How to create an effective mobile coupon program

Are die-hard paper coupon clippers finally ready to embrace technology and change their ways?

According to a study by Yankee Group, the answer looks like a resounding, “Yes.”

The study found that the number of mobile coupon users in North America is set to increase more than tenfold in 2010, followed by triple-digit increases in both 2011 and 2012.

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, per Yankee Group.

Many marketers have experienced great success with targeted and measurable online discounts and affiliate programs, and have started using mobile coupons to extend the capabilities of their online marketing to reach in-store customers.

A recent study from Harris Interactive shows that only 4 percent of Internet users have redeemed mobile coupons, compared with 86 percent who clipped paper coupons and 65 percent who used online or email coupons.

But the reality is that these digital coupon incentives are catching on quickly and marketers have an opportunity to leverage this new technology to enhance their consumer targeting and advertising efforts.

Targeting the “perfect” customer
Mobile coupons are highly measurable. Marketers can see not only how many coupons were redeemed, but which type of customers or segments responded to which offer.

Marketers are mastering the creation and delivery of these personalized digital coupons, either by sending an actual coupon to a mobile phone, with a bar code or coupon code embedded in it, or by alerting a customer to a personalized digital coupon promotion via email or text message.

Some platforms take into account an individual’s past purchases as based on recent credit card transactions, using behavioral targeting to deliver relevant discounts. Consumers find out about the current incentives loaded onto their cards via emails, text messages, or an online portal.

For example, a sporting goods retailer could target all people who have bought sports equipment in the past 60 days from other retailers with a 20 percent-off incentive on their next purchase. A shopper receives a text message that the “coupon” is on her card and heads back to the store to make a purchase.

Execution is key
Getting started with mobile coupons can be tricky, but, following are tips to get marketers on their way:

1. Define your goals. Do you want to connect with a hard-to-reach target audience? Do you need to increase average order value or transaction amounts?

Maybe you want to focus on new customer acquisition, build loyalty with existing customers, or get them to return sooner and buy more frequently.

All of these goals are valid, and the type of incentives you offer will vary depending on which goal is most important to your brand today.

2. Select the right marketing technology partner. The mobile marketing platform you choose to communicate and reconcile the incentives is key.

The right technology will enable you to analyze customer purchase trends to come up with the right incentives for each target group, as well as ensure your incentives are easy for consumers to redeem.

The system should also allow you to track redemptions and analyze purchase patterns so you can fine-tune future incentive offers, as well as compare bottom-line ROI results of your incentive offers against other marketing programs.

3. Gather data and optimize campaigns. Another added benefit of mobile coupon programs are the data you can collect on individual shopping patterns and preferences as people redeem the incentives in-store.

By mining and analyzing this cross-channel data, you will get a clear picture of which promotions are working and how different segments and demographics react to specific offers.

You can then create more effective incentives, targeting key customer segments based on demographics, preferences, geography and purchase data.

Redemption methods
Redemption is imperative, and at this point in the industry’s evolution, the best options for redeeming digital coupons are systems that require the least amount of change for both the consumer and the marketer.

It is critical to understand how the system you choose will work on the backend to reconcile an offer.

Five most common redemption methods
1. Consumer presents a phone displaying a discount offer and the cashier rings up the purchase with a discount.
2. Cashier manually enters a code displayed in the mobile coupon to generate a discount.
3. Cashier scans a bar code embedded in the mobile coupon.
4. Consumer downloads coupons to a store’s loyalty card through a Web site or smartphone application, and the discount is applied when both loyalty card and payment card are swiped at the checkout.
5. SMS and smartphone applications alert consumers that discounts have been loaded directly to a consumer’s credit or debit card, and discount is automatically applied when the consumer uses a card to pay.

Challenges and looking ahead
The challenge for many of these redemption methods is getting both consumers and retailers to alter their behavior.

Many consumers are not yet comfortable with handing over their phones at the checkout to receive a discount.

Even more problematic is the training required for store clerks to accept mobile coupons.

A customer waving a mobile phone in front of them saying, “I have a coupon on here,” is still a rare occurrence that most cashiers are ill-equipped to handle. That is why “coupon alert” services tied to payment or loyalty cards are quickly gaining popularity.

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.

Meaghan Schafer

Trends in couponing: Are you posed to take advantage?

When it comes to couponing too many marketers seem to still be stuck in the 1950s with their offers. Certainly $0.25 off offers are great, but today’s consumers aren’t just looking to save a few pennies from a roll of Bounty. They are looking for deals in all retail sectors and in their quest they may take a competitor’s offer over yours unless you play your coupons right. Here are a few trends.

