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GUEST OPINION The future of coupons is mobile

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Ahead of his company’s appearance in Internet Retailing Expo’s Mobile & Social conference track, Eagle Eye’s CEO, Steve Rothwell, shares his thoughts on why it’s time retailers swapped paper-based coupons in favour of a more high-tech alternative

Just a few months ago, David Snow at Juniper Research authored a report on the mobile coupon market. In it he predicted that by 2016, more than $43 billion mobile coupons will be redeemed each year. Compared to 2011, when an estimated $5.4 billion worth of mobile coupons were redeemed, that represents an incredible eightfold increase.

So what’s driving this rapid increase? There are two key factors. Demand from consumers looking for the best deals and a change in how people are using their mobile phones.

UK consumers are actively seeking offers to drive more value when spending their hard earned cash. Often that means tracking down special offer coupons via digital or traditional media, or turning to group-buying sites. This is substantiated by Valassis reporting that 61 per cent of people in the UK used coupons in 2011 (up 17 per cent year-on-year), and Google reporting an 800 per cent increase of mobile search queries for coupons, vouchers and offers.

It’s this change in behaviour that has grabbed the attention of retailers, who see money-saving deals and value added offers as a great way of getting people into their stores.

Of course, offering customers a great deal has always been a good incentive to drive business. But what’s so different about mobile coupons?

Largely driven by smartphone growth, consumer behaviour is shifting and mobile becoming integral to the overall shopping experience. The Internet Advertising Bureau (IAB) stated recently that 38 per cent of people use their mobile in-store to do a variety of shopping related tasks, and in a separate study, 22 per cent of mobile media users have redeemed a mobile coupon.

But why exactly should high street retailers use mobile coupons and vouchers instead of paper-based version, when they have worked just fine in the past?

Retailers are demanding more accountability and measurement for their marketing spend. They need to know which media is driving sales, whether the purchase has been made from a new or existing customer, and how they can best serve that customer moving forward to build up a true relationship so they keep coming back into store. Or in other words valuable CRM intelligence – the ‘who, what, when, where’.

Paper-based coupons can be difficult to measure and offer limited targeting solutions, but more importantly they are hard to track in a time period that could be deemed useful to optimise campaigns. As a result, retailers are looking to more sophisticated options to drivecustomers in-store. One solution comes in the form of fully-trackable mobile coupons and vouchers.

The measure of success

Just like their paper-based cousins, mobile coupons can be used to lure shoppers with the offers or added value. But what they offer is a better, more convenient experience for consumers, and the type of insights that retailers are demanding.

First off, they are stored on the consumer’s phone. This means customers have quick and instant access to them whilst shopping. Mobile coupons can also be issued immediately, meaning retailers can be very responsive to marketing opportunities at point of sale (PoS).

Secondly, mobile coupons offer the capability of delivering a unique identifier to each specific coupon and / or customer. This allows retailers to gather more CRM intelligence about which customers are responding to what offers, in order to make better decisions on how they can best serve that customer.

Using mobile to increase retailers understanding of who your customers are and learning how they react to your offers will give them a competitive edge.

There are currently two customer-facing redemption methods that can be used: scanning barcodes, which usually requiring hardware investment, or entering a code into the Chip & PIN terminal, which typically involves a straightforward upgrade to the software of the existing PoS systems.

In the coming years, as Near Field Communication (NFC) enabled phones become more prevalent we can expect consumer behaviour to change again, with code entry ’upgraded’ to a simple ’touch’ interaction between mobile and the PoS system. This requires consumer adoption but once consumer confidence is established we can expect this to become the norm. (Eagle Eye’s patented technology caters for both keyed and NFC enabled entry).

It’s the real-time track-ability which is crucial in targeting the right customer and controlling the campaign. By using the full mobile coupon capability, it’s possible to alter, extend or curtail an offer based on its performance, within hours. For retailers this could have the potential to make an almost-instant impact on footfall in stores.

These are the kinds of attributes that have made digital marketing so successful for internet retailers in recent years. Mobile technology gives bricks-and-mortar retailers the opportunity to benefit from the same sort of tools for the first time, whilst paving the way for smarter targeting through location-based mobile marketing campaigns.

Location, Location, Location

In the days of old, retailers wanting to target consumers in a specific area of the country would take out advertising in a local newspaper. But, with local papers continuing to lose readers and struggling to pique the interest of young people, new ways of targeting consumers are much needed.

Already we’ve seen media owners, such as O2, offer location-based mobile advertising campaigns to reach consumers in targeted areas. Whilst this can be an effective way of driving people to store, issues with trackability and measurement have meant that it has been difficult to gauge the impact this activity has had on increasing traffic into stores.

The marriage of in-store mobile redemption systems paired with any targetable coupon delivery media, including mobile, changes the game. They allow retailers on the high street to target mobile users by location in a fully measurable way, thereby bridging the virtual and real worlds. And since digital campaigns can be up and running in a matter of hours, it means retailers can be more agile, using mobile as a multichannel enabler.

Whilst mobile coupons may not completely replace their paper-based counterparts in the immediate future, I’d be very surprised if we didn’t see a rapid move away from traditional paper coupons and vouchers. Retailers will increasingly embrace the benefits that the mobile device offers consumers as a convenient way to store and redeem coupons and vouchers.

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