White Paper: Mobile Couponing

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This white paper will help you understand the challenges and opportunities using mobile to create a one-to-one relationship with your customers.

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White Paper: Mobile Couponing

  1. 1. An iLoop Mobile WhitepaperAuthor: D’Arcy SalzmannMay 12, 2010© iLoop Mobile 2010 1
  2. 2. IntroductionWith the arrival of digital marketing channels, the landscape of marketing haschanged forever regarding the way brands, publishers and virtually every othertype of company reach their target consumers and audiences. The most significantchange has been the advent of mobile marketing and the ability to interact withconsumers via the most personal and ubiquitous device ever—the mobile phone.We hope this whitepaper provides useful information on how the mobile channelcan be used for promotional messaging and couponing, specifically in the wayprecise, personal and contextual messages can enhance bottom-line marketingobjectives.If you would like more information on mobile marketing campaigns usingSMS/MMS, mobile Internet sites, mobile-enabled Web sites and other advancedmobile marketing technologies and strategies, please give us a call. We work withFortune 500 companies and companies of every size and industry, and would beglad to discuss how can help you.For more info visit our Website at www.iloopmobile.com or contact us directly:Steven Gray | COO | iLoop Mobile Inc.+1.714.801.2370. Skype: sgray12Text message SGRAY to 20757 and get my business card on your phone. Try it forfree! www.txtcard.net Connect with us 2
  3. 3. Overview: The Evolution of Mobile MarketingMobile phones are pervasive. In the United States, nearly everybody has a mobilephone. What’s more, mobile phones are personal devices, used extensively for avariety for purposes and almost always within reach.According to a study by market researcher Synovate, the U.S. has more than 286million cell phone subscribers, 82% of whom never leave home without theirdevices.It’s no surprise, then, that applications and services for mobile phones have becomeso popular. Between July 2008 and July 2009, users of mobile phones and electronicdevices in the U.S. sent more than 1.3 trillion text messages—almost double the 660billion calls they made, according to CTIA (Cellular Telecommunications andInternet Association).The Pew Research Center, in a study released in December 2009, found that 68% ofcell phone owners older than 18 send text messages. Approximately 95% of 18-to-24 year-olds send text messages. Even in older age ranges, texting is becomingincreasingly popular.As of the third quarter of 2008, approximately 77% of U.S. wireless subscribers arereported to have paid for text messaging either as part of a package or on atransaction basis. The Nielsen Company estimates that text messaging is usedregularly by 57% of all mobile subscribers 13 and older. In any given month, U.S.mobile subscribers engage in more text messaging than phone calls.Given those numbers, it isn’t surprising that advertisers and marketers are seekingto leverage text messaging for interactive engagement with consumers. In fact, SMS-based marketing has established itself as one of the fastest-growing advertisingchannels in the world today.Forrester Research Inc. estimates that mobile marketing will become a $54 billionindustry by 2014. A Forrester survey indicated that 74% of marketers preferred touse SMS messaging as a marketing tool, while 44% of consumers surveyed said theywould rather receive product information and other marketing messages throughSMS campaigns than via any other channel.Early Successes in Short-Code MarketingShort-code marketing involves text messages that incorporate a Common ShortCode (CSC), or short code. A short code is an abbreviated phone number used fortext (SMS) and multimedia (MMS) messaging.According to Wikipedia, Canada’s Labatt Brewing Company in 2002 ran the firstcross-carrier SMS short-code marketing campaign in North America. Since then, 3
