Prior to mySAP CRM 2005, most companies that offered coupons managed them using homegrown systems involving Microsoft Excel. Coupon Management is a new scenario in mySAP CRM 2005 Marketing that centralizes the process within mySAP CRM and allows you to integrate with SAP NetWeaver Business Intelligence (BI) to analyze your coupon campaigns.

This scenario helps you estimate how many coupons consumers will redeem for a given campaign. It also helps you determine the total cost of a coupon promotion by taking into account the face value of the coupon and estimated clearing house fees.

Coupons can introduce new products and attract more new buyers for existing products. They can also help you widen your product distribution, reduce product inventory, and stimulate quick sales.

You can foster cross-selling by offering cross-ruff coupons, which are coupons delivered on one product that consumers redeem for another product. For example, a consumer might buy a carton of eggs that has a coupon for bacon attached to the carton. Coupons reward brand loyalty and can soften the impact of a price increase.

The coupon process consists of four stages: pre-analysis, planning, execution, and post-analysis (Figure 1). I will focus on the planning stage, which is where you perform most of the Coupon Management tasks.

Figure 1

The four stages in the couponing process

Planning

After researching your coupon campaign ideas in the pre-analysis stage, you begin the planning stage by defining the campaign objective, type, and tactic (Figure 2). Campaign types are an optional attribute in the Marketing Planner, a Business Server Page (BSP) planning tool you use to access your marketing activities.

Figure 2

Define your coupon campaign

Campaign types categorize individual campaigns or trade promotions (for example, telephone or email campaigns). You use them to compare the success rates of different campaigns. You can also create and assign objectives specifically for campaign types and create pairs of objectives and tactics for them. You must set a campaign type if you want to analyze the coupon campaign.

As you set up your coupon promotion, specify how you want to clear the coupons. Select the clearing process in Customizing under Customer Relationship Management>Marketing>Marketing Planning and Campaign Management> Basic Data>Define Campaign Types/ Objectives/Tactics. You can clear them in one of three ways: external clearing, internal clearing, and via mail (with internal clearing).

External clearing. With external clearing, consumers redeem coupons at the retailer. The retailer cooperates with the national clearing house (NCH) to collect and verify the coupons. NCH bills the manufacturer with invoices and submits statistical coupon information to the manufacturer. The manufacturer pays the invoice to NCH and tracks the cost through its account assignment to the campaign (Figure 3).

Figure 3

Coupon process flow: external clearing

Internal clearing. With internal clearing, a publisher (e.g., Internet seller) defines a new coupon campaign and publishes coupons. An external provider (e.g., Internet provider or retailer) or the publisher distributes the coupons through specified channels (e.g., direct mail, email, and flyer). The consumer then redeems the coupon directly with the publisher (Figure 4).

Figure 4

Coupon process flow: internal clearing

Via mail (with internal clearing). When you execute a coupon campaign via mail with internal clearing, you send a coupon code to the consumer. The consumer then enters the code during order entry in the Web shop.

Once you have chosen the clearing method, you can set up your coupon. You must consider the target group, geography, and size of the intended audience when planning coupon distribution. For example, let’s walk through the process for a coupon with external clearing. Follow IMG path Marketing Planning and Campaign Management>Coupons to set up the coupon attributes. When you set up a coupon with external clearing, you must complete the tasks shown in Figure 5.

Figure 5

With these five tasks, you assign the combination of country, family, and manufacturer codes that uniquely identifies each product

Task 1. Define the manufacturer code. The Uniform Code Council (UCC) assigns a manufacturer code to identify each company that distributes goods using a Universal Product Code (UPC)-A bar code, the standard bar code for products sold for retail in the US. The manufacturer code is important for external clearing because it helps the clearing house sort the coupons by manufacturer.

Task 2. Define bar code types. Select either the UPC or European Article Number (EAN) bar code type.

Task 3. Define distribution methods. With this task, define how to distribute your coupons to the consumers. Distribution methods include newspaper supplements, coupon booklets, and free-standing inserts (FSIs).

Task 4. Assign the product hierarchy to a clearing house. This assignment ensures that you use the correct product hierarchy for your product when you select and maintain the offer codes on the Coupon tab (Figure 6).

Figure 6

The clearing method determines fields the system displays on the Coupon tab

Task 5. Define family codes. Define these by country. Family codes indicate the group of products from a certain manufacturer for which the coupon is valid. When a consumer redeems a coupon, the three- character family code checks whether the coupon applies to the products the consumer is buying.

The manufacturer assigns family codes to each of its products. This three-digit number differs from the product number on an item, since many coupons are for more than one size, color, or form of a particular branded product.

