Texting for Shoppers

Discussion
Apr 23, 2007

By Bernice Hurst, Managing Director, Fine Food Network

Once upon a time, the competitive advantage of small shops was personal service. Then along came technology and supermarkets started getting more ‘personal.’ Using emails, phone calls, regular mail, special shopping nights and anything else they could think of, larger retailers began flooding their best customers with tailored offers that would prove irresistibly tempting. In an effort to fight back, though, corner shops in England are now trying to re-claim their turf.

The London Times reports that a mobile phone-based loyalty scheme called Shop Scan Save will soon be launched across 17,000 local grocers. Under the campaign, special offers are sent to mobile phones as barcodes that can be scanned from handset displays. Some 400 categories, including coffee, diapers, soft drinks and confectionery from the likes of Unilever, Procter & Gamble, Nestle and Mars, have already signed up.

Details of purchases will be stored and used to personalize future offers, setting in motion a virtuous circle of sales and promotions. Customers will also be able to request special offers as they are on their way to the store. For example, a shopper texting ‘BBQ’ could be sent offers, within 30 seconds, for beer, sausages and salads.

The Light Company, which will be managing the data for brand owners, will take a fee from them. Consumers will be charged for sending messages by their cell phone service, but not for receiving offers. The Light Company is already talking to chains in the U.S. and Australia.

Part of the drive behind the program is enabling smaller stores to tap into the success of loyalty programs run by larger retailers, such as Tesco’s Clubcard. The hope is also to find another traffic driver beyond coupons, which are perceived as “tacky” by many British residents and used by fewer people in the U.K. than in America. In particular, this cell phone approach is designed to extend the demographic reach, especially to younger men who love their hi-tech toys.

Discussion Questions: What do you think of the opportunity of text-message driven customer loyalty programs for independent retailers? Will sending targeted offers encourage shoppers to buy more than they might have planned? Will it promote loyalty?

[Author’s Commentary] The New York Times recently published a piece raising questions about using mobile phones to solicit donations to charity. Added to problems that users have had with unexpectedly high charges and unwanted subscriptions for downloads, for example, and you begin to wonder whether a backlash is on the way. Or whether the desire to save money will continue to take priority.

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14 Comments on "Texting for Shoppers"

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Michael Tesler
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Michael Tesler
10 years 7 months ago

Nope, this is not the way for independent retailers. Big stores need to “buy” loyalty, fine…they have the money to do so. Smaller stores get real loyalty, the kind with traction, meaning and staying power because they EARN it. How do the earn it? It is simple if you have the ability to “think small” and to “think like a customer”–just have interesting, unique, fresh, healthy, well presented products in clean, visually exciting surroundings and add in well informed, motivated staff and you get what a coupon can never provide…great products and quality experiences. Retailers are always looking for shortcuts…real retailers know there are not any.

Dan Jones
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Dan Jones
10 years 7 months ago

Like any targeted marketing, if the message is compelling, and the targeting appropriate, the message will be well received. If consumers become “blanketed” with mediocre messages, the impact will decline.

Unlike England, U.S. consumers must invite retailers in to receive these messages (consumers can invite retailers by texting BBQ to a short code). A relevant follow-up message, for example: “Salmon Steaks are available, with grilling directions” would be an effective message. But hearing about laundry detergent, children’s cereal, etc. would not be as effective.

The mobile environment is being carefully managed by carriers (and hopefully marketers) to stay uncluttered. No other medium allows for immediate, targeted contact at a low cost. But the power of the medium must be carefully considered by marketers, so that text and mobile marketing remains viable and effective for the long term.

Alex Fries
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Alex Fries
10 years 7 months ago

Text messaging for retailers is the best direct customer service one can offer. Imagine being able to sell goods to your existing customers via short message? Sending renewal or refill messages so that customer can just press YES on phone and get product delivered. SME would be able to sell products without having their customers come to their stores. This is a must for small local stores. All would be permission based. There is a company called Mobile Mantra that tried to pitch this three years ago in the U.S.

Ben Ball
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10 years 7 months ago

I think this has a better shot at working for the small corner shop than it does for larger retailers–provided they use it to increase personalization for patrons and not to just blast out messages to everyone in the same area code.

The reason is that my own “corner shop” equivalent knows me by name. They know my purchasing habits. That I prefer seafood to chicken and zinfandel to cabernet. Getting relevant messages from them would simply be a convenient continuation of that relationship. Getting messages from (Wal-Mart/Tesco/Kroger) would not be the same. Even though their software can target my needs and preferences just as well as the corner shop owner can, I know they don’t know my name and never will. Their messages would always seem more of an invasion.

