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What Products Are Right for Mobile Couponing?

Before you get started with mobile couponing, you must assess your goals and expectations. Some products and services are more appropriate for mobile promotions than others. Mobile promotions provided by retailers are much more intuitive than promotions provided by manufacturers. This is because when you are working with a specific retailer, you can ensure that they will have the necessary equipment and training to redeem mobile coupons or discounts at their counters. Because coupons offered by manufacturers can be redeemed at any location that sells the product (for instance a 50¢ off coupon for Velveeta Cheese), there is no way of ensuring a problem-free redemption of the coupon.

Some companies have tried to surmount this obstacle, but their efforts have seen varying success. CellFire, Hothand Wireless, and SingleTouch Interactive have three different models whereby participants can interact with a database of manufacturer coupons (online or through a downloadable application), to choose the manufacturer coupons that they would like from their mobile phone. After coupons are selected, the information is sent to their loyalty account, and redemption happens automatically when the user scans his or her loyalty card at the register.

Mobile coupons from retailers are much simpler. Besides knowing that the retailer will be able to redeem the coupon, there is a lower likelihood that your customers will have more than one or two coupons to redeem during any one transaction. This makes the redemption of the coupon a simpler process and, thus, more rewarding for the consumer and the retailer.

Mobile Coupon Messaging

The most effective and easily redeemable mobile coupons are sent via SMS or MMS. Although it is not yet required by law, the Mobile Marketing Association stringently suggests that users must opt-in to this kind of marketing because their carrier may charge them for the receipt of your text or picture message. This charge must be taken into account when you are crafting your messaging, because the offer must provide enough value to justify the charge to their bill. In the case of text messages, the charge can be around 10¢–15¢ but for picture or multimedia messages (MMS), the charge can be as high as 50¢.

Most mobile coupons are sent via text message, which creates a number of constraints for the marketer. You have only 160 characters (or 70 non-Latin characters), including spaces, to convey your message. Coupons should always provide a clear offer and expiration date. Simple offers with quick expiration periods will promote a faster response, but longer expiration periods will provide a better rate of redemption. Ideally, you should also provide a mechanism for recipients to opt out of future coupons and messages from your company.

Mobile Coupon Targeting

One of the first challenges with mobile couponing in the United States is that there is no consensus regarding the best way to encourage potential customers to opt-in to your marketing messages, thereby ensuring that you are marketing to a targeted list of recipients. Many of the options are still too complicated or intrusive, but there is a clear incentive for companies to find the right balance, and that will probably happen soon. In general, companies can use numerous methods to encourage potential customers to opt-in to your mobile communications and mobile coupons, and a combination of all the methods is usually desirable.

  • Text message opt-in—The consumer initiates the opt-in process by texting a keyword to a short code after being presented with the option through some other form of marketing.
  • Invitation opt-in—If you already have a database of customer phone numbers, it is generally acceptable to send them one message, requesting that they opt-in to your mobile couponing program. This message should include your company name and instructions for responding to the text message to opt-in. If recipients do not explicitly opt-in they should not be sent further marketing messages. If they do opt-in, a follow-up message should be sent with an initial coupon thanking them for signing up. You should also be sure to include information about how they should respond if they want to stop receiving text communications, as well as a link to view your terms and conditions.
  • Online opt-ins—With this method of targeting, people interested in your product or services simply sign up to receive your mobile marketing messages and coupons through your website. They submit their phone number, and then messages and coupons can be sent to them directly from your database. This is just like sending coupons by email, except that the coupons are sent to the user's phone via SMS or MMS. The best practice is to send a text message immediately after the online form has been submitted, thanking users for signing up, verifying that you have permission to send coupons, and including other marketing messages via text messages. If users are signing up for both email and text messages, you will need to send an email confirmation, to complete the opt-in for the email program, and a text message confirmation, to complete the opt-in for the text message program.
  • Point of sale opt-in—Billboards and displays in stores can be used to encourage users to opt-in to a mobile couponing program. These messages usually have instructions that tell the shopper to text-message a specific word to a short code that is provided on the signage. Alternately, retailers can collect mobile phone numbers through a specialized device at the purchase counter, or a clerk can input them directly into the company's system at the register.
  • Phone call opt-in—A quick and frequently overlooked method of building a targeted list of mobile coupon recipients is to integrate the opt-in process with your phone system. When potential customers call in and are put on hold, you can include a message that encourages them to opt-in to your mobile couponing program while they are on hold, simply by pushing a button on their phone. Although this works only if the caller is calling from a cellphone, it is quite easy to implement because the phone system can automatically detect the caller's mobile phone number and store it to a database. The hold message would simply say something like, "Press 1 to get mobile coupons sent directly to your cellphone." Again, the first message sent to the phone number should be a coupon thanking customers for opting in and giving instructions about how to opt out if they want to stop receiving the messages.
  • Email opt-in—If you are doing email marketing, you should also include information about your mobile couponing program in each of the emails that you send, encouraging the recipients either to go to the website to opt-in (include a link to the opt-in page) or to opt-in via text message immediately.
  • Microblogging opt-in—Microblogging platforms such as Twitter and Pounce are another way to send mobile coupons and promotions to your clients with minimal overhead or complications. Brands can simply create accounts with the microblogging platform of their choice (Twitter is the most popular in the United States). Users can then opt-in to messages from your company by "following" your brand on the platform. Short messages are then broadcast via the platform to all your followers, and they have opted in to your mobile marketing messages via their default agreement with the microblogging platform. Users can opt-in to receiving your messages via the Web or directly to their mobile phones as text messages. After a brand account has been set up, you can build your list of followers by searching for people who are interested in your product or service. When you friend someone on these networks, many follow you in turn. Automated responses can also be set up using programs such as Twitter-Hawk, and they can be tied to the use of specific key phrases or specific actions taken on the platform. It is advisable to include a personal appeal to your messaging instead of simply relying on automated responses or only including marketing messages in your Twitter feed.

