Elevating the Mobile Love Affair With Coupons

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kiss_small ADOTAS – Everywhere you look, people are clutching their mobile devices; playing, talking, listening to music, snapping pictures, and surfing the Web. People have a love affair with their mobile phones, and they are eager to save money.

So shouldn’t “mobile coupons” be a huge success?

Well, not just yet -– only 4% of Internet users have redeemed mobile coupons, compared with 86% who clipped paper coupons and 65% who used online or e-mail coupons, according to a recent study from Harris Interactive — but these digital incentives are catching on quickly.

However, the number of mobile coupons redeemed in North America is set to increase more than tenfold in 2010, followed by triple-digit increases in both 2011 and 2012, according to Yankee Group. All in all, some $2.37 billion worth of mobile coupon transactions will take place in North America in 2013, up from just $5 million this year.

Typically text messages or images sent to people’s mobile devices offering a discount redeemable in-store, mobile coupons are a win-win for everyone. Consumers get deals targeted to their current interests, past purchases and/or current location sent right to their phone, while marketers succeed in directly spurring purchases that can be tracked and measured through to the point of sale.

Many marketers have experienced great success with targeted and measurable online discounts and affiliate programs, and mobile coupons are a powerful way to extend the capabilities of online marketing offline.

Consumers Want Deals, But Also a Good Experience

From a consumer perspective, mobile coupons deliver not only a discount, but more importantly, a positive shopping experience. They don’t need to flip through circulars and clip coupons or search for promotion codes online, since mobile coupons are pushed to consumers’ phones.

Today’s mobile applications also can glean understanding about a customer’s product preferences and current location from GPS, CRM, and credit card systems, then match data with brand marketers’ promotions so that offers sent to phones are truly targeted. Mobile coupons are relevant, timely and easy… and they have the ability to dramatically alter the way people shop.

Brands Want to Drive Purchases, But Also Establish a Lasting Customer Relationship

Brands and retailers are eager to adopt mobile coupons to reach consumers in a unique way. By sending relevant offers to people via their very personal, always-on mobile device, marketers can essentially speak right to a potential customer in a one-to-one dialogue.

This channel not only improves sales and loyalty, but the in-store experience. Mobile coupon alerts can also serve as an influence point when someone is in the vicinity of a store, providing a timely and targeted call to action.

One of the most effective reasons marketers like them is that mobile coupons are very measurable — marketers see not only how many coupons were redeemed, but which type of customers or segments responded to which offer.

Marketers can leverage this analysis to accurately understand customer behavior and target future offers. In addition, marketers can eliminate lengthy and expensive reconciliation processes that are standard with paper coupons. If consumers opt in to offers from brands to their mobile phones, marketers can wisely develop an intimate level of customer engagement.

Devil in the Details

Sound great? Yes, but execution is key. Many marketers are mastering the creation and delivery of these coupons — either by sending an actual coupon to a mobile phone, with a barcode or coupon code embedded in it, or by alerting a customer to a coupon promotion via a text message – but the tricky part has been redemption.

The devil is definitely in the details. Today, there are at least five options for redeeming a mobile coupon. At this point in the industry’s evolution it’s critical to understand how the system you choose will work on the back end. Here are the most common redemption methods:

— Consumer presents phone displaying a discount offer and cashier rings up purchase with a discount

— Cashier manually enters a code displayed in the mobile coupon to generate a discount

— Cashier scans a barcode embedded in the mobile coupon

— Consumer downloads coupons to a store’s loyalty card through a smart phone application, and discount is applied when both loyalty card and payment card are swiped at checkout

— SMS and smart phone applications alert consumers that discounts have been loaded directly to a consumer’s credit or debit card and discount is automatically applied when consumer uses card to pay

The challenge for many of these methods is getting both consumers and retailers to alter their behavior. Many consumers are not yet comfortable with handing over their phones at checkout to receive a discount.

Even more problematic is the training required for store clerks to accept mobile coupons. A customer waving a cell phone in front of them saying “I have a coupon on here” is still a rare occurrence most cashiers are ill-equipped to handle. That’s why “coupon alert” services tied to payment or loyalty cards are quickly gaining popularity.

Today, the best options for redeeming digital coupons are systems that require the least amount of change. For some of the newest solutions, no additional training is necessary for retailers since the discount is processed on the back end through the payment card and requires no additional effort to read, scan or enter a coupon from a phone. Some solutions even provide insights like which demographics responded to which deals, the sales impact of the mobile coupon promotion, and the overall ROI of the program, which marketers love.

Down the road we’ll see more options that allow consumers to use their mobile phone as a wallet, offering dual functionality to receive offer alerts and then automatically apply discounts when paying by phone. Near-field communication is a wireless communication technology that exchanges data from the user’s mobile phone and the retailer’s point-of-sale system so that the consumer can “click and buy” from a phone right in the store. Payment can be charged to the consumer’s wireless phone bill, a stored credit card, or a pre-existing billing system such as Apple’s iTunes.

Retailers still need to make investments in infrastructure systems to accept these forms of contactless payments, but with the explosion of mobile activity, a payments system to support commerce will no doubt soon follow.

Mobile coupons hold the promise of both direct marketing and one-to-one marketing. By delivering highly personalized incentives to a person’s mobile phone, marketers are promoting their brand right into the pocket of their target audiences at key influence points. The mobile commerce and coupon ecosystem will be one to watch as brand advertisers capitalize on this innovation.

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