According to coupon hub CouponCodes4U over the past year their hub has seen coupon redemption - both online and in-store - increase by about 525%. What’s more the deals consumers are taking advantage of aren’t just at the local grocery. Consumers are looking online for coupons to e-tailers and even maid services. With the right coupon and call to action, a coupon can be a huge selling tool to increase a brand’s consumer base.

“We have found that almost all of our visitors are interested in online codes,” said Carl Weber, Online International Marketing Manager for Couponcodes4U.com. “The vast majority of our coupons are related to retail shopping, and the savings are much bigger [than traditional quarter-off-bread deals]. Many of our shoppers save $10 - $20 per purchase using coupon codes from companies like Macy’s, Target and Southwest Airlines.”

In addition to dollar off offers, consumers are now looking for:

• Free shipping/shipping discounts
• Electronics (television, computer, satellite radio) coupons
• Retail coupons for everything from jeans to shoes
• Store coupons - $20 off a purchase of $100 or $5 off a purchase of $50 or more

As the savings keep coming so do the consumers. Several coupon hubs report increased use over the 100% mark over the last two years as the economy has soured. But the real trend isn’t just the use of coupons, but the amount of time consumers are spending looking for these deals and discounts. That, according to the experts, will continue to push coupon use as the economy moves out of the cellar.

“We believe coupons will become more popular,” said Mr. Weber. “Especially in these tough economic times, people are being very careful about how they spend their money. Coupons allow people to maintain their lifestyles and continue to spend their money how they want to - even when budgets are tight. Things like clothing, electronics, vacations, etc. don’t have to be cut out of the budget if people can get them cheaper.”

The last trend: thinking outside the box. Every business, whether a retail store or a tax preparation business can benefit from a coupon offer. During the US tax season, for example, CouponCodes4u offered a coupon for tax preparation software.

“[Coupon codes] are much more than printable $0.25 discounts - we were giving away $140 worth of software. We believe the beauty of the campaign was that it not only helped us build our fans and followers on Facebook and Twitter, but also got people interacting with us, talking about us and sharing their tax season shopping stories.”

Kristina Knight

KFC campaign sees 13 percent in-store mobile coupon redemption

KFC added 6,000 subscribers to its mobile loyalty program and saw a 13 percent redemption rate for coupons sent to the list over a one-month period.

The database and coupons were part of the fast-food giant’s “Relief Plan” campaign, which was comprised of four distinct weekly offers. KFC saw a significant bump in participation when traditional media outlets were engaged to get the message out – including an email blast to a group of existing subscribers.

“J&A was looking for a way to make KFC’s message more integrated with consumers and increase traffic via exceptional coupon offers,” said Jarrett Klein, national sales manager at Cellit Marketing, Phoenix. “The mobile platform accomplished just that, and brought more dimension to KFC’s overall media mix.”

J&A Integrated Thinking is a full-service agency that has worked with KFC for more than 40 years, providing local marketing services and media planning and buying for 50 markets and approximately 1,500 retail units.

During the campaign, the average store redemption was 13 percent. A whopping 14,000 coupons were sent during the one-month promotion.

A follow-up survey identified which offers consumers preferred over others, enabling J&A and KFC to better hone content going forward. Forty-five percent of the database participated in the survey.

Here are some screen grabs of traditional media promoting the mobile program:

Method for success
Upon J&A’s creation of the Relief Plan, KFC used Cellit’s technology to collect information from participants that would allow segmentation and targeting of users in future mobile campaigns.

Each week, the KFC team at J&A sent out a different mobile offer to the database, rotating through a buy-one-get-one free offer, a percentage-off discount offer and an offer of a completely free lower-value item such as a small drink.

The mobile club was promoted in-store, online and in other traditional media.

KFC stores could track the popularity of the individual offers, as well as specific traffic patterns by store throughout the promotion.

To understand consumer preferences, Cellit designed a post-promotion mobile survey that was sent to all mobile members who participated in the KFC Relief Plan program.

Why mobile?
J&A sought an opportunity to introduce mobile to its KFC clients and test the effectiveness of the medium on KFC’s target audience.

Due to a highly competitive fast-food landscape where the customer is faced with nearly unlimited choices, it was critical that KFC present compelling and competitive offers that break through the quick-service-restaurant clutter and motivate the consumer to action.

Mobile is really changing the fast-food business, according to Neil Strother, practice director at ABI Reseach, Oyster Bay, NY.

“Fast-food restaurants have been leveraging mobile in several ways: for discovery of nearby locations, coupons and for enabling mobile ordering and purchase,” Mr. Strother said.

“Mobile is a good fit for these chains, especially the forward-thinking ones that seek to gain an advantage in a highly-competitive market by providing new tools for on-the-go customers,” he said.

Giselle Tsirulnik