Mobile Coupon Delivery

Mobile coupons can be sent using a variety of technologies. The most common method of mobile coupon delivery is through SMS or MMS based on a list of contracts you already have. Mobile coupons can also be delivered via location-based technology, described in more detail later in the chapter. Regardless of the method of delivery, any mobile couponing delivery should be directed through a database or preference center that identifies potential customers and whether they have opted in to mobile communication. This is also discussed later in this chapter.

Coupon Delivery via Text Messaging (SMS)

In 1991, a Finish company called Radiolinja (now known as Elisa) offered the first mobile data service; the first text message was sent in 1993. Text messaging, otherwise known as Short Message Service (SMS), wasn't used much for marketing in North America until after 2000.

SMS messages can be sent from phone to phone or from computer to phone, or they can be sent from a phone to a "common short code," usually abbreviated to simply "short code." See Figure 6.1 and 6.2. A short code is a five- or six-digit phone number that can be dialed as a destination for a text message. Text messages are then sent to a computer communication system instead of a phone. Short codes can be shared or owned privately by a company.

Figure 6.1

Figure 6.1 Short codes, such as the one shown here, are becoming more common in mobile marketing.

Figure 6.2

Figure 6.2 Another example of a short code used in advertising.

If a short code is shared, certain keywords are set up to trigger the parsing activity of the computer system for the short code. The computer communication system that controls the short code is tasked with sending and parsing all the information for the short code. Shared short codes are easy and cheap to get, but can be risky or complicated depending on the types of text responses you expect to get, and how well the computer system is able to parse them.

Dedicated short codes are ideal, especially for big bands, because they allow you to control the branding and capture all the information that is sent to the short code. The disadvantage is that they can be expensive, and the process to acquire them can be time consuming and cumbersome. Common short codes are generally registered or leased, for a period of time, much like a domain name. The body that controls common short codes in the United States is called the CSC Registry and they have a website at www.USShortcodes.com. Once a short code is leased, you must send applications to each of the carriers in the region that your text messaging campaigns targeted, so that your campaign can be reviewed, provisioned and approved by the carrier. Your application must also pass review from the CTIA Monitoring Agent, who evaluates the campaigns adherence to the Consumer Best Practices.

Initially, SMS was used as a way for carriers to communicate with their subscribers. Later, SMS began to take off as a means of person-to-person communication. It offered a significant cost savings over traditional voice calling and allowed recipients to view and respond to the text message at their discretion. In North America, the first cross-carrier SMS marketing campaign was run by Labatt Brewing Company in 2002. Now, in 2009, it is estimated that more than 74% of mobile subscribers are active users of SMS, and more than 90% of the mobile marketing revenue comes from SMS messaging.

Coupon Delivery via Picture Messaging (MMS)

The late 1990s also saw the development of picture messaging, otherwise known as Multimedia Message Service (MMS). MMS is an extension of the SMS messaging standard but uses the WAP coding language to display multimedia content. Picture messages are sent in much the same way as text messages, but they can contain images, timed slideshows, audio, video, and text. The first group to launch an MMS campaign was a carrier out of Europe called Telenor, in 2002.

