Chapell & Associates' president examines the mobile coupon landscape and the importance of targeting.
My grocery store recently installed a set of those automated check-outs. So instead of having a cashier ring up my purchases, I sometimes do the scanning myself. Right before I pay the automated teller always asks me if I have any coupons. I never do-- after all, who still clips and carries around paper coupons?
Maybe part of this is generational, since I remember my parents using coupons all the time. But maybe it's about convenience, too. To use a coupon, I'd have to dig through a newspaper or circular to find a coupon geared towards the products I buy, cut it out, and then remember to carry it with me to the store. That seems like a lot of trouble for $1.00 off my corn flakes.
This is just the dilemma that 'mobile couponing' aims to solve. By sending coupons straight to mobile users' phones, mobile marketers hope to make using coupons convenient and thereby increase redemption rates.
What is Mobile Couponing?
The basic idea of mobile coupons isn't all that different from traditional paper coupons. In either case, says Gady Shlasky, CEO of mobile technology provider RegiSoft, an advertiser uses a coupon to "get a person into the store-- or get an existing customer to spend more." With mobile coupons, however, there are two significant differences. First, mobile users show retailers their phone or mobile number-- not a slip of paper. And second, mobile coupons offer the opportunity for marketers to personalize coupons to individual users' tastes.
How does this all work? There are currently two distinct ways that marketers can serve mobile coupons:
- Via Downloadable Application - This method requires users to download a small application or piece of java-script to their mobile device. Once they've done so, they can then request coupons - even, if they like, from specific retailers. Cellfire's recently launched mobile coupon wallet is one example of this approach.
- Via Mobile Messaging - The other method doesn't require users to download anything. Instead, users request individual text message (SMS) based coupons. Enpocket, for example, ran a well-regarded campaign for Dunkin Donuts in Boston based on this approach. The availability of the mobile coupon was advertised offline and on mobile sites. As consumers responded to the ads by sending an SMS to the listed Common Short Code (CSC), they received an SMS mobile coupon for a $0.99 latte, redeemable at any Dunkin Donuts.
- In the current environment, Courtney Acuff, Associate Director at Denuo (a Publicis Groupe Company) told me, the dominant form of mobile couponing is "unique redemption codes via SMS messaging." For the most part, coupons via downloadable application have yet to really catch on…yet.
What's the Value Proposition?
Now that we've seen how mobile coupons work, its worth looking into how they can benefit consumers as well. Part of the value proposition offered to consumers by mobile coupons is discounts on products and services. In this respect they bear some resemblance to paper coupons. But discounts in and of themselves aren't always enough to get consumers to use coupons-- the redemption rate of paper coupons rarely rises above 3 percent. Although 3 percent is a respectable enough response rate, it does show that consumers don't redeem the vast majority of paper coupons.
Consumers redeem coupons when the value exchange seems high enough to do so. This might mean increasing the discount, or it might mean providing the right coupons to the right consumers. "The value exchange," says Acuff, "will vary based on the consumer, the brand, and the offer." In other words, mobile marketers can't just offer the same coupon to each and every consumer as often happens with paper coupons. Instead, they're going to need to personalize mobile coupons, making the value exchange of using the coupon much higher for each individual consumer. Targeting coupons in this way, however, necessitates knowing a little bit about the consumer.