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Mobile coupon installed base needs to grow: retail experts

By Gary Schwartz

SAN DIEGO – In 2005, Procter & Gamble came out with the revelation that brands have three to seven seconds to win the consumer in-aisle. P&G called this the “First Moment of Truth,” or in tech speak, FMOT.

The consumer packaged goods company proceeded to assign FMOT directors to develop FMOT marketing strategies to win the consumer in this shopping inflection.

P&G went on to move its large traditional media budgets to in-store digital and point-of-purchase display. It understood that its agencies would naturally gravitate to costly television spots, so it began to tie agency compensation with product-sales increases.

Enter mobile.

There has never been a more just-in-time retail solution: the ultimate FMOT buster. But what mobile tools should the retailer embrace?

To be or FMOT to be
At the San Diego CTIA Wireless I.T. & Entertainment Conference 2009 last week, a number of companies discussed retail FMOT-busting solutions in-market and solutions just over the technology hill.

Brent Dusing, CEO of Cellfire, said that 80 percent of the consumer’s shopping list is bought.

However, the shopping list only account for 40 percent of their final basket. This allows for a fair amount of freestyle shopping and FMOTing.

One influential factor can be the mobile coupon. 

“Traditional paper coupons provide 0.05 percent redemption,” Mr. Dusing said. “You can expect 20 to 40 percent higher rates with mobile.”

The grocery store consumer uses multiple offers and the aisle need to move quickly. For this reason mobile coupon implementations with Kroger and Safeway are not so mobile. Mobile coupons are selected on the phone and transferred to the physical loyalty card which is swiped at checkout.

However, in recent trials with J.C. Penney in a store in Houston, Cellfire used 2D codes presented on the phone. These codes were then scanned with specially installed image scanner at checkout. (Traditional laser scanner cannot read the screen because of refraction.)

Although this solution slows down the aisle, consumers usually have one coupon to check out and the department store cashier has more time to gun the phone.

Michael Mullagh is CEO of Vivotech, a company that provides 2D barcode solutions that are tagged to traditional media. He said that in France, Yellow Pages include 2D code tags on each directory listing.

“These codes provide directions to the commercial destination and often are bundled with coupons,” Mr. Mullagh said. “In these cases, businesses are seeing 15 to 20 percent redemption rates over traditional methods.”

“The beauty of these new solutions is that they target at the consumer’s point-of decision unlike Catalina coupons that are given to the consumer at checkout,” he said.

There are good reasons to seriously look at mobile for couponing:

1. The retailer is not cannibalizing the existing paper coupon consumer. Statistics show that 30 percent of mobile coupon users have never clipped a paper coupon. This is a new mobile demographic.

2. It is cost-effective. Unlike newspaper coupons, you only pay for engagement.

3. The medium allows for onward engagement. Unlike paper coupons, you have a two-way channel.

All encouraging news but the sample size is still small. The challenge will be growing the installed base of mobile-powered consumers.

Keen on Keynes
As things stand, there is little to no reach with mobile coupons.

“It is easy to come up with great ideas,” said James Crawford, executive director of the Global Retail Executive Council. “But 90 percent of retailers cannot support them. Retailers have historically missed the trend by decades. Retail is all about mainstream adoption.”

“In many cases we can expect mobile to follow Gartner’s ‘Hype Cycle,’” he said. “People get excited about a new solution. There is hype [and] then when the solution does not immediately deliver results, it crashes, disappears and then grows slowly, reemerging over a longer period of time.”

It is possible for a solution vender to innovate in one store or in one enterprise loop.

“However, the CPGs need universal adoption across all stores,” Mr. Crawford said. “While we all want a solution, it is a really complex problem to solve.”

Retail behavior is slow to change, said Mark Self, vice president of industry solutions at Motorola Enterprise Mobility Solutions.

“It is an evolutionary process,” he said. “Look at self-checkout – it took 10 years to be adopted.”

When Bob Pye, vice president of 2D bar code firm Mobiletag, suggested that Near Field Communications machine-to-machine short-range wireless connectivity will become a standard and solve all these retail problems in the long run, Mr. Self responded to the quick.

Mr. Self reminded Mr. Pye of what economist John Maynard Keynes said during the Great Depression: “We need solutions now because ‘in the long run we are all dead.’”

Gary Schwartz is president/CEO of Impact Mobile, a mobile commerce firm with offices in New York, Toronto and Los Angeles. He served as roving correspondent for Mobile Marketer at last week’s CTIA Wireless I.T. