Retail Customer Experience: Why Mobile Coupons Are Not the Answer

Discussion
Aug 12, 2010

Commentary by Jeff Weidauer, Vice President of Marketing for Vestcom International

Through
a special arrangement, presented here for discussion is a summary of a current
article from Retail Customer Experience, a daily news portal
devoted to helping retailers differentiate the shopping experience.

In a recent
article in Fast Company magazine, Steve Jobs quoted Henry
Ford: "If I’d have asked people what they wanted, they would’ve
said a faster horse." Mr. Jobs’ point was that the iPod, as well
as Apple’s other game-changing ideas, did not come out of focus groups
or quantitative research; they came from understanding human behavior, and finding
opportunity there.

There is an apt analogy to the world of coupons.

What people really want,
but don’t know how to ask for, are ways to save
money that are relevant to them. They know about coupons, so they think in those
terms.

Coupon use has skyrocketed in
the past 24 months or so as shoppers looking for ways to save money returned
to their old habits and started clipping coupons. Coupon aggregator websites
have fed the trend. With nearly every adult (and many kids) carrying a mobile
phone, the transition from paper coupons to mobile began very quickly, for
good reason: distribution was, theoretically at least, quick and cheap.

But
displaying a coupon barcode on a mobile phone is a ham-fisted way to address
this need for value. Coupons have always been a poor way to drive sales, but
again, absent a viable alternative, they have hung in there for much longer
than their ability to drive incremental sales should have allowed. Putting
a coupon barcode on a mobile device does nothing to make the coupon more effective,
and only minimally more measurable or targeted.

Thanks to mobile devices, and
the smart phone in particular, reaching shoppers in real-time is easier, cheaper,
and more effective than ever. The opportunity to engage with shoppers in a
meaningful manner, all while driving profitable sales via measurable marketing
efforts, far exceeds the paltry returns of mobile coupons. Of course, this
is a tougher road to travel, with IT investment required to develop infrastructure
and back-end analytics.

Designing and building an affordable car for the masses
was, likewise, tougher than breeding a faster horse, but the results have quite
literally changed the world. The question of whether a few years from now we
will look back on today as a time of transition to more effective marketing
tools, or sticking with the old world because it was easier, has yet to be
answered.

Discussion Questions: Do you agree that mobile coupons are not the answer?
If so, what do you think is the answer?

Please practice The RetailWire Golden Rule when submitting your comments.

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26 Comments on "Retail Customer Experience: Why Mobile Coupons Are Not the Answer"


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Bob Phibbs
Guest
10 years 9 months ago

Excellent points. Look, there are too many places to buy too much of the exact same thing. Using ham-fisted coupons doesn’t make you special. Your employees, their training and desire to serve do.

Carol Lauer
Guest
Carol Lauer
10 years 9 months ago

Coupons will be only one of many relevant vehicles to reach shoppers with mobile and web marketing. But even with couponing, new approaches based on analytics of shopper loyalty card data can prompt very relevant coupon savings tailored to an individual shopper’s purchase patterns. These savings can be automatically loaded to retailers’ frequent shopper cards with a simple “opt in” mechanism. Even the loyalty cards themselves will increasingly be conveniently stored on the mobile device.

So, are coupons the answer? Not entirely! But we’d bet new creative approaches to couponing that are simple and easy will be welcomed by tomorrow’s shoppers.

Max Goldberg
Guest
10 years 9 months ago

Coupons are a tactic. And as with any tactic, they need to fit into an overall strategy. Brands need to build sustained value in consumers’ minds. A brand that tries to buy its way out of these tough economic times through coupons is not building loyalty…it’s only building temporary trial.

Anne Howe
Guest
10 years 9 months ago

I agree with Jeff that a coupon in and of itself on a mobile phone doesn’t provide a marketer a lot of value. It might provide the shopper a little bit more convenience, but not much incremental upside beyond the “cents off” they are already know how to get via other coupon distribution. The real value that marketers and retailers are really seeking translates to more trips and shopper loyalty to the two brands, (manufacturer and retailer) and a palpable reason to inspire that loyalty.

Getting there requires more than a discount. It requires something more that is relevant, unique and actually useful. I believe that can be accomplished through smart use smartphone technology, including QR codes today, and who knows what else that’s around the corner tomorrow!