  4. 4. mobile short codes have become increasingly popular as a new communicationchannel for personal interaction with consumers.Nielsens report notes that so far, marketers have used short code marketing in arange of ways, including simple information messaging, rewards programming,couponing, and even direct SMS purchasing.Nielsen cites the following examples of how SMS short-code messages have beenemployed by brands and advertisers:  Papa Johns, Domino’s Pizza, Chipotle and Pizza Hut allowed customers to register ordering details online, then order pizzas from their mobile phones via text message. Nielsen estimates that 552,000 AT&T and Verizon Wireless subscribers texted with Domino’s Pizza, 279,000 texted with Pizza Hut and 182,000 texted with Papa John’s in Q3 2008  Foot Locker sent special offers to its “VIP program” participants, with texts going to approximately 306,000 AT&T and Verizon Wireless subscribers in Q3 2008  Subway’s FRESHBUZZ service allowed Subway customers to receive news and promotions via text message. According to Nielsen, Subway sent sandwich deals and other offers to 212,000 AT&T and Verizon Wireless subscribers in Q3 2008  Coca-Colas My Coke Rewards program had engaged 1.1 million AT&T and Verizon Wireless customers as of Q3 2008.The following are a few examples of major brands and retailers who providemarketing information through text and multimedia messaging: American Express,Arbys, Best Buy, Citibank, CNN, Coke, E! Entertainment, HP Snapfish, Jiffy Lube,Mandee, Paramount, Vans, Village Inn, Weather.com, Wells Fargo, and WesternUnion.Pitfalls of Broad-Based, One-Size-Fits-All SMS MarketingToday, consumers look at every text message they receive almost immediately. Formarketers, that presents an immense opportunity, but it also entails a prohibitionagainst contaminating a rich marketing and communications channel.That’s why the Mobile Marketing Association (MMA) established text-messagingguidelines, monitored by the CTIA and wireless operators, to which all mobilemarketers must adhere. These guidelines were adopted to protect the consumerfrom spam and unwanted messages, but also to provide consistency,standardization, and to protect the integrity and overall value of SMS as a marketingmedium. 4
  5. 5. As mentioned above, mobile phones are personal devices, so marketers must berespectful of how they reach out to the consumer with marketing and promotions.Broad, one-size-fits-all SMS marketing campaigns—uninformed by personalization,relevance, and contextual immediacy—run the risk of alienating rather thanengaging the target audience.Mobile marketing campaigns are far less effective when they fail to leverage thepersonalization, precision, and relevance that are defining attributes of the mobilemedium. Consumers, for example, who opt in to a brand advertiser’s mobilemarketing campaign expect personalized messaging and promotional offers thatwill speak directly to them. They want the communication to be personalized (basedon market segmentation and customer preferences), relevant (based on ZIP codesand other geographic markers), and immediately actionable.What consumers don’t want are mobile marketing campaigns that take animpersonalized, shotgun approach, and that fail to speak to them directly. Suchcampaigns run the risk of being perceived by the consumer as indifferent, irrelevant,and even as a type of spam.Consumers Wary of Mobile Marketing “Spam”A recent study of college students by WPP Group’s Mindshare found that, eventhough texting is preferred to face-to-face communication within the youthdemographic, approximately 76% of those surveyed said they do not like to receiveads by text message. That opposition isn’t directed at the medium, but at how themedium has been misused by unwary marketers.Consumers in that demographic and others want dialogue first and foremost, andthey also want preapproval of advertisements sent to their mobile phones. Foradvertisements to win that preapproval and trust, they have to offer value, which ispredicated on “smart” attributes of personalization, relevance, and immediacy.Ensuring that Mobile Marketing Fulfills Its PotentialThe problem is, how do marketers ensure that mobile marketing is personal,relevant, targeted, and timely?Thankfully, advertisers and marketers can use innovative new approaches andtechnologies to ensure the consumer appeal and full effectiveness of mobilemarketing campaigns. Indeed, advertisers now are well placed to deliver valuewhenever and wherever consumers can benefit from an interaction or transaction.Such value can be delivered by ensuring that the marketing message is one anaudience is eager to hear. But how can that be done? 5
  6. 6. Defining Smart Alerts and the Customer Lifecycle—and Why They MatterThe best approach is to ensure that mobile marketing communications, such asalerts, are smart. What’s a smart alert? They are customized messages based onrelevant intelligence. They are targeted based on, for example:  who the customer is  what’s happening around the customer (contextual relevance)  where the customer is (geographic location)  how the customer has responded to offers in the past (database records)Perhaps more important, once a relationship between the brand and consumer isestablished, smart alerts can be integrated into the entire customer lifecycle:  initial customer acquisition and to establish brand affinity  two-way relationship building and conversion  cross selling and upselling  improving customer satisfaction and brand loyaltyIn short, smart mobile alerts and smart mobile coupons are effective, immediate,interactive, direct response marketing conduits. The Yankee Group estimates thateven mobile coupons can deliver redemption rates of 10% versus 1.2% for paper-based coupons. The potential for smart mobile coupons is much greater. 6
