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As business owners battle for survival in a global recession, the retail industry — one of the hardest hit by bankruptcy, store closures and layoffs — discovered a silver lining in the latest incarnation of direct response marketing.
Mobile strategies have proven to be as effective for trendy retail chains like Urban Outfitters as for EZ Lube oil change service stations. Mobile ad campaigns are relatively simple to create and easy to distribute, in comparison to elaborate multi-channel campaigns. Most importantly, they're considerably inexpensive to produce and manage.
Mobile marketing works for retailers as an effective standalone strategy or can be integrated into a larger multi-channel effort. Brand retailers (and retailers establishing brands) can leverage the interactivity and engagement inherent to mobile to create a two-way conversation with consumers. Ideally, a mobile offer converts into an opt-in response and then evolves into ongoing communication, brand loyalty programs, further offers and incentives, and repeat business.
There are many ways to build a successful mobile strategy and dozens of examples to illustrate them, but before delving into the how-to, marketers should consider the why: the Mobile Marketing Association (MMA) estimates that mobile marketing budgets will increase 40 percent this year and generate $6.5 billion in ad revenue by 2012. Businesses are quickly deciphering a mobile marketing strategy, and the space is quickly filling with more voices calling for consumers' attention. And, according to Nielsen, there are 145 million mobile media consumers. SMS is the most popular form of mobile media, with 127 million users, while 48 million browse mobile Web sites.
As the proliferation of smartphone usage continues, the concept of mobile marketing broadens. An E-mail blast sent out with a promotional code or an electronic coupon is a mobile advertisement, or has the potential to be, if the consumer views the message on a smartphone. The same applies to all online ads viewed on a smartphone since smartphones are essentially pocket-sized, portable computers. So how is mobile marketing uniquely valuable compared to all existing online and E-mail advertising simply viewed on a mobile device? The key differentiators are real-time and geo-targeted messaging, alerts and offers.
Urban Dictionary defines this new strain of advertising as geo-vertising or GPS-vertising: "GPS enabled devices [smartphones] receive real-time, promotional, time-sensitive offers from local retailers as the holder of the device passes within a short distance of the retailer's store location."
Two-Way Conversations
The retail industry is ripe with opportunity to test mobile strategies. Marketing budgets have been softened by a weak economy, yet mobile phone and smartphone sales continue to grow. More than 1.2 billion mobile phones have been sold in the U.S., and, according to research firm Gartner, smartphone sales are expected to jump 28 percent this year despite the economic slump.
"For the past five years, it's been the year of mobile — and I'm going to be right one of these years," says Dan Jones, head of grocery, CPG & recall services at Irvine, Calif.-based SmartReply.
SmartReply is a mobile marketing and advertising company that recently created a mobile coupon campaign for EZ Lube, a chain of fast oil-change service stations in Southern California. EZ Lube wanted to create a unique, cost-effective marketing plan that would reinforce branding and proposition customers with the best value in town. Over a six-week period, 500,000 text messages were delivered regionally. At the end of each text message, consumers could opt in to "Win 1 year free oil change! Reply EZ." More than 1,700 people opted in at an acquisition cost of less than $6 each.
SmartReply manages audience segmentation and helps its clients craft mobile messages and brand loyalty programs. EZ Lube loyalty club members receive ongoing safety tips and other content as added value.
"We put together a communication plan for EZ Lube to talk to consumers," says Jones. "It's not always about oil changes and saving. It's talking to people to build the brand."
Developing a database of loyal consumers who are willing to receive ongoing communication from a business starts by building trust and offering quality content.
"The concept to keep in mind is to make it unique and different than other communication," Jones contends. "If you're a grocer, don't give me page one of the circular. Give me something cool and different. Consumers took a leap of faith and gave you their phone number. That's the No. 1 thing — different and vibrant. And, the consumer is always in charge."
Ace Hardware, a national home maintenance retailer, launched a mobile strategy over Memorial Day weekend to build brand awareness, remind consumers about their summer projects to-do list and boost in-store visits. Mobile messages were sent to consumers inviting them to check out Memorial Day sales.
The campaign consisted of two mobile ads and a weather forecast sponsorship for one week. The mobile ads, which featured seasonal products like RoundUp Weed & Grass Killer, returned an average 18-percent click-through rate (CTR), and the integrated weather forecast sponsorship generated an average 17-percent CTR.
After the campaign ended, a sample of users were asked if they had visited an Ace retail store within seven-to-10 days, and people who viewed the mobile ad were 29 percent more likely to have made an in-store visit.
The Mobile Posse, which developed the ads for Ace Hardware, refers to mobile as the "idle screen." Mobile Posse connects advertisers with content providers and wireless carriers to develop integrated marketing programs on mobile phones. The ads go beyond SMS and strive for a fully integrated and seamless experience for the user without the need for opt-in messaging.
Customization Is Key
Urban Outfitters is another example of a national retailer erasing barriers between online, mobile and in-store marketing. The Philadelphia-based retailer's merchandise consists of men's and women's brand-name apparel as well as gifts, books and a modest selection of electronic gadgets and home (or dorm room) accessories. Its target demographic of 20-30 year olds is mobile, social and smartphone-savvy.