But whatever the technology, successful transmission of the value beyond coupons to the shopper will require visibility in-store, integrated marketing messaging and support by more educated and willing retail personnel who can help the shopper understand value beyond price.

Ben Sprecher
Guest
Ben Sprecher
10 years 9 months ago
Hear, hear! The key to effective marketing is not the medium of delivery, it is the relevance of the message. Mobile is hot right now, for many good reasons, but merely transposing old ways of mass marketing onto a new, smaller, portable screen is not the answer. The “mass-selected” model of most coupon aggregators today–letting anyone access any coupon and load it to their card–is just a “faster horse.” For mobile marketing and couponing to be better than its email or in-store or web or print brethren, it needs to be more relevant to the particular consumer, at the particular place where they are that moment. The fact that the mobile medium allows for knowing the where, when, and who of a consumer is where its true potential lies. So, instead of giving every shopper access to every coupon all the time, mobile will allow for giving a frequent organic produce and steak buyer a personalized discount on organic sirloin when they are about to leave work on a Wednesday. Without the relevance to shopper’s… Read more »
David Biernbaum
Guest
10 years 9 months ago

Retailers and consumer products manufacturers rely a thousand per cent too heavily on coupons, scans, and other discounted price events. Excellent branding depends on achieving a more consistent value for your product or retail store that doesn’t rely on coupon price alone on any given day. That strategy is nothing more than a dog chasing his tail.

E-coupons and mobile coupons are appropriate mostly in certain special circumstances where close outs and inventory reduction are the objectives but its not very effective for generating trial or new business.

Gib Bassett
Guest
Gib Bassett
10 years 9 months ago
Mobile couponing is such a hyped application that overlooks a really important issue. Sure, everyone has a cell phone, and so the marketer can deliver a text message coupon code to almost anyone. The holy grail of massive reach is achieved. Consumers must opt in to receive the offers, so they must want them, right? And then, consumers have their phones with them all the time, so the coupon is in their hip pocket when they visit the store to redeem–no shuffling through coupon mailers, Sunday circulars, etc., to do the clipping. The mobile phone as a platform for otherwise paper coupons does nothing to increase the effectiveness of couponing, in my view. No business likes to offer discounted products and all mobile does in the above case is expand the universe of people who can obtain the coupon. The opportunity with a mobile device is to instead present relevant offers to consumers based on something you know about them. B-to-C marketers tend to know little about the identities of their customers and so this… Read more »
Bill Bittner
Guest
Bill Bittner
10 years 9 months ago
The coupon POS process consists of three steps: presentation; validation; and valuation. Presentation is how the coupon is identified: a piece of paper, a barcode on a phone, an electronic coupon tied to the customer’s frequent shopper ID, etc. Validation is the step that confirms the customer has met all the requirements to qualify for the discount: multiple purchases, purchase date, etc. Valuation is the step that involves identifying the discount amount based on various purchase minimums. Of course there are also the back-office processes associated with collecting reimbursements from the coupon sponsor. All the current discussions seem to be focused on presentation. The goal seems to be to minimize the effort for consumers. But when you really think about it, the most frictionless way for manufacturers to reach consumers would be to simply lower costs. The “dirty little secret” is that the reason manufacturers use coupons is that they are trying to segment the market between regular and price conscious customers. The manufacturer does not really want to make the discount frictionless because they… Read more »
Ryan Mathews
Guest
10 years 9 months ago

Mobile couponing doesn’t solve any of couponing’s traditional problems. If anything, it magnifies them. What people want is price integrity combined with service. Figure out an app for that and you’ll have a winner.

Ted Hurlbut
Guest
Ted Hurlbut
10 years 9 months ago

I’m going to jump on the pile here. Coupons are only another way of competing on price. Competing solely on price is nothing but a slippery slope to the bottom, whether you’re a brand marketer or a retailer. Sustainable success comes when you build intrinsic value into the item and the experience.

Liz Crawford
Guest
10 years 9 months ago

Kroger has the right idea–consolidate the shopper’s coupons and discounts online. It’s convenient, tailored to the shopper’s needs and controlled by the buyer. Kroger wins because the consolidation drives traffic.

Now, does this coupon consolidation make sense on a mobile device? Well, a Kroger card (any frequent buyer card) is “mobile.” So, if it works on a card, can the card be put onto a cellphone? Why not?

