Industry News

Crocs use mobile coupons as the first stage of an ongoing customer engagement programme

Crocs have received a promising response for its new mobile coupon campaign launched across all its stores with 94,000 requests for coupons in the first month.

In an attempt to better engage with its consumers and create a positive value exchange, Crocs have launched this proactive campaign using timely mobile communication. The target age range for Crocs is 18-50.

Consumers were invited through in-store communications to text CROCS to a specific number including the unique store code. The consumers then received an instant 15% off coupon for a product purchase. This coupon could then be redeemed at the till.

In store assistants were motivated to support the initiative through prelaunch training. The aim was to encourage customers to continue to use the mobile communications through opting in to the programme. This would enable Crocs to continue the mobile engagement after the initial promotion, providing them with the same tracking capability as an ongoing loyalty card scheme but with improved communication facilities.

Croc’s future plans include providing an ongoing dialogue and relevant targeted offers via SMS to help increase footfall to the stores as well as web visitor traffic.  The relevance of the offers will be driven by previous shopping preference combined with online history and general demographical information.

Jay Custard, global online marketing director at Crocs Inc. commented “Being able to connect with customers in a meaningful way via their mobile device allows us to create a valuable shopping experience and to have a one-on-one dialogue”
Stefan Magnusson, CEO of Mobile Customer Engagement provider Mobilize commented ‘Crocs are demonstrating the power of using mobile coupons as the first stage in an ongoing programme where the real value comes from the long term engagement.  This can only be achieved through having the ability to capture transaction information at the point of use.”  

The Mobile Market for Advertising and Coupons in Retail will be worth $8bn by 2012

A recent report published by Juniper Research on Mobile Marketing and Retail Strategies forecasts that the market for mobile coupons is set to double by 2012 to $4billion whilst the market as a whole for advertising, coupons and smart posters will globally exceed $8billion by 2012.

The report found that Retailers were already starting to utilise the additional benefits of the mobile channel to provide advertising on the phone and the provision of money off coupons. The research showed that location aware technologies would play a key part and suggested that companies such as Google and IBM were already seeking to exploit location based knowledge to enable retailers to provide relevant offers to shoppers in-store.

Mobilize has been operating the SHOP SCAN SAVE® mobile loyalty scheme since 2004. Stefan Magnusson, CEO, is not surprised. “Consumer interest in mobile coupons has always been strong, as has that of the advertisers.  Now that retailers are beginning to align themselves to issue and redeem mobile coupons in-store, I can easily see the market more than doubling over the next two years”.

The report stresses the importance of targeting and therefore the relevance of the offers and advertising to the consumer. The mobile phone is seen by the consumer as part of their personal space so any unwanted intrusion will not be welcomed. Failure to use targeting particularly with SMS communications will result in the user treating the advertising as spam.

Mobilize are currently in dialogue with most of the UK’s largest retailers regarding the issue and redemption of mobile coupons, and recently appointed loyalty expert Steve Gray as Executive Chairman.  Gray has a deep understanding of retailers’ requirements in loyalty and direct marketing, having worked with industry giants including Tesco, Kroger, Carrefour, Boots, Metro, Waitrose and Morrisons in the area of customer retention and loyalty.
Gray, commented “For mobile marketing to be successful the message and its delivery needs to be continually relevant to the consumer. This requires the ability to harvest insight from the transaction and create an ongoing engagement programme that is opt in and permission based. Mobile Loyalty creates significant opportunities particularly for retailers with an existing loyalty scheme as they look to “mobilize” their customers”.

Full report can be accessed here

http://www.juniperresearch.com/reports/mobile_marketing_&_retail_strategies

M&S launches dedicated mobile website

With M&S online sales growing by 48% in the first quarter of 2010, on top of a 32% increase in the months leading to Christmas, M&S have launched a dedicated mobile website. This enables shoppers to access and order more than 24,000 products including clothing, home and furniture, technology and gifting.

The website, which M&S claims is the first mobile site from a major UK retailer, is characteristically different from most recent retailer announcements concerning mobile marketing and commerce. Whereas the headlines have recently been full of retailers announcing initiatives on the iPhone which requires a specific app, this M&S website can be accessed by any web-enabled mobile.