  7. 7. Market researcher Aberdeen Group determined that Money Mailer, an iLoop MobilePlatform customer, employed mobile coupons to help one of its clients, a fast-foodrestaurant, achieve more than a $20-to-$1 ROI with an integrated mail/mobilecampaign. The redemption rate on the mobile messages averaged a staggering 17%.Because they are more relevant, the initial opt-in rate is expected to be higher, butperhaps more important is the ability to continue to deliver relevant messagesduring the customer lifecycle, translating into a lower opt-out ratio over time.Smart alerts and coupons address the convergent interests of consumers andmarketers. Customers have opted in to receive the alerts and coupons, so they’reamenable to receiving them and won’t regard them as spam.Meanwhile, brands and advertisers tap the alerts and coupons to capitalize on time-sensitive marketing opportunities. Carefully targeted and data driven, smart alertsand coupons increase customer acquisition and conversion while also bolsteringbrand loyalty. They take SMS marketing way beyond the simple, one-size-fits-allapproach.Industry observers, including Nielsen and others, agree that the likelihood ofconsumer purchases increases if the marketing message is targeted (based oncareful market segmentation), personalized, and offers point-of-need relevance. Assuch, SMS coupons should map real-time information and profile history of directrelevance to the customer.Providing Mutual Value for Customer and Brand/AdvertiserAs mentioned earlier, smart alerts and coupons are effective as marketing channelsbecause they deliver value to both customers and advertisers.Benefits to consumers include:  Opt-in nature confirms that consumers want to be engaged  Immediate, direct response to promotions gives customers what they want, when they want it (such as when a given product or service is first available)  Personal convenience derived from consumers being able to act instantly on relevant, compelling calls to actionSimilarly, brands and marketers also benefit:  Real-time, news and information driven alerts increase customer acquisition, conversion, and loyalty  A leap beyond “one size fits all ” SMS promotions confers brand and message differentiation 7
  8. 8.  Segmentation, personalization, and point-of-need relevance increases likelihood of purchase  Time and place relevance increases likelihood of purchase  Valuable consumer data is captured for analysis and fine-tuning of future campaignsiLoop Mobile Platform: Delivering on the Promise of Smart Mobile MarketingWith its patent-pending Situation Relevance Engine, the iLoop Mobile Platformadvances the art of SMS marketing and reconciles the interests of consumers andadvertisers.It does so by providing smart coupons that address the following customer criteria: 1) Physical location 2) Weather conditions 3) Redemption history (what previous campaigns a given customer has responded to) 4) Purchase behavior and preference (which products and services customers want to be informed about, and how and when they want to be notified of actionable opportunities) 5) External events and information triggers (news and other developments that might be immediately relevant to the circumstances and value proposition) 6) Any other relevant data source (whether provided by the advertiser/brand or the consumer’s social networks)Along those lines, the iLoop Mobile Platform has several advanced capabilities,including the following:  CRM Database Integration—Automatically delivers coupons relevant to a customer’s profile data and history  Coupon Management—Handles quota, validation, distribution timing, expiration and redemption code management  POS Integration—Integrates with in-store systems and coupon clearing houses such as Infinian, Inmar, and others  Dynamic Targeting—Targets individual consumers and groups of consumers using any number of criteria or profile triggers  Redemption Codes—Deliver unique redemption codes or SMS messages with a URL link to WAP-based coupons  2D Barcodes—WAP coupons can include standard or 2D barcodes for point-of-sale retail redemption  Consumer Behavior—Intelligent coupon database stores customer behavior and campaign trends for subsequent targeted delivery or campaigns  Analytics Dashboard—Detailed, segmented results reporting. 8
