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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.
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