In The News

Mobile Loyalty Solutions A Way of the Future?

September 14, 2009

While the global recession has shown some signs of hitting bottom, with some experts believing we're through the worst of it, there could still be a long hard road to rebuilding consumer confidence. One company that is looking into helping ease consumer worries is SmartReply, a provider of loyalty and mobile solutions for many of the country's top retailers.

I had a chance to discuss SmartReply's strategy with Eric Holmen, the company's president, and he offered his take on how the company is working to help retailers increase revenues and connect with customers through mobile marketing campaigns.

AllBusiness.com: Mobile coupons seem to be really taking off, but why now? Has the technology finally reached a point where this makes sense?

Eric Holmen: Mobile couponing is indeed on the rise, but the growth of the practice we're currently witnessing is less a sudden explosion than the result of a snowball effect in the retail industry, and a wider acceptance and adoption of mobile marketing as a bona fide medium. Mobile coupons have been around for a long time, but like every "new" technology or platform, it has been in the shadows as an emerging medium. Now, as retailers have been forced to rethink their marketing strategies and look for more cost-effective ways of reaching their customers, more have gotten onboard with the practice, their competitors followed them in, and so on and so on.

While I don't think we've seen a critical mass of mcoupons just yet, what we're seeing now is a sizable portion of retailers embracing the practice. This time next year, mobile coupons will be norm, and cut-out coupons waning. Of course, technology has something to do with it - smartphones have propelled the mobile Web (and mobile marketing), which facilitates mobile coupons, and the saturation of mobile devices in this country and around the world is nearly complete. That said, the growth of mobile couponing is mostly attributable to wide-scale retailer adoption.

AB: How does this affect those who don't rely on mobile phones, such as the elderly?

EH: When online and e-mail coupons came into their own, there was some speculation that they would signal the death of the print coupon Grandma religiously clipped from her Sunday paper.  This hasn’t been the case so far, and I don't think it will be the case with mobile coupons.  On a longer timeline, print coupons may indeed become obsolete, but on that same timeline mobile usage will increase among all demographics, the elderly included.

AB: Is this something that will become more readily available on smartphones, or will those with feature phones and even lower end and pre-paid handsets be able to take advantage of this technology?

EH: The technology currently exists to facilitate mobile couponing on almost every mobile device.  The most basic mobile coupons are simple numeric codes, which can be transmitted easily to any SMS-enabled device.  The more advanced coupons, which feature scanable barcodes or incorporate a location-aware aspect are better served by smartphones, and the proliferation of these devices is helping promote the practice of mobile couponing.

AB: What are the benefits for the retailers? Obviously it seems that sending a coupon digitally is going to be more cost effective?

EH: Mobile coupons are more cost effective, and their redemption/response rates are higher than print coupons. Across the range of mobile marketing initiatives, a category that encompasses mcouponing, response rates can approach 15%, which is nearly 10 percentage points higher than traditional marketing like direct mail; and of course, much, much lower in cost. There’s also the immediacy aspect: as a consumer, you receive a coupon delivered into the palm of your hand and start thinking... "I’m getting 25% off XYZ, I really should stop by in my lunch hour and pick up this item." 

Mobile coupons can also reach consumers at the point of sale because a consumer always has his or her cell phone on them (and rarely carries their Sunday paper around with them) - a mobile coupon can reach that consumer at the exact moment a purchasing decision is made, or not.

Bed, Bath & Beyond - Here’s an example of how a mobile coupon is more cost-effective than traditional coupons.

AB: What are the incentives to get people to sign up beyond just potential savings? And given that data plans cost money, as well as texts, could this become something that costs consumers money?

EH: The fairness of data pricing plans put forth by wireless carriers is a subject for another day.  The potential savings of a mobile coupon is important to offset the cost of the individual text message, and as many users move toward unlimited data plans this cost consideration is negligible. Mobile coupons are also sometimes a part of a larger mobile marketing strategy - and should be in my opinion - which establishes a dialogue between consumers and the brands that serve them. Mobile coupons can go a long way in building loyalty and enhancing the entire lifecycle. They’re not just receiving savings, but alerts to offers on items they’ve expressed interest in, or services that they’ve requested. There is a lot of value in mobile coupons beyond XYZ%.  The added value of this communications channel is an incentive for consumers to participate.

AB: Finally, do you see this as something that could expand beyond the United States? Currently there are people in parts of Africa and China who will never see a computer screen, but they have a phone. These seem like a potential person who could use digital coupons, especially as spending potential increases?

EH: The U.S. actually lags many countries, including developing nations, in terms of mobile usage.  As such, these markets represent tremendous potential for effective mobile couponing. I agree that as consumer purchasing power increases in these parts of the world, mobile coupons will play a large role in the marketing mix aimed at these audiences - as long as they are part of a planned strategy, fulfill peoples’ needs and respect their privacy.