  9. 9. The iLoop Mobile Platform provides a comprehensive solution for mobile campaigncreation, management, and analytics. Platform features include advanced mobilecampaign reporting and analytics, SMS alerts with CRM targeted messaging,expanded APIs, multi-byte characters for all international languages and viralmarketing applications. The licensed SaaS self-serve platform, along with theCampaign Packages, are designed to help companies achieve significantly increasedROI in mobile marketing, surpassing the performance of marketing channels likeemail, print, Web ads and other traditional marketing channels.How the Solution WorksHow do smart coupons work in practice? The following chart illustrates oneexample.In the illustration above, a consumer sends an opt-in message to receive a couponfrom a brand or advertiser. The database receives the keyword opt-in message,correlates relevant data relating to relevant criteria, and generates a personalizedcoupon, either in the form of a contextually relevant SMS-only coupon or an SMSmessage with a link to a WAP page that features multiple coupons and a barcode forpoint-of-sale redemption. 9
  10. 10. In all, it’s a personalized, targeted approach that provides convenience for theconsumer and flexible fulfillment options for the advertiser, brand, or retailer.A marketing campaign would work similarly, as the following illustrationdemonstrates: 10
  11. 11. In the above example, an opt-in promotion prompts subscribers in New York City tosend a keyword via an SMS message. The keyword is received by the database andreferenced against all the relevant criteria, including weather. With 90-degreetemperatures producing sweltering heat in the New York area, the database—responding to current conditions—intelligently chooses to send a coupon for adiscount on a summer skirt rather than one for a discount on a fall sweater. An SMScoupon (basic SMS or enhanced WAP/barcode) is then sent to the consumer’s cellphone. The consumer then redeems the electronic coupon for a discount in a retailoutlet.Additional Campaign ScenariosThe creative possibilities for one-off promotions or campaigns are practicallyendless.Consider the example of how weather can be used as actionable criteria. During aparticularly oppressive heat wave in Houston, air-conditioned AMC movie theaterscould offer mobile coupons on two-for-one or three-for-two admission prices.Similarly, a Starbucks in Seattle could offer latte specials during a cold spell.Automotive dealerships might extend specials on snow tires in advance of winterstorms in the Northeastern states.Data other than weather conditions can drive promotions, of course. Market data,such as a surge in the Dow Jones industrial average, could trigger notifications fromCharles Schwab along with coupons offering complimentary investment advice atlocal Schwab offices.Back-office systems, such as inventory, could also drive smart coupons. Land’s End,for example, uses business rules to clear out end-of-season inventory by offeringsmart coupons that proffer “daily deals.” All inventory is assigned a promotion startdate and valid regional code. Sweaters and boots might be promoted in the Northand Northwest, for instance, with shorts marketed in Southeast and Southwest. Suchcampaigns are monitored in real time and discontinued when stock is sold out. Theprocess is fully automated.Using inventory-based mechanisms similar to those employed by Land’s Endcombined with news-based criteria, the NFL or another major professional sportsleague could offer opt-in coupons for discounts on jerseys of players who retire orare traded. Presuming considerable inventory of a given jersey, the NFL could applya sharp discount and issue smart coupons to opt-in subscribers regarding sales of atraded player’s former jersey.News-based sports marketing also might occur at Foot Locker. If an athleteassociated with a certain shoe brand or tennis racket wins a competition ortournament, Foot Locker could send out smart coupons regarding sales of gearworn or endorsed by the victor. 11
