The Fastest Growing Marketing Channel in the Past 90 Years is the Mobile Channel and that Growth is attributable to Mobile Couponing
Mobile has emerged on the scene faster than any other new medium over the past 90 years and mobile coupons are the category to watch, according to the “2010 Local Mobile Advertising & Promotions Forecast” from Borrell Associate’s Mobile Commerce Daily news letter (April 2010). A recent survey of over 2,250 U.S. adult Internet users, conducted by Harris Interactive, found that nearly half (46%) who own a mobile phone are “somewhat likely” to try out mobile coupons.
Mobile coupon redemption rates averages are 10 times higher than traditional coupon and with mobile phone penetration in the U.S. well over 90%, it is the single most direct marketing channel there is. And mobile coupons are just going to get more and more popular.
Mobile couponing or text couponing is ideal for restaurants and small businesses because it’s less expensive than print advertising and more effective. Furthermore, it takes a matter of minutes to formulate and execute a mobile coupon campaign. A company to watch is Frugaldoo.com. Frugaldoo.com offers small businesses pull and push SMS couponing technology using geo location services. Geo locating or proximity marketing targets local customers who are more likely to engage your business on a regular basis.
Mobile coupons (text coupons) are permission-based promotions where merchants send electronic coupons to subscribers’ mobile phones. Unlike other forms of electronic couponing (email / web), mobile coupons are read instantly with a 95% read rate. Mobile coupons may be delivered in a variety of digital forms, such as QR or data matrix barcodes, Universal Product Code (UPC), or unique coupon codes. The coupons can be redeemed through special barcode scanners that read them or by inputting the unique number into a relevant website or a point-of-sale (POS) machine that prints out a paper coupon. Typically with restaurants, guests are required to simply show the coupon to their server to redeem the offer.
Benefits of Mobile Coupons vs. Traditional Coupons
Mobile coupons are much more efficient in both delivery and cost than paper coupons. Using newspapers and coupon books sent through the mail do not offer any direct link between your restaurant and the guest who uses the coupon. A legitimate m-coupon campaign is permission-based and there is a direct connection between your restaurant’s offering the mobile coupon and the person choosing to use it. Thus, advertising and promotions using mobile coupons have a higher value and offer a direct link to the guest using the coupons. For this reason text-coupon promotions make for a great addition to your loyalty program. In comparison, paper coupons cost anywhere between $0.25 and $0.40 per mailed coupon, with average redemption rates of around 1-3%, according to the market research firm Frost & Sullivan. Effective m-coupon solutions can benefit from much higher redemption rates. Email coupons have a redemption rate of 8 – 10 percent but lack the instant open rate of text coupons.
For example, this past August http://mobilematradee.com launched a multi-channel campaign with Amigos Tex-Mex Restaurant. This campaign resulted in 24% redemption rate with the m-coupon. Plus, through a “refer a friend campaign,” they added an additional 70 new subscribers during the 30-day campaign. In addition, the A&P supermarket chain recently launched a m-coupon campaign with double-digit redemption rates and IHOP’s m-coupon redemption just hit 12% according to Mobile Commerce Daily.
Restaurant Return on Investment
For small businesses, text coupons offer a great ROI,” said Peter Conti, junior executive vice president at Borrell Associates, Richmond, VA. “Redemption rates are 10 times that of mail- or newspaper-distributed coupons.” Small businesses are adapting to the mobile channel because it’s cost effective and drives results. For example, if traffic’s been light lately, you can formulate and execute a m-coupon promotion in a matter of minutes (no printer or mailer required). And when you consider 95% of text messages are read within a 30 minutes of receipt, you can see double-digit results within hours (depending upon the value proposition of your promotion). My small business clients are on average are getting a 12-15%increase in traffic over a single channel mobile promotion (not print or radio).
According to Frost & Sullivan, consumer expectations from mobile coupons can be summarized as follows:
- Convenience/Portability – Consumers do not have to carry paper coupons with them
- Ease of use (redemption)
- No additional costs to receive offers
- Privacy protection
- Non-intrusive coupon delivery (as opposed to junk mail)
- Single interface for multiple offers
- Effective storage and presentation of delivered coupons
- Automatic updates
- Enhanced interactivity options
- Simple device requirements
Challenges Associated Mobile Coupons
The challenges associated with text coupons are 1) How redemption is handled to avoid abuse and 2) How to achieve mass distribution. Unlike direct mail where you can essentially spam your community with paper coupons, both email and text coupons require the consumer to “opt-in” to the mobile campaign.
Redemption abuse for text coupons is when a guest or a customer presents the same coupon multiple times to redeem the offer. Unlike paper coupons, the restaurant or merchant can’t actually collect the coupon upon redemption, unless they use bar code scanners, thus the coupon could be redeemed again and again or forwarded on to friend to be used again. And while paper coupons don’t encounter this problem, they do present the problem of counterfeit coupons.
My restaurant clients have noted they don’t encounter widespread abuse. Best practices require all promotions to have a hard expiration date, training staff on the promotion and the redemption requirements and tracking the redemptions, usually with a designated “promo” key on the POS or register. Adding unique coupon codes is another affordable way to track redemption (although it requires staff to record the code manually);it is also a deterrent to possible abusers. The recent development of QR code scanning apps downloaded to a smart phone will be the solution to overcoming this issue.
Also keep in mind the point of any promotion is to drive business and if guests gets away with redeeming a text-coupon twice that means they made two purchases, ultimately the point of the campaign.
Building Your “Mobile VIPs”
In order to achieve mass distribution you need to build your subscriber base, the more customers who opt-in to your mobile marketing program the greater your reach, thus the greater your distribution. Mobile subscriber lists are not as easy to build as an email list since most people don’t have spare cell phone numbers like the do email addresses.
Mobile works best as part of a muti-channel campaign. In other words, include your short code (5 or 6 digital number) and keyword (text “Pizza”) on your print advertisements, Facebook page, website and radio campaigns. Don’t neglect the importance of your our email campaign, offering an exclusive value proposition is essential to getting building your Mobile VIP database.
Depending upon your existing marketing plan and advertising budget, a restaurant typically needs 60 to 90 days to build an adequate mobile subscriber program, according to. Restaurants that now use cell phone pager systems like Mobile Matradee or Text2Table have an advantage. They have the guest’s cell number in order to seat them, now they simply send a follow up message offering a promotion if the guest’s subscribe to its “Mobile VIP” program. Building that initial data base is essential, choosing an experienced mobile marketing firm should be your first decision.
The Forecast for Mobile Marketing
Market researchers have found a strong correlations with the growth of smart phone users and m-coupon use. We know that the iPhone revolutionized the cell phone as the Swiss Army knife for consumers and businesses and the adaption of smart phones will grow exponentially over the next 3 to 5 years. As for mobile coupon utilization, more than 300 million consumers around the world will have used mobile coupons by 2014 and this usage will generate a redemption value close to $6 billion globally, according to a forecast and report by Juniper Research.
Your customers already have mobile phones. Make it easier on them by offering the opportunity to receive and redeem your mobile coupons. To learn more contact http://www.fulcrumdesignllc.com or call us at 203-715-4780
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