Customers can log into their web-account to manage shopping baskets from their mobile as well as access most of the standard functionality found on the main M&S website.

The M&S move is supported by a recent report from the Aberdeen group. This suggests that while only 24% of all retail organisations surveyed currently utilize a cross-channel customer loyalty platform, 58% plan to implement one in the next twelve to eighteen months. The adoption of a truly integrated cross-channel approach to loyalty is seen as a necessity as customer channel preferences and affinity continue to evolve.

Stefan Magnusson, CEO of Mobile Customer Engagement provider Mobilize commented "M&S have signposted the future for mobile as an integrated element within a multichannel approach. Whilst iPhone apps provide an easy and intuitive access to a brand, they can only represent a fraction of UK Mobile owning consumers, therefore Smart apps may well be an interim solution. Over time, interaction via fully-fledged mobile browsers will provide an accessible and ubiquitous mobile engagement channel available to all customers".

Justin King comments on the competitive advantage provided by Loyalty Data

In a recent interview Justin king claims that those supermarkets that don’t grasp the benefit of using loyalty cards and the wealth of insight they create are going to be at a serious disadvantage.  He believes that without customer insight they rely too heavily on untailored promotions.

King said that ‘those without data’ were being drawn into ‘ever more promotions’ because they lack the sophisticated databases to tailor special offers to particular customers.

The Sainsbury’s CEO was commenting after the retailer announced pretax profits up 17.5%.  He stated that just 32% of spending at Sainsbury’s was on promotions compared with an industry average of 37%.

He added that last year’s launch of "coupon at till" where customers are given targeted vouchers based on historic purchases and Tesco’s doubling of Clubcard points had marked a turning point in the industry.

Tesco and Sainsbury’s main supermarket rivals, ASDA and Morrison, have resisted calls to have loyalty schemes and last week Morrisons promised that they would continue with the increased number of special offers and discounts, while Asda have been focused on one-off vouchers in newspapers.
Steve Gray, the Executive Chairman of Mobilze commented “The next big challenge for loyalty is creating a consistent user experience and access across all channels including Mobile Loyalty. I believe that Mobile will provide the next level of competitive advantage through its ability to be an intimate, immediate and most importantly convenient consumer channel. “

KFC use mobile to enhance customer engagement and loyalty

KFC, have demonstrated the effectiveness of using mobile marketing as a means of driving increases in footfall and loyalty membership . Mobile coupon redemption rates averaged 13% with the addition of 6,000 new subscribers to their mobile loyalty programme.

Over a period of four weeks KFC sent 14,000 mobile coupons that were valid across 1500 outlets.

The programme formed a mobile channel component of KFC’s “Relief Plan” campaign that ran over four weeks with a different offer every week. Offers included a buy-one-get-one free, a percentage discount and a free low priced item such as a drink.

A multichannel approach was adopted using other media to promote the mobile loyalty club .  This included an email shot to a group of existing subscribers, as well as using in-store, online and other traditional media.

KFC stores could track the success of each of the offers, as well as specific footfall patterns by outlet, during the campaign.

In addition a post-campaign mobile survey , that achieved a 45% response rate, was sent to all participants in the programme to further enhance customer insight for future campaigns.

Stefan Magnusson, CEO at Mobilize, commented “The fast-food market is hugely competitive with many alternative choices facing the consumer. Mobile loyalty programmes are increasingly seen as providing a new, lower cost and innovative channel for reaching and influencing a consumers purchasing preference. In our experience KFC’s success can be put down to using a multichannel promotion approach, compelling offers and a technology that enables data collection for ongoing and relevant engagement”.

Mobilize Systems, as the leading Marketing Innovator in Retail for mobile loyalty, are holders of the key technology patent in this area in the UK.

Starbucks rolls out Mobile Payment and Loyalty

Starbucks have announced that it is rolling out its loyalty and payment card on mobiles across 1020 Target and Starbuck stores in the US. This announcement comes after a successful trial in 16 stores in California and Seattle.

This mobile application, which will be available on iPhone and iPod Touch, replicates the features available on the existing plastic payment card. The application enables customers to check their card balance, view transactions and upload additional credit. It provides the same additional benefits as the existing plastic loyalty card such as free syrup and milk options as well Wi-Fi access.