Ken Wyker
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Ken Wyker
10 years 7 months ago
Text messages are intrusive to the extent that your phone alerts you to the new message. That might be fine if you just requested offers by texting “BBQ” and immediately receive the offers in response, but it can be annoying if you’re at lunch and get a message letting you know about savings on detergent. Consider consumer attitudes toward email, which has proven to be a powerful promotional tool for communicating personalized offers, and is far less intrusive than text messaging because each customer is in control of when they view their email inbox. Even so, marketers have found that without truly relevant and meaningful offers, customers can be quick to label promotional emails as spam. Imagine how quickly customers will complain if they are bombarded with frequent text messages throughout the day. I think the cell phone companies should develop a way to handle business/promotional text messages differently from individual messages. Regular, personal text messages from friends and family would be communicated immediately and the receiver would be notified with the alert. But promotional… Read more »
Mel Kleiman
Guest
10 years 7 months ago

I think this program is going to miss the mark for three reasons:
1. After a short period of usage this is going to begin to be seen as a bunch of spam and a lot of clutter.
2. If it really works then the big boys will jump all over it and spend the dollars to get a larger voice.
3. If the small retailer wants to really develop customer loyalty they should do it in the one way that the large retailer can’t and that is in high touch personal service. People still like to interact with people.

Camille P. Schuster, PhD.
Guest
10 years 7 months ago

Companies first need to be able to determine how to personalize rewards to consumers. In the U.S., consumers appear to be willing to allow messages if they receive something in return. If they do not receive personalized rewards or rewards that are meaningful to them, the consumers will have a strong negative reaction. In addition, consumers need to have the choice to “opt in” to these promotions and not get spammed with them. Especially for Gen Y consumers, this could be a tremendously effective tool if handled properly.

Jeff Weitzman
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Jeff Weitzman
10 years 7 months ago

Any phone-based incentives have to overcome some technical and process hurdles beyond just getting the offers onto the phone. A list of offers buried on your phone is not a substitute for coupons in hand along with your shopping list. Incentives are ultimately about driving incremental sales, which means they need to be in the consumer’s mind at the moment a purchase decision is being made. Another drawback is at checkout. Even if barcode scanning works flawlessly (and I’ve yet to see that happen), waiting for a shopper to call up one offer after another for the cashier is not going to fly.

Phone-based incentives will surely have their place and be ideal for certain consumer interactions, but they are not likely to be a substitute for paper coupons any time soon. Coupon use is far higher in the U.S. but the use of “vouchers” in the U.K. is taking off, especially when combined with internet marketing.

Gregory Belkin
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Gregory Belkin
10 years 7 months ago

Text messaging for smaller, independent retailers… why not? The benefits AND the potential drawbacks, should translate into the same business scenario that work for larger retailers like Tesco and Wal-Mart.

The key, as always, is targeting. The customer should have access to ONLY the promotions they are likely to buy, or else the program risks being labeled as a nuisance. The moment a customer is oversaturated with promotional materials is the moment the program is a failure. Until that point is reached, however, there is much to gain for small and large-scale retailers as a way to reach out to their customer smartly and complimentary.

Mark Lilien
Guest
10 years 7 months ago

Using cell phones instead of loyalty cards is a good idea, because it’s convenient. Consumers might fear that text message coupons and other text message ads will turn into a Mississippi River of spam. Retailers might be concerned that text message coupons would become the cherry-pickers’ dream, simply maximizing loss leader sales instead of profitable traffic.

Bernie Slome
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Bernie Slome
10 years 7 months ago

I’m sure that this will help drive some sales. Companies such as Vindigo have long touted services that involved targeted ads. At one point some services were discussing ads being offered to consumers when they were passing stores.

To me personally, I use my cell phone and blackberry for business and personal. Text messaging is for immediate contact with people I choose to speak with. I would find text messages advertising specials or sale items very obtrusive. Especially when I am paying for the text messages.

I am a baby boomer. Perhaps my comfort zone with all this–that I consider an invasion of privacy–is very different than the “younger generation.”

Lisa Bradner
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Lisa Bradner
10 years 7 months ago
Potentially, this is a really interesting way for small retailers to band together and get data. The issue here, to me, is that the reason Tesco’s “loyalty program” works is that they don’t stop at discounts and rewards–they use the data to create a communications stream with their customer, to help influence store formats and planogram decisions and to create as customized an experience as they can. Without the critical next step of planning for what you’ll do with the data once you collect it and how that will influence your relationship with the shopper loyalty programs really aren’t about loyalty at all–they’re about giving discounts in a new way. Unless the smaller retailers can turn data to action, they’re essentially just cutting their prices to compete. As for mobile, the issue again comes down to relevance. With so many marketers trying to reach consumers through their mobile devices it’s pretty easy to believe the novelty will wear off quickly. Let’s hope the UK grocers have an opt-in program and a plan for balancing and… Read more »
Bhupesh Shah
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Bhupesh Shah
10 years 7 months ago

I think this will work well for the generation that has grown up on text messaging. They don’t seem to mind sharing personal information a la Facebook, MySpace and YouTube but I believe the boomer generation in North America would be hard pressed to utilize or agree to this type of marketing.

Retailers that are targeting the younger generation need to establish a number of different touch points so that the customer can be contacted when they wish, how they wish, where they wish and with the content that they wish to see.

Liz Crawford
Guest
10 years 7 months ago

The key to texting and opt-in programs for small, independent retailers is creating a person on the other end of the messaging. In other words, an anonymous V-oupon isn’t going to enhance loyalty it’ll squash it in an intimate space. Conversely, if the “owner” of the shop is seen to be communicating one-on-one with the customers & offering personal deals–that’s a home run.

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