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 Borrell Associate’s “2010 Local Mobile Advertising & Promotions Forecast,” (Mobile Commerce Daily newsletter, April 2010).

A recent survey of over 2,250 U.S. adult Internet users, conducted by Harris Interactive, found that nearly half (46{170c5dc430f64c583d5107d62ba05598e67e73b9b6a5f140f81c7d71fdb25fb3}) 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{170c5dc430f64c583d5107d62ba05598e67e73b9b6a5f140f81c7d71fdb25fb3}, it is the single most direct marketing channel there is. Mobile coupons are just going to get more and more popular.

Mobile Coupons

Mobile coupon are, permission based promotions where merchants send electronic coupons to a subscribers’ mobile phones. Unlike other forms of electronic couponing (email / web) mobile coupons are read instantly with a 95{170c5dc430f64c583d5107d62ba05598e67e73b9b6a5f140f81c7d71fdb25fb3} read rate. Mobile coupons may be delivered in a verity of digital forms, such as QR or data matrix barcodes, Universal Product Code (UPC), or via unique coupon code. The coupons can then be redeemed through special barcode scanners that read them or by inputting the unique number to a relevant website or a point-of-sale (POS) machine that prints out a paper coupon. Typically with small businesses the customer is required to simply showing the coupon at a retail outlet or restaurant to redeem the coupon.

Benefits of Mobile Coupons vs Traditional Coupon

Mobile coupons (m-coupons) are much more efficient in both delivery and cost than paper coupons. Using newspapers and coupon books sent through the U.S. mail do not offer any direct link between your business and the person who uses the coupon. A legitimate mobile coupon campaign is permission based, another words, there is a direct connection between your business 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 person using the coupons. For this reason mobile coupon promotions make for a great 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 percent, according to Frost & Sullivan, a market research firm. According to Frost & Sullivan, effective m-coupon solutions can benefit from high redemption rates. Email coupons have a redemption rate of 8 percent but lack the instant open rate of M-Coupons. For example, in August we launched a multi-channel campaign with Amigos Tex-Mex Restaurant which resulted in 24{170c5dc430f64c583d5107d62ba05598e67e73b9b6a5f140f81c7d71fdb25fb3} redemption rate or 109 guests redeem the m-coupon, plus through a ‘refer a friend campaign” we added an additional 70 new subscribers during the 30 day campaign. A&P supermarket chained launched a m-coupon campaign with double digit redemptions rates and recently iHOP’s m-coupon redemption hit 12{170c5dc430f64c583d5107d62ba05598e67e73b9b6a5f140f81c7d71fdb25fb3} according to Mobile Commence Daily.

Business ROI

“For businesses, m-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,traffics been a lite 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{170c5dc430f64c583d5107d62ba05598e67e73b9b6a5f140f81c7d71fdb25fb3} 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 of course. My small business clients are on average are getting a 12-15 percent increase in traffic just a single channel mobile promotion (not print or radio).

Consumers Benefits

According to Frost & Sullivan, consumer expectations from mobile coupons can be summarized as follows:

  • Convenience of 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 (junk mail)
  • Single interface for multiple offers
  • Effective storage and presentation of delivered coupons
  • Automatic updates
  • Enhanced interactivity options
  • Simple device requirements

Challenges of Mobile Coupons

The challenges associated with m-coupons are how redemption is handled to avoid abuse and how to achieve mass distribution. Unlike direct mail where you can essentially spam your community with paper coupons both email and m-coupons require the consumer to give permission or “opted into” the m-coupon campaign.

Redemption Abuse

Redemption abuse or coupon 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. Paper coupons don’t encounter this problem but they do have a big problem with counterfeit coupons.

In my experience most small businesses I consult with to develop m-coupon programs don’t encounter wide spread 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 your staff to record the code manually. The recent development of QR code scanning apps, you can download to your smart phone will be the solution to overcoming the issue.

We also have to keep in mind the point of a promotion is to drive businesses and if a customer gets away with redeeming a m-coupon twice that means they made two purchases, which is the point of the campaign anyhow.

Building Your “Mobile VIPs”

In order to achieve mass distribution you need to build your subscriber bases, the more customers that 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. Another words, including your short code (5 or 6 digital number) and keyword (text “Pizza”) on your print advertisements, Facebook page, website, radio campaigns and even your email campaign with an exclusive value proposition for opting in essential. Depending upon your existing marketing plan and advertising budget, a business needs 60 to 90 days to build an adequate mobile subscriber program. Restaurants that now use cell phone pager systems have an advantage. They have the guest cell number in order to seat them, now they simply send a follow up message offering a promotion if the guests subscribers to their “Mobile VIP” program. Building that initial data base is essential going forward and by choosing the right mobile marketing partner will determine how successful you will be in the long run.

The Forecast

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. Do your customers have mobile phones, if so offer them the opportunity to receive and redeem your mobile coupons.