Nikki Baird
Guest
Nikki Baird
10 years 9 months ago

I am so fascinated to see the responses here vs. the comments that were posted in response to the article on RCE. There, people were much more negative about the ideas in the article. I, too, disagreed with some of the points, and put my response in RSR’s newsletter this week. The short of it is, don’t confuse the offer with the offer’s vehicle.

It’s refreshing to see so much emphasis on relevancy in this discussion. But how do you find the right shoppers with the right offer? Loyalty linked to mobile seems like a pretty good tool to me. Whether you call it a coupon or an offer or you store it in a digital wallet or tag it to your loyalty card–I really don’t think the ultimate form will matter. But the consumer’s phone? That will definitely play a role.

Ed Rosenbaum
Guest
10 years 9 months ago

Mobile coupons are the “it” for today and maybe a few short years until two things happen. First, the consumers are going to become tired of their devices getting infiltrated and cluttered with too many retailers after their business at the same time. When this happens and the quiet uproar happens, another newer app will be developed to get the attention of the buying public.

I am of the opinion that point of sale will return and become the focus point to the buyer. What has to happen is finding that single driver that drives traffic to the store and it might be the online orders with store pickups. Get the consumer in the store and point of sale will draw their attention.

Ken Wyker
Guest
10 years 9 months ago

As has been pointed out by many previous comments, if mobile coupons are simply another delivery vehicle for the same content the customer had before, there’s no dramatic change in impact.

Impactful promotional messaging requires relevant incentives regardless of the method of delivery. Loyalty cards provide an incredibly powerful set of purchase history data with which to quantify the relevance of offers and deliver the most motivating offer to each customer.

Armed with relevant offers, the delivery method of mobile devices certainly enhances the impact and is an important element of a comprehensive program. However, with the exception of location-based offers driven by the phone’s GPS, the mobile device itself does not make the offer relevant or meaningful.

Matt Hahn
Guest
Matt Hahn
10 years 9 months ago
The world is relentlessly changing; so are consumers. The latest emergence in social networking are sites that seek to learn more about the user’s taste like getglue.com or ConsumeU.com(beta). These sites integrate with other social networks, like facebook, and prompt users to rate their favorite (and least favorite) media and other items. The site compiles this data, compares the fact that one user likes a movie, let’s say Tron, with the likes and dislikes of other users who also like Tron. The site then makes recommendations of other movies, books, TV shows, etc that the user might also like. Discovering what you and your friends have in common and finding new media and items you might like covers the social aspect of the service, but there is much more. Aggregating this much data about the consumer’s tastes, (particularly as more data points are gathered like electronics, food choices, clothing, etc) will give companies better information on how to market to individual customers. Couple this with the GPS technology and functionality like Foursquare and you’ve got… Read more »
Herb Sorensen, Ph.D.
Guest
10 years 9 months ago
“What people really want, but don’t know how to ask for, are ways to save money that are relevant to them.” And how do we know this??? Tracking where shoppers actually focus in stores shows that SHOPPERS pay little attention to prices. This doesn’t mean no one does. If we went from 5% of shoppers being price/coupon driven to 8% this would lead to skyrocketing demand–relative to the base for that behavior. But it would still be a gross distortion, seriously misleading, to say “what people want…” The reality is that everyone, shoppers, retailers and the brands, want to describe shopping in rational terms. And price is about the most apparently rational way of explaining things. It may explain retailers and brands behavior, but hardly influences “the shopper,” unless you are dealing with the small minority who either habitually invest large amounts of their TIME in saving money, or are temporarily on a binge money diet. This is not to dismiss global downshifting to spending less. But spending less often has a great deal more… Read more »
Dan Berthiaume
Guest
Dan Berthiaume
10 years 9 months ago

Mobile coupons are not “the” answer, but they are “an” answer. Price optimization and selling items in-season (particularly for apparel retailers) are two other ways to get consumers the products they want at reasonable prices without having to use discount schemes.

Doug Stephens
Guest
Doug Stephens
10 years 9 months ago

I think if we look at this rationally and strictly from an historical point of view, coupons were a better vehicle prior to 1980 when…

1. There were more stay-at-home spouses
2. Fewer media channels
3. Less competition
4. A lower degree of consumer sophistication

As a vehicle, coupons will continue to ebb and flow with the general state of the economy but from a high-level perspective, I think their effectiveness is increasingly marginal. Value, in general, has been redefined.