Picture message marketing has not been widely adopted in North America, partly because mobile carriers charge for both sending and receiving picture messages. The cost is usually 5 to 10 times higher than it would be for a text message, which creates a substantial disincentive for people to remain opted in to that kind of messaging.

The lack of mass adoption of this type of marketing could also be because no sufficient platform can efficiently send bulk MMS messages. Complications caused by discrepancies in the different networks' MMS messaging standards, and different phone-rendering capabilities make deploying a successful picture messaging campaign time-consuming and difficult.

As with email, concerns arise about unwanted SMS and MMS marketing, otherwise known as spam. This is more prolific in countries where carriers are allowed to sell the phone numbers of their subscribers to third-party advertisers. Many mobile carriers in the United States and Europe now police their own networks, to prevent SMS and MMS SPAM from reaching their subscribers. In December 2005, the Mobile Marketing Association (MMA) outlined Consumer Best Practices Guidelines, which included instructions for SMS marketers. This document is updated twice a year, and is considered the best set of guidelines available in the United States. Be sure to review these guidelines before launching any SMS or MMS marketing campaign. You can find the guidelines here: http://mmaglobal.com/bestpractices.pdf

Mobile spam is covered in more depth in Chapter 13, "Mobile Marketing Privacy, Spam, and Viruses."

Location-Based Couponing

Mobile coupons can also be delivered directly to your device when you respond to a location-based prompt that is part of a Bluetooth or WiFi broadcast, or is embedded in a billboard or display as a QR code or infrared beam. LBS is discussed later in this chapter.

Mobile Coupon Redemption

Mobile coupon redemption is another aspect of mobile couponing for which there has yet to be a consensus. The two basic methods of mobile coupon redemption are through the use of alphanumeric redemption codes and barcode scanners.

  • Alphanumeric codes—Redemption codes can be used for both manufacturer and retailer coupons. In this scenario, a redemption code is sent to potential customers via SMS. The message should include information about the coupon and when it expires. When the recipient goes to redeem the coupon, he simply gives the code to the clerk at the register. If your company has an online presence, the recipient should also be able to redeem the coupon when shopping online. The difficulty with this method of redemption is mostly seen if manufacturers have not worked directly with their retailers to ensure consumers' ability to redeem the coupon at their registers.
  • Barcode scanners—In Asia, many retailers are equipped with scanners that can read barcodes, known as QR codes, directly from a mobile handset. These are not prevalent in the United States, but that may change as mobile marketing becomes a more powerful force in the industry (see Figure 6.3). In this scenario, coupons are sent as a text message, with a link to the mobile coupon and barcode that can be scanned at the register. Alternately, coupons can be sent as an MMS message that includes the barcode directly in the message.

    Figure 6.3

    Figure 6.3 QR codes are more common outside the United States, but that could change soon. Photos courtesy of Maly LOLek, Darko, Ajenbo and Brdall, via Wikimedia Creative Commons License 3.0, a freely licensed media repository and Share Alike 2.0, also a Wikipedia freely licensed media repository.

    If you are a retailer and you can ensure that all your retail locations have the equipment required to scan barcodes off phones, then this can be a good strategy. However, if you are a manufacturer, ensuring quick redemption of these coupons becomes more difficult. Mobile marketers who are launching campaigns in a region where mobile barcode scanners are not ubiquitous should include an alphanumeric code with the barcode message, to ensure that recipients will be able to redeem the coupon.

In either redemption scenario, you can choose to send the same message to everyone or you can choose to segment your message to learn more about your customers. In some cases, you might want to run an A/B test to see what offers recipients find more compelling. To do that, you write two different promotional messages that are each linked to different redemption codes. When coupons are redeemed, you can quickly and easily see which marketing message was more compelling and then use that information to guide future marketing messages.

If you have a loyalty program in place, you can also use information from your loyalty program to send the same message to different types of customers. The catch is that messages sent to different customer types contain different redemption codes. This allows you to track the individual segment's response to the same marketing message. If you segment your customers based on their average annual spending, gender, or zip code, and give each group a different redemption code, you can learn which groups are more responsive to your marketing message.

You can also segment messages to determine which method of delivery is most effective for your customer base by sending one group an alphanumeric promotion code and the other a link to a mobile Web coupon or a scannable bar code.

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