To set up your coupon with external clearing, go to the SAP menu and select Marketing>marketing planning and campaign management>marketing planner or use transaction CRM_MKTPL. Enter the coupon campaign ID and select the Coupon tab (Figure 6).

On the Coupon tab, the Value Code identifies the redemption value of the coupon. The industry recommendation for coupon coding in the US is UCC’s UPC value code list. The Expiration Date is the final date consumers may redeem the coupon. In the Clearing House and Coupon Product Cat. fields, assign which clearing house to use and the category for the coupon.

The clearing house assigns the Coupon Code to identify the coupon uniquely. The number of characters in the code varies according to the country in which you plan to distribute the coupon. With external clearing, the clearing house communicates the coupon codes to you for each product category.

You usually receive a range of codes for a certain product category from the clearing house and can maintain these codes by range. Before you can release a campaign, you must maintain these coupon codes in transaction CRMD_MKTPL_OFRCODE (SAPGUI) or via application CRMD_MKT_OFRCODE (People- Centric User Interface). As soon as you release the coupon campaign, the system automatically assigns the next free coupon code for the selected clearing house and product category. You can use each code only once per coupon.

If you select the Indiv. Coupon Info check box in Figure 6, it indicates that you require additional data from the clearing house for redeemed coupons (e.g., consumer address or marketing data). If you set the Coupons Sorted (by retailer) check box, the clearing house keeps your coupons sorted by retailer. This allows you to check at random how accurate the redemption rates are by retailer.

Now I will explain how you can obtain marketing data using coupon redemption modeling with SAP NetWeaver BI 2004s.

Coupon Redemption Modeling

Coupon redemption modeling enables you to forecast the redemption probability of your coupons both during the planning process and after the coupons are in circulation. The forecast is based on extrapolating past coupon redemption data, which you can call from cost planning on the Costs tab page in the Marketing Planner.

Coupon redemption models display results graphically as a redemption curve. You can use coupon redemption models both during the planning process and while the coupon campaign is active to forecast the redemption probability of your coupons. For example, you can check during your promotion how successful the campaign is and adjust your campaign accordingly. Once the coupon campaign is complete, you can compare the forecasted redemption curve with the actual redemption curve to see if your campaign was as successful as you anticipated.

The system calculates redemption curves based on redemption trends for coupon campaigns that you previously executed. A redemption trend displays the redemption percentage for each month in the campaign. Then the system generates the redemption curve from the average of all individual redemption trends (Figure 7).

Figure 7

Coupon redemption trend of cumulative redemption by redemption month

Coupons can have different typical redemption trends depending on different attributes. For example, you could have characteristic redemption trends for coupons with different product areas, distribution channels, or values, or you might find regional differences. For this reason, it normally makes sense to group together coupons with similar attributes and to calculate an average redemption curve for each of these coupon classes. The system enables you to split your coupons into classes according to the attributes you choose.

Redemption modeling provides rate prediction for accurate incremental volume forecasts that you can integrate with the supply chain to guarantee delivery. You also use redemption rates for planning marketing spending as part of the financial integration related to the budget.

The functions for coupon redemption models are available in mySAP CRM 2005 and SAP NetWeaver BI 2004s. Set up the models in the SAP BI system. You use the forecasts and redemption curves provided by these models in mySAP CRM via a connection to the Marketing Planner. You can configure this using a BAdI, either in mySAP CRM with the BAdI CRM_MKT_MRMBW_CORM or in SAP BI with the BAdI RSMRM_CORM_BADI.

You can access customizing settings for coupon redemption modeling in SAP BI by following the menu path SAP NetWeaver> Business Intelligence>Settings for BI Content>Customer Relationship Management>Marketing>Coupon Redemption Model. Use transaction RSMRM_CORM to set up coupon redemption modeling in SAP BI.

You can derive a corresponding model, for example, from the coupon marketing element, or simply enter the name of the model you want to use. You can also specify whether you want to base the forecast on the curve of all coupons or just on the curve of the redeemed coupons. If you have not modified the existing BAdI implementation for deriving the model, the system searches for the model that you defined in the Customizing transaction Define System Parameters for Coupon Redemption Modeling.

Pandora Campbell

Pandora Campbell is a CRM solution manager at SAP. She has over 11 years of SAP experience with an extensive background in the SAP R/3, Basis, SAP NetWeaver Portal, and workflow. She has spent the last five years working with mySAP CRM. Prior to working at SAP, she worked for five years at IBM and 18 years at Unisys. Pandora holds a BS degree from Immaculata University in Immaculata, PA.

You may contact the author at pandora.campbell@sap.com.

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