Camille P. Schuster, Ph.D.
Guest
10 years 9 months ago

Innovation comes from responding to strong consumer insights. Mobile coupons are coupons using a different delivery vehicle. For those who use that delivery vehicle, it is a good idea. Is it a new-to-the-world innovation? I think not.

Ben Appenzeller
Guest
Ben Appenzeller
10 years 9 months ago

A coupon is simply a means of conveying an offer to a customer. What the customer wants is a relative or absolute deal, and that ideology has been steadfast over the years. Technology has and will continue to allow offers to be made digitally. They may be redeemed with a bar code, Near Field Communication, or some other means. Whether such offers in the end are still considered “coupons” is an argument in semantics and not a relevant one.

The meat of the offer is rooted in human nature and not technology. New technology will change how offers are executed and the precision with which such offers may be targeted, but the offers found on coupons will remain unchanged.

Gene Detroyer
Guest
10 years 9 months ago

To quote myself from a few weeks ago, “The future is not an extension of the present.” Yet, many of the comments regarding coupons simply addressed finding “a faster horse.” Even the question is “faster horse” oriented.

Start with a clean slate. What would we do having today’s tools, but eliminating coupons from our tool box. Could we come up with schemes that better utilized our funds? Could we come up with schemes that tied our brands closer to the consumer? I think so!

Ultimately, the objective is to build a one-on-one relationship with the consumer. The use of coupons pre-supposes that relationship does not exist and a bribe has to be paid to get the consumer to buy our product. Coupons are the antithesis of what we should be doing to our brands.

Jonathan Marek
Guest
10 years 9 months ago

I get the “faster horse” analogy, but you haven’t told me what you think the “car” is.

James Tenser
Guest
10 years 9 months ago

Echoing Gene a bit, I must say I think this dialog is focused too much on a narrow bit of terminology and too little on how best to deliver value to shoppers.

Mobile “coupons” need not (and should not) attempt to create a metaphor for the scanned paper experience on an electronic device. I know early efforts prefer to display the bar code on the cellphone screen, but I consider this approach ludicrous. A digital device should communicate digitally with the retail POS, not via an analog work-around.

Now if we can drop the term “coupon” from this discussion and substitute “offer” or “incentive,” maybe we have a chance to pursue a value-added thought process about this area of innovation. The mobile phone is a very powerful shopper touchpoint. It’s up to us innovators to apply its potential in ways that are relevant to the shopper’s needs and that take appropriate advantage of the inherent properties of the channel. Both are necessary.

Mark Burr
Guest
10 years 9 months ago
The best coupon, phone based reward, ‘so-called loyalty card, etc., etc., etc, (you fill in the blank) never has and never will trump consumer experience. It’s puzzling to me that there has always been the search for the ‘silver bullet’ method of marketing, promotion, and reward for the customer. Why? Some would always exclaim the need that there has to be something. All of these methods are a distraction. (That’s a polite word for waste.) The most effective thing for gaining the best results–which is the intention of all these things–is the customer experience. Why do I go to Discount Tire? I don’t go there because I know that they always have the best possible price. I don’t go there because they quickly and pleasantly check and repair a tire at the speed of a pit crew. I don’t go there because I get email from them. I don’t go there because if a tire is damaged they’ll replace it. I don’t go there because they treat you better than about 98% of any other… Read more »
Mark Price
Guest
Mark Price
10 years 9 months ago

Ultimately, mobile devices provide a way of communication with selected customers at the point of purchase, in real time with personalization. That communication may be in the form of discounts to incent trial or to provide value for volume purchases, or may be in the form of any other value-added communication (in the perception of that customer).

Coupons are not a “bad” tactic at all; rather, they are used similar to “when all you have is a hammer, the world looks full of nails.” The right blend of incentives, services and value-added communication, personalized to customer behavior and stated preferences, will drive loyalty, retention and increased share of wallet–the holy grail of marketing.

Mobile devices just make such a strategy more immediate and potentially more effective.

tom walters
Guest
tom walters
10 years 9 months ago

Who wants to hold up your phone to a scanner for EACH coupon and then possibly debate the validity of the coupon?

Who wants to be BEHIND a person who has to get off of their phone long enough to scan in coupons?!

Why not do like KROGER and allow users to ‘upload’ coupons to an account (Kroger-card) or similar so that the ‘coupon’ is automatically ‘presented’ after the account info is entered (bar-code read or Phone number are possibilities)?

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