The company built its mobile presence with E-mail marketing, text message coupons and, most recently, a mobile commerce site launched in July. E-mail offers come packed with lookbook-style trend alerts, top-rated items, new and popular styles, sales and free shipping offers, in-store appearances by music artists and incentives for users to fill out their preferences for customized deals and recommendations.
The mobile site further integrates the experience by enabling users to view an E-mail or text message offer on their mobile phones and then click through to the mobile Web site to shop and purchase.
Streamlining the Web-site-to-mobile experience is essential for retailers carving out a long-term mobile strategy. The migration from Web to mobile usage is being fueled today by social networking sites such as Facebook and MySpace, whose most popular applications are location based. According to Nielsen, the mobile social networking audience grew 189 percent from 2007 to 2008, and the fastest growing demographic of social network users are between the ages of 25 and 34 — a sweet spot for retailers.
Nielsen's assessment of mobile social media, presented at CES 2009, claims that the trend will fundamentally change the way that advertisers reach consumers.
Act Now! Online Sample Sales
It's tough for consumers to refuse a great value — especially when there's a clock ticking and opportunities to buy are diminishing. The tried-and-true, limited-time offer so familiar to DRTV aficionados has been embraced online in the form of high-fashion sample sales.
The trend started in France in 2002 with http://Vente-Privee.com/ and grew in popularity through word-of-mouth, or rather, send-to-a-friend marketing. Last year, online sample sales mainstreamed in the U.S. with sites such as http://RueLaLa.com/ and http://Gilt.com/ opening and closing online boutiques filled with brand name apparel at discounted prices. Members must be invited to join, and they're incentivized to get their best friends to join too. The discreet sales are closed off to Google and other search engines.
Unique monthly visitors to Rue La La have spiked from 180,000 in June 2008 to more than 700,000 in June 2009. Despite decreased consumer spending, particularly in high-ticket items, Gilt has experienced the same steady growth with roughly 100,000 unique monthly visitors in June 2008 to almost 500,000 in June 2009.
Rue La La also boosts membership by extending invitations through newsletters, such as Splendora or Very Short List, which are targeted to their demographic.
"In this environment many retailers come to us because they've discovered this great new distribution channel," says Rob Murphy, senior vice president of marketing at Boston-based Rue La La. "We see ourselves as having two customers, our members and the brands."
Rue La La has extended its merchandise beyond women's apparel and has positioned itself as a lifestyle site with boutiques offering quality names in categories ranging from housewares to hotel packages.
"We turn down a lot of brands if we don't think they're a good fit for our members," says Murphy. "We edit the assortment. It's definitely not excess inventory."
Rue La La is also positioning itself to accommodate its users who want to take action and buy from a boutique on the go. With sales starting at various times during the day, building out the mobile experience is essential. Last month, the company launched its iPhone mobile shopping experience. Members can also schedule alerts to their phone when an upcoming boutique is scheduled to open.
"People use their phone as a primary device to shop," says Murphy. "This is the perfect model for mobile because it's so time sensitive. People are on the go, and they have to show up when the boutique opens at 11. It's a great example of using mobile for practical value."
Other retail sample sale sites include http://BillionDollarBabes.com/,http://HauteLook.com/ and http://Ideeli.com/.
Securing Online and Mobile Sales
The advantage of online shopping from a consumer perspective is convenience, but as more consumers flock online to shop, there's a lower level of commitment to complete a purchase. Often, consumers will shop online and leave their carts full without committing to buy. This presents an opportunity for retailers to reach out to potential customers, encourage or help them to complete a purchase and recommend an upsell item.
"We were working with a retailer that had most of its transactions online but it had a call center," says Craig Handley, CEO of Listen Up Español (LUE) and Revenue Enhancement Consultants, based in Portland, Maine. "Its upsells were low, and the calls into the center also had low conversions on upsells. So, in a moment of frustration one of my managers picked up the phones and started calling back customers about their experience, confirmed the order and asked for additional upsells."
LUE has worked with online retailers in categories ranging from nutraceuticals to dating. The company's cart abandon call-back program guarantees to reach 70 percent of a retailer's customer base, and that at least 15 percent of these calls will convert back into sales. Over the course of a year, Handley claims, this can result in more than $1 million in sales for a retailer. While calling back on abandoned carts, they've also discovered and exposed some fraudulent sales, which customers appreciated and benefited from as well.
"We call from a service standpoint and just make sure they got what they wanted," says Handley. "Some customers say, 'Oh, yeah. I wanted to get that!' Some need a little extra push, so we like to have a discounted offer or a new SKU to offer, just in case. But we can get more than 15 percent to happily give us a credit card, creating found money in a day and age when it's harder to find."
As with all new direct response marketing campaigns, the key to launching a mobile strategy is to start small, test and then roll out a larger plan that's customized to a business' needs and also provides a special value to consumers. The added benefit of mobile is that it brings businesses one step closer to understanding their consumers and creating low-cost marketing programs that will work. It's the ultimate medium for consumer segmentation and ushers in a new era of real-time, geo-based and direct communication.
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