Chicago Company Merges Direct Mail with Online Coupons

By | March 2, 2011

Bare Deal likes to describe its coupon service as “Groupon meets Netflix.” Its founders are a couple of Northwestern grads who mail (yes, mail) coupons to consumers who’ve asked for them, requiring payment only when consumers use the coupons.

Bare Deal co-founder, Glen Andrianov, explains through an example. ”This week, we are  featuring the company, Chocolate for Your Body. Anybody who signed up for Bare Deal is able to select this specific deal on our website. A scratch off-card for Chocolate for Your Body is then sent to the person’s mailing address.”

Put another way, this is the process:

  • The consumer hears about the service via Twitter, Facebook, word of mouth, or opt-in email and goes to the Bare Deal website, and “signs up.”
  • The consumer who wants to explore a deal, registers for that deal.
  • Bare Deal digitally prints and mails the consumer a scratch-off coupon featuring a 40- to 100-percent discount, branded with the business’ info.
  • When ready, the consumer takes that coupon to the business and redeems it.

Because the recipient asked for the coupon, the open-rate is high. But there’s another – some might say better – reason to open that envelope immediately. Consumers don’t know precisely how big their discounts will be until they scratch-off in the privacy of their home. The discount could be a healthy 40%, or the discount could range up to 100%.

Andrianov says consumers have fun with the coupons. “Instead of a product focused only on savings (Groupon and competitors), our scratch cards provide variable savings, which create excitement – consumers are ‘winning’ a discount.”

Couponing is huge in the Windy City (as this Chicago Tribune article notes) so there’s plenty of competition. But coupons enjoy impressive marketing acceptance, too. So how does Bare Deal differentiate and market its coupons? Andrianov says the company set out to create a service people would love and drives traffic to the website mainly through word of mouth and social media (Facebook and Twitter). “Also, members pay businesses directly, which helps foster loyalty between consumer and their business.”

Lynford Morton, owner of PhotoTour DC, a company that teaches photography on walking tours around Washington, DC, would concur that business access to consumers is critical, but also missing in most coupon arrangements. Morton, who has a lot of experience with coupon marketers, says, “I get pitched by these coupon companies all the time. They all claim some novel differentiator…which really turns out to be yawn-inducing. Every now and then I get a couple smart ones who want to talk to me about where my pain points might be with the daily deals of the world and how they might address them. Others bring me solutions to problems I don’t have. If I understand the Bare Deal approach correctly, this business solves one huge problem by letting you communicate with your customers. To know 600 people bought your product, but you can’t communicate with any of them is nuts. Giving a business owner direct access is huge.”

Andrianov agrees. “Businesses prefer us over competitors because they are able to put their brand identity on a physical product, compared to a black-and-white printed piece of paper with no brand identity.”

Customers must love the pay-as-you-go arrangement, too? I mean who doesn’t have at least a few coupons already paid for, but unredeemed sitting in a folder somewhere? Guilt! Angst! Pressure! Ah… relief!

The delivery of branded, redeemable scratch-offs can happen only one way: via direct mail. “Because we provide a physical product that can’t be printed on a computer, we use direct mail .. This process allows us to send scratch cards only to members who are interested in a specific deal … If a member does not select a deal, they will not receive anything in the mail.”  

In short, Bare Deal’s innovative merger of a pay-when-you-use-it-only coupon with the thrill of a strike-it-rich scratch-off should add up to a model with promise.

As Netflix already proved, the U.S. mail has its advantages. In fact, some people would argue that the U.S. Postal Service made Netflix successful. So, yes, it’s good to see smart marketers still working the direct mail angle.

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6 thoughts on “Chicago Company Merges Direct Mail with Online Coupons

  1. Bill Lamparter

    Your approach to the otherwise low redemption rate of FSI and web coupons is innovative and for a printing industry consultant, fascinating. Scott’s article indicates that you print scratch-off coupons digitally. I would be interested in learning whose digital printing equipment you use and how you apply the scratch-off coating. Thanx.

  2. Nancy Scott

    Hi, Bill… I’ve forwarded your comment to see if somebody at BareDeal wants to respond. If they care to share, I suspect everybody would be interested in this response. Stay tuned …

  3. Glen Andrianov

    Bill – Thanks for your comment! We have partnered with a national printing company to provide our customers with the highest quality scratch cards!

  4. Jasper Casey

    I understand that “ordering” these printed coupons has a the novelty element (scratch off game with variable discount rate), I’m just wondering how sustainable this is. Will people tire of this model once the novelty wears off? Why not just have a digital coupon (with a randomly generated discount rate) that the recipients can print themselves. Would that be more cost effective?

  5. Ian Flynn

    This is a very clever idea and I could easily take it one step further by using Kodak NexPress invisible red fluorescing digital ink to print the variable discount. The consumer could reveal the code by taking it into the retail store to reveal the discount with a UV light thus closing the loop. This inline process has the benefit of being faster & cheaper than adding a scratch off coating.

  6. Nancy Scott

    That’s a good question, Jasper. In general, the coupon game would appear to need two satisfied participants to make it work: the business owner and the consumer. I think BareDeal’s business model is meant to offer an alternative to complaints that both sides have with coupon deals. Business owners are frustrated because they don’t “own” the contact info that the coupon companies gather in marketing (that’s the real value of Groupon-esque models, of course: the data). Business owners participate anyway because a) they get a large cash infusion upfront and b) the majority of consumers never redeem the coupons they paid for. Which takes us to the consumer side of the equation: Consumers don’t like paying for coupons upfront that they never get around to using (note: there is a growing “used coupon” industry building up; if you Google unused coupons, you’ll see what I mean). I understand the unredeemed coupons are between 40% and 70% of those sold. An article in the HeraldTimesOnline.com was titled “billions of unredeemed coupons seen as fodder for fraud,” so redemption is a box with many angles. All of this means, of course, that currently popular coupon models are vulnerable and new coupon models will keep cropping up. Interesting times, huh?

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