Since experience cocreation can make shared coupons more appealing than direct coupons, we explore how to enhance its effectiveness. No firm can sustain costly coupon strategies indefinitely. Our research team finds a more cost-effective way to entice coupon redemption when dealing with shared coupons involving experience cocreation: by sending reminder messages to customers who have claimed the coupon but have not yet redeemed it. The message could emphasize the shared coupon’s economic value (“you still have a coupon for $10”) or a reminder that highlights its social value (“you still have a coupon you earned with your friend”). We find that economic messages are most effective at driving redemptions for high-value coupons, but not for low-value coupons; meanwhile, social messages have little effect on high-value coupons, but they dramatically increase redemptions for low-value coupons.
We recommend that managers consider three steps when utilizing social influence to promote business:
- Encourage consumers to share coupons. This can be a low-cost but impactful consumer-to-consumer coupon distribution strategy because it takes advantage of social influence. However, firms must note that social capital does not always lead to economic capital.
- Enable consumers to advance social goals with experience cocreation. When designing the cocreation program, firms should configure the program around two criteria: (1) requiring joint effort and promoting a shared experience between consumer peers; and (2) considering important factors such as whether the experience is interactive, competitive, or collaborative, and occurring between friends or strangers.
- Communicate shared coupons’ social value, which can substitute for economic value. That is, with the correct communication, low-value coupons are as appealing as high-value coupons. In our simulation, for a low-value shared coupon with cocreation (worth $4), an ex-post social message could increase the coupon’s value by 48.32% (to $5.93). Further, offering large economic incentives may not be worthwhile if they both cost more and diminish the social appeal of shared coupons.
From: Eric (Er) Fang, Beibei Dong, Mengzhou Zhuang, and Fengyan Cai, “‘We Earned the Coupon Together’: The Missing Link of Experience Cocreation in Shared Coupons,” Journal of Marketing.
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Eric (Er) Fang is Professor of Marketing, Iacocca Chair of Business, and Director of Center of Digital Marketing Strategy and Analytics, Lehigh University, USA.
Beibei Dong is Associate Professor of Marketing, Lehigh University, USA.
Mengzhou Zhuang is Assistant Professor of Marketing, University of Hong Kong, Hong Kong.
Fengyan Cai is Associate Professor of Marketing, Antai College of Economics and Management, China.