Customers register for their mobile loyalty card online and can then load credit using a credit card either online or through the mobile application. 

Payment is made via their iPhone or iPod touch using a bar code displayed on the phone that can be scanned in the same way as the bar code on the original card.

Mobilize Systems, as the leading Marketing Innovator in Retail for mobile loyalty, are holders of the key technology patent in this area in the UK with the difference that their capability is available across all phone platforms including iPhones.

Stefan Magnusson, CEO at Mobilize, commented "There are a number of benefits for Starbucks in the adoption of a mobile loyalty platform. The added convenience of a mobile card to the customer potentially increases footfall and loyalty. In addition substantial cost savings can be realised by replacing a plastic card with a mobile application. However the most significant benefit is that it also opens up a more intimate and immediate communications channel to the customer for future marketing campaigns and promotions."

Tesco launch loyalty card on iPhone.

Tesco embraces Mobile Marketing with Clubcard on the iPhone.

As an enhancement to one of the world’s most successful loyalty programmes Tesco has announced an iPhone application for its Clubcard now available on iTunes.

The idea of having a loyalty card on your mobile is born out of the need for increased convenience and therefore less frustration for the customer: given that the chances of a customer having or finding their phone on them are greater than finding a loyalty card.

The service enables any current or new subscribing Clubcard holder to use their iPhone mobile as a replacement for a plastic Clubcard. Once they have registered for the iPhone application a customer can scan a barcode on their phone rather than the plastic Clubcard.

No doubt this is just the start of Tesco’s journey into mobile marketing and loyalty. Tesco have stated that they intend to do lots more with this channel in the future*, such as display a customer’s points balance or enabling e-vouchers sent directly to the phone so customers can use them at the checkout directly through a scanner.

The advantages to any retailer of using mobile loyalty are also substantial, as the cost of replacing and administrating plastic cards alone is said to be in the region of £5 a head across the retail sector. It also opens up a more immediate and intimate communications channel from retailer to the customer enabling more timely and relevant offers to be shared: boosting customer participation and redemption rates.

Mobilize Systems, as the leading Marketing Innovator in Retail for mobile loyalty, are holders of the key technology patent in this area. Stefan Magnusson, CEO at Mobilize, commented “We are excited about Tesco’s adoption of this medium to enhance their existing loyalty programme” and went on to stress “This capability is not restricted to iPhones, we are working with retailers across the UK to deliver mobile loyalty on all types of mobile phone using the Mobilize technology platform”

*For more information visit http://www.techfortesco.com/clubcard/Support.html

Our Thoughts

Coupon Redemption Rates Outperform On Mobile

One of the most debated topics in the area of mobile marketing is whether or not redemption rates are somehow pre-ordained to be higher than coupons distributed through other media.  If that’s the case, then it makes sense for brands and retailers to engage and retain their customers through mobile , as high redemption rates would imply high levels of customer engagement.

Two sets of figures on redemption rates were released recently, one from IHOP, a US digital marketing agency, and one from Vouchercloud, a new UK based mobile coupon iPhone app.  IHOP states a ten percent redemption rate of mobile coupons that they distribute, and Vouchercloud claim an amazing 42%.

These numbers far outrank traditional redemption rates.  A standard paper coupon campaign would be proud to report a redemption rate over one percent and an email campaign might sit at five (which is why the higher "click through" number is more usually quoted).

The company with one of the longest track records in mobile coupon redemptions is Mobilize, who run the SHOP SCAN SAVE® mobile loyalty scheme.  SHOP SCAN SAVE® has delivered mobile coupons to its members on behalf of brand owners every three weeks for the last five years and therefore delivered over a thousand campaigns.  Managing director Stefan Magnusson thinks that the results need to be evaluated in context before conclusions can be drawn about mobile coupons.