  12. 12. Immediacy, Interactivity, and Location Bring New Power to Mobile MarketingA myriad of other examples, leveraging the extensive reach and inherentintelligence of the platform, are possible. What’s important, however, is that all ofthe above examples represent new advertising and direct marketing scenariosunleashed by the interactivity and immediacy of smart SMS alerts and coupons. Inthis new world, advertisers and brands aren’t limited by technical constraints. Theycan take campaigns to the limits of their creativity and imagination.One new area with tremendous potential is geo-fencing, a messaging mechanismtriggered whenever an opt-in subscriber enters or leaves a specific location. CalledGeographic Messaging Service (GMS), this nascent area is emerging as a powerfuladdition to the mobile marketing arsenal.A sample application of geo-fencing in action might involve a consumer who opts into a push messaging service for a restaurant chain or other retail brand, whichmight link content to the user in a specific geographic setting, such as a one-mileradius around New York’s Times Square. A personalized message featuring thecontent—either a coupon for a special offer or a notification of a store eventoccurring that day—would be sent to the opt-in subscriber when he or she entersthe predefined geographic area, which could include suburban malls as well asurban centers.The iLoop Mobile Platform makes it possible to deliver a complete campaign,whether planned well in advance or executed extemporaneously as a result ofchanging circumstances (such as an oversupply of inventory), real-time events(weather patterns or relevant news), and, as discussed above, customer location. Infact, a valuable aspect of smart alerts and coupons is that they can be invokedopportunistically, as events unfold, to capitalize on situations that offer mutualbenefits to consumers and advertisers alike.Moreover, the analytics capabilities of the platform give brands and advertisers thepost-campaign intelligence to customize subsequent marketing efforts for optimalresults. The dynamic interactivity of smart alerts and coupons gives advertisers awealth of ongoing insight into consumer behavior and preferences, facilitatingincremental improvements in later campaign effectiveness.Proven ROIThe ROI from such campaigns can be compelling. The Aberdeen Group found thatMoney Mailer, which has used the iLoop Mobile Platform to run more than athousand mobile marketing campaigns, has helped its clients achieve a 3.5-to-1uplift in consumer response to the paper coupons, with between 2–11% opt-in ratesand 8–20% redemption rates across many campaigns. Those results have beengarnered by simply including a text messaging call-to- action on printadvertisements. 12
  13. 13. What’s more, Money Mailer has found that typical print mailings with a mobile callto action result in hundreds of new database acquisitions for small local businesses.In just a few weeks, one local restaurant built a database for regular SMS messagingthat included more than 900 customers.Summary: Mobile Marketing and the Continuous Customer RelationshipThe widespread proliferation of mobile phones and the popularity of SMSmessaging set the stage for the first wave of SMS marketing based on short codemessaging. While many advertisers have been successful with broad SMS marketingcampaigns, new innovations enable smart SMS alerts and coupons that bringpersonalization, relevance, immediacy, and value to mobile marketing initiatives.Savvy advertisers and brands are seeking to develop closer, more personalrelationships with their customers. The formula for success must involve deliveringmore value to customers as a trusted source of relevant, timely, and targetedtransactional information.Mobile smart alerts and coupons give consumers unprecedented opportunities tobenefit from bargains and deals that they would not have enjoyed otherwise. At thesame time, they give advertisers and brands a direct, interactive channel to theirmost passionate and loyal customers, affording opportunities to capitalize onchanging variables (inventory volumes, weather, external events, etc.) to realizeincreased revenue and profitability. Additionally, advertisers strengthen their bondswith customers, continually enhancing interactive relationships that confer mutualbenefits.About iLoop MobileiLoop Mobile is a premier mobile marketing solutions provider to the world’slargest enables brands, media companies, agencies, and retailers. iLoop Mobilesmarketing platform allows customers to quickly and independently create andmanage campaigns worldwide using an intuitive, self-service, Web-based package.Customers can also take advantage of iLoop Mobiles extensive experience indeveloping and launching mobile campaigns using the companys managed services,which provide turnkey marketing programs for messaging, mobile Web, mobile-enabled broadband websites and mobile coupons. All customers have access toiLoop Mobiles powerful mobile Web and messaging analytics, enabling detailedanalysis of their mobile marketing activities. Founded in 2004, iLoop Mobile isheadquartered in San Jose, California, with offices in Krakow, Poland. 13

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