September 19, 2011
As an industry, it has been obvious since the very beginning that digitally redeemed mobile coupons were not only desirable, but necessary if the promise of mobile marketing was to be realized.
I remember in 2000, back in the early days of the industry, running coupon campaigns that sent consumers into retailers and being frustrated that the best we could do was “sight acceptance” by the shop staff. This had a number of disadvantages, ranging from fraud to a reliance on manual reporting.
Since those days, nothing much has changed on the coupon front.
Real digital redemption, along with all the benefits it would bring always seems to be two or three years away.
Most solutions either seem to only work in lab conditions – some bar code scanning techniques in store, for example – or rely on an upgrade of the retail EpoS or consumer handset, as in the case of Near Field Communication.
Another much-touted alternative is installing new hardware in the retailer, but this involves a huge investment that most retailers or vendors have been reluctant to subsidize.
However, a huge latent demand has been building up for digitally redeemed coupons by physical retailers and the brands that sell via them – especially the consumer packaged goods (CPG) or fast moving consumer goods (FMCG) verticals, depending on which side of the Atlantic you sit. The evidence for this is fairly dramatic and holds rich promise for mobile.
The average marketing budget today commits around 15 percent of its total budget to digital – the vast majority of which is still actually via PCs. And yet, for CPG and physical stores, it is a mere 2 percent. Why the 13 percent discrepancy?
CPG marketers and their agencies explain the reason for the discrepancy by pointing to two related factors.
First, sending someone to a PC Web site does not allow the marketer to incentivize a store visit or a sale. And even if it does lead to a sale, it is very hard to measure the correlation.
However, digitally redeemed coupons on mobile do not have that problem.
The consumer journey is that they are browsing a mobile Web site or using an application. They see an ad and click on it and enjoy that rich engagement that digital media is so good at delivering.
These consumers then request a coupon, take it to the store, make a purchase and receive the coupon value. This overcomes the limitations of the PC Web, allowing the marketer to both load the gun (brand building and interaction) and pull the trigger (a promotional marketing incentive).
As mobile couponing takes off, this should mean that the missing 13 percent spend – worth billions of marketing dollars – should start flowing into mobile. Clearly, this is great news for the industry.
Apart from measurability, what other benefits can digitally redeemed coupons deliver to retailers and brands? The most immediate benefit is cost for three main reasons.
Firstly, mobile coupons cost a fraction of their paper cousins to distribute and redeem. But the cost benefits do not stop there – distribution of coupons takes on a new mindset.
Secondly, paper coupons are normally distributed on a scatter-gun approach.
Marketers print around 100 times more than they expect to redeem and send them out to all and sundry.
With mobile coupons, our experience is that they are normally requested by consumers in the first place, in response to an ad in traditional media or within the mobile environment.
Once requested, redemption is between 20 percent and 40 percent, and has actually been as high as 100 percent in a few instances. This means that the marketer dramatically reduces the number of coupons in the first place.
Finally, digital coupons solve one of the ongoing problems of paper-based coupons and one which seldom is acknowledged publically, despite costing marketers millions and, possibly, billions of dollars a year. And that is fraud.
Digitally redeemed coupons can remove this from the value chain by removing staff from the process – unfortunately, still a major source of this type of fraud – and at the same time ensure that the consumer has purchased the product that is funding the cost of the coupon.
Apart from the clear cost advantages, mobile coupons have two more important benefits for marketers.
We can use digital coupons to create instant marketing campaigns. Does your EPoS tell you that a store is having a slow day? No problem, launch a mobile ad campaign on the network of your choice right now.
Coupons can then start to be redeemed within a few minutes – a step change in how we plan and execute marketing campaigns.
And finally, for all you data junkies out there, when the coupon redemption is linked to the retail EPoS, you can have real-time reporting and all the goodness that such analytics packages provide in terms of testing, measuring, analysis and continuous improvement.
Chip and click
Mobile coupons have clear benefits for retailers and brands alike, but what about the consumer? Will they embrace mobile coupons?
Experience with the likes of retailers Comet (electrical retail), Aurora (fashion) and Blockbuster (movie rentals) that employ mobile coupons redeemed via Chip & PIN terminals in Britain (credit card terminals in U.S. terminology) have proved that consumers love the technology, with redemption being many times higher than the old paper-based variant.
Equally common is the frequent response from consumers that while they have never used paper coupons, “using a mobile coupon is cool.” So, perhaps mobile coupons will expand the market, as well as cater to an existing need.
Mobile coupons are being welcomed by retailers, brands and consumers alike and this bodes well for the next big spike in mobile marketing growth.
Moreover, early signs indicate that mobile may end up being the most powerful marketing medium in history, so hang on and enjoy the ride.
Russell Buckley is London-based chief marketing officer of Eagle Eye Solutions, a Guildford, Britain-based mobile voucher and redemption technology provider. Reach him at email@example.com.