August 12, 2011
Consumers are increasingly embracing digital deals, discounts and promotions, and with the proliferation of smartphones, a growing number are redeeming offers at the point-of-sale using only their mobile device.
Historically, marketers did not care much about mobile coupons due to minimal consumer smartphone penetration. Today, the question for marketers is not whether to deploy a mobile promotion, but instead how, when and where to execute it.
Fast clip
Although consumers are demanding coupons and deals on their phones in increasing numbers – Borrell Associates sees mobile coupons growing at a cumulative annualized growth rate of 84 percent per year – marketers may not be ready operationally to handle this deluge of consumer appetite for their promotions.
The realities of retail IT systems and hardware, when combined with the need for significant training of store personnel and customers, often make mobile coupons much more attractive for marketers than for wireless carriers.
The top five reasons why retailers, restaurants and consumer packaged goods manufacturers may need to think twice before pulling the mobile coupon trigger are:
1) Issues with point-of-sale scanning of mobile-based coupons and offers
2) Line hold-ups caused by redemption of sequential mobile-based coupon offers
3) Redemption policies that conflict with manufacturers’ coupons
4) Outdated retail systems that lack coupon functionality
5) Lackluster consumer experience viewing coupons on mobile screens
The question becomes how best to overcome these obstacles in the most reasonable time frame and cost.
Issues with point-of-sale scanning of mobile-based coupons and offers
Scanning bar codes from a mobile device involves two distinct problems.
First, point-of-sale scanners must recognize the newer types of bar codes such as Datamatrix that are best used for mobile couponing.
Second, scanning devices, which are typically laser-based scanners, often require an upgrade to the more expensive optical imagers, ideally 2D.
The first problem can be overcome with some custom software development.
The second, depending on the number of checkouts requiring new scanning devices, might break the bank.
An average grocery store, for example, might need 20 new scanners at $500 apiece for the 20 check-out lanes in a single store.
Multiply that across a chain and one can begin to understand why major retailers need to be big believers in mobile to justify that investment.
The good news is that Target and Starbucks have already taken the leap, and others are going to follow. For most others, cashiers are manually entering in the digits of the coupon into POS.
Line hold-ups caused by redemption of sequential mobile-based coupon offers
Assuming scanners and software are good to go, operations personnel still face issues with mobile coupons when a consumer seeks to redeem multiple coupons at time of purchase.
For example, consider a long checkout line where the consumer at the front of the line is completing a purchase. This person retrieves the first mobile coupon and hands her mobile device to the cashier to scan. The cashier scans the mobile coupon and returns the mobile device to the consumer to retrieve a second coupon.
This process then repeats itself until all coupons are redeemed.
For retailers looking to drive frequency of spend and speed at checkout, this is clearly a losing proposition.
Innovations are in the works to enable redemptions of multiple coupons simultaneously with one single scan at checkout.
One-scan checkouts are already a reality with the load-to-card coupons at many grocery stores, but not in most other categories.
Redemption policies that conflict with manufacturers’ coupons
Many CPG brands want to get in the mobile couponing game but do not quite know how, given that retailers must submit a physical coupon back to the manufacturer for reimbursement of that coupon value.
To solve these scanning and redemption issues, many brands are bypassing mobile devices as coupon redemption vehicles, instead using them as an engagement tool to entice consumers to load coupons onto a loyalty card or sign up and opt-in to receive future communications – email, primarily – to receive printable coupons.
With the mobile device acting as the engagement tool, CPG brands are experimenting with QR codes and SMS opt-ins in stores and on shelves, as well as in advertisements both digital and print.
Consumers with smartphones now have many options to engage with the coupon content, even if the coupon does not physically get scanned off the phone.
Outdated retail systems that lack coupon functionality
Local businesses are often immune from these headaches but face other challenges.
Often lacking advanced systems or scanners, a local merchant’s mobile couponing is much more fundamental.
Consumers flash their phone with an SMS message and some generic coupon copy sent by the merchant, and the local merchant honors it – or not.
Lackluster consumer experience viewing coupons on mobile screens
Consumer experience with mobile coupons covers two topics.
First, basic SMS text message coupons lack the sizzle and aesthetics of images and rich media.
Second, mobile Web content, including mobile coupons with graphics and rich media, are still not formatted properly for many mobile devices, leading to a choppy visual experience.
Quite simply, mobile coupon experiences are not very sexy at this time. A better mobile Web experience for consumers – and ability to scan bar codes off a phone – will create a shift away from text messaging towards stickier forms of mobile engagement.
None of this is to say that mobile couponing is not happening currently. It is, in a big way. Merchants are finding different ways to cope with their own idiosyncratic limitations and adapt with the rapidly-changing consumer.
Fast forward even 18 months and you will find a drastically more advanced mobile consumer.
Marketers will make the investments in IT systems over time to overcome many of the challenges surrounding mobile coupons today, giving way to a more mature and sustainable environment for mobile coupons.
Jonathan Treiber is cofounder/CEO of RevTrax, New York. Reach him at jonathan@revtrax.com.
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