"The success of any coupon campaign is strongly anchored in the value of the offer it delivers to the consumer.  Twenty pence off a £10 product is unlikely to produce a noticeable redemption rate at all, whereas Hoover famously created a massive over-redemption when it offered transatlantic air tickets with every new product purchase.  We have seen mobile redemption rates for experimental mobile push campaigns below one percent but also above 25% and a key factor in that variation is the value of the coupon.  However, the most significant factor is relevance, which can easily double the redemption rate of a campaign. Of course someone’s mobile is probably the most targeted medium to reach them through, and targeting enables relevance." Therefore IHOP’s redemption rate of ten percent is sustainable for well targeted campaigns of good offers.

The Vouchercloud rate needs to be viewed from a different angle as their coupons need to be requested, or pulled, by the consumer.  Moreover, the deal available is shown to the consumer before she requests it, so she knows upfront what’s on offer. Therefore fewer coupons are distributed, but the ones that are have been qualified as interesting by the recipient themselves and are therefore more likely to be used.  "We have run Pull campaigns with 100% redemption rates and that’s not as staggering as it sounds.  Why would you make the effort to fetch a coupon if you weren’t going to use it?" says Magnusson.  This point highlights the second strength of mobile as a coupon delivery medium: convenience.  Because it is easy to use the Vouchercloud application to fetch offers on nearby items that you are interested in, there is a high tendency to use the vouchers it provides.

Everything else being equal, therefore, it seems that mobile couponing will consistently deliver higher redemption rates for two reasons.  Firstly, the phone is a very targetable medium, which means that segmentation can be very granular and start incorporating both time and location elements.  Secondly, it is convenient for consumers to receive vouchers to their mobile, which results in a greater tendency to use them.

However, coupon redemption rates should not be seen as an end in its self as redemption rates on its own doesn’t drive profitability for a retailer. Profitability is driven by ongoing customer loyalty and engagement.  For these smarter applications than one-off coupon delivery is required.

Apps: a solution for the medium term

It is difficult to think of anything that is more hyped right now than iPhone apps.  They are billed as a fast road to riches for developers, consumer love potion for brands and a universal snake oil to solve any problem to consumers. A cursory glance at the next hype level down will find yet more apps; for Androids and Blackberrys and WindowsMobile, and of course the revamped app stores such as Ovi.com and Vodafone 360.

The question no-one seems to ask is whether the hype is justified.  After all, no single platform has more than 10% of the smart phone market (iPhone) and both Nokia and Samsung are bringing out new platforms in 2010, fragmenting the market further still.  Consequently any brand or retailer (except the handset makers themselves) aiming to engage more than 10% of their market in commerce via mobile apps, will have to be prepared to develop, support, maintain and upgrade on multiple platforms. 

From a consumer perspective too, the app story is pretty fragile.  Excluding iPhone, less than 30% of smart phone owners have ever downloaded an app.  And for iPhone apps, ninety percent of those downloaded are deleted within two weeks.

If we then draw the commonplace comparison between customer engagement via internet connected PCs and customer engagement via smart phones, the hype seems positively barmy.  The trend for PC behaviour is away from apps (or programs, as they used to be known) to Software As A Service (SaaS), Cloud Computing and Virtualisation – all ways of separating the physical link between software and hardware.  New hardware launched is designed not to run apps but to place full focus on Internet connectivity, easy browsing and working “in the cloud”.  And this is also the strategic direction of the big trendsetters Google and Apple; cloud hosted software and services.

So Apps seem to be an interim solution.  They are an easy and intuitive way for consumers to access a brand and to interact with it from their mobile.  This is an interesting development and shows that brand engagement via mobile is appealing.  Over time, however interaction via fully-fledged mobile browsers will replace apps. Mobile websites will be designed with mobile-based behaviour in mind (think transactions instead of browsing, think publication instead of research) rather than the slimmed down versions of PC websites that they are today.  These mobile sites will be supported by near-ubiquity in smart phones and WiFi enabled handsets.  Today 42% of all cell phones in the US are smart phones and in Europe the number is quite a bit higher.  In-Stat projects that 25% of all phones shipped will be WiFi ready by 2012, enabling mobile commerce without an associated worry of data costs from the consumer’s side.  Mobile apps are destined to be the tactical quick fix, whereas good, task oriented and user friendly mobile websites are what will drive consumer engagement over the years to come.  Retailers need to start learning about long term consumer engagement via mobile, in order not to find themselves down a cul-de-sac when consumers move from apps to mobile browsers.