Start-up’s ‘coupon games’ get shoppers to buy more online

Internet bargain hunting and playing games are two of the most popular online activities. Combining the two, believes Shaun Waksman of Israeli start-up CouponRoller, provides online retailers with a one-two knockout punch that practically guarantees user engagement with their shopping sites.

How does he know? “According to our statistics, for every player that wins one of our special coupons, nine others go to the site that was giving away the coupon they were playing for. We take that as proof that the concept works, and, based on that statistic, investors from places as far away as Japan have been impressed enough to offer us funding,” Waksman told The Times of Israel.

This year’s Cyber Monday – the big online shopping day that follows the post-Thanksgiving Black Friday bricks-and-mortar store buying binge – was the biggest single Internet shopping day ever, with sites racking up over $2 billion in sales. As more consumers buy online, they are bringing with them one of their most treasured shopping legacies – the clipping of coupons. Where once consumers would comb the Sunday paper for coupons giving them discounts on food, clothing, even cars, they now surf to sites like Coupons.com, Priceblink, Fatwallet, and a myriad of others that offer coupon codes and “secret links,” where they can save on their Internet purchases.

With the plethora of online shopping options, Waksman and his partner Dana Meromsky sought ways to enable shopping sites to stand out from among the crowd. They came up with CouponRoller, which lets users play online games (roulette, video poker, puzzles, etc.) to win coupons.

“The coupons are generally ones they cannot get anywhere else, and are of higher value to customers than ordinary coupons,” said Waksman. For example, instead of getting 10% off at a shopping site, the winner of a CouponRoller game can get a coupon for 20% or more off.

All the action takes place at CouponRoller’s own site (although the company is working on a “white-label” generic version that will allow Web retailers to integrate the service into their own sites, said Waksman). Just winning a coupon doesn’t require a winner to actually use it, but according to CouponRoller’s numbers, over 60% of winners do go and buy something at the site. “Not only that, but we found that even users who played a game for a coupon at a specific site but didn’t win the big prize – instead receiving just a ‘regular’ coupon they could find on the Internet – went to the shopping site, and many of them buy something as well.”

According to Waksman, the commitment to playing a game – many players spend hours at CouponRoller, his stats show – translates into commitment to the shopping site sponsoring the game. It’s as if players who invested so much time in playing a game feel compelled to buy something, just to prove to themselves that they didn’t waste their time.

Shaun Waksman and Dana Meromsky (Photo credit: Courtesy)

Whether or not that is the motivation consumers are responding to is a question for psychologists, said Waksman – but for online retailers, the question is whether CouponRoller can help them grow profits. Based on the site’s data, the answer is clearly yes.

“If we were talking about one person, the winner, having a motivation to shop on a site, that would not be a sustainable business model,” said Waksman. “But we see that there are many more game players besides the winners jumping to the shopping sites.”

Whether these players are first-time shoppers at a site is something only the Internet retailers know, but Waksman has a feeling, he said, that many of these player-customer converts are getting their initial exposure to a retailer via CouponRoller.

Next on the agenda for CouponRoller is integrating the games into Facebook. While his company would be taking on some industry giants, like Zynga, no one else is offering the twist on games that CouponRoller is, said Waksman.

One potential pitfall is the Facebook rule against giving away a material benefit – like a coupon – for engaging with a page, but the team has that all figured out.

“For the Facebook games, we won’t give out coupons directly, but tokens that can be redeemed for coupons,” said Waksman, who believes this method will hold up under Facebook scrutiny. Of course, there would be nothing stopping Zynga and other Facebook game giants from adopting his model, but Waksman believes his advantage will be the experience CouponRoller has garnered from being in the business longer than the others – enabling the company to sew up contracts with retailers more successfully than the other game “players.”

Some large Internet retailers have signed up (Amazon, Aeropostale, Gap and Tellavista, a short-term apartment rental service), said Waksman, but the site has also got attention from a surprising quarter. “We’ve been in touch with Japanese investors, who are very excited at this model,” said Waksman. It turns out that the coupon business is not well-developed in Japan and most Far Eastern countries, and retailers – especially in Japan – have been trying to promote coupons as tools to push consumers to spend more and lift the moribund economy.

CouponRoller may be just what Japanese retailers need, said Waksman, who knows the market well, having worked in Japan as the representative of an Israeli mobile company. “The Japanese may not be enthusiastic about coupons, but they are very enthusiastic players of online games,” and, added Waksman, investors believe that CouponRoller may be just the thing to prompt consumers to open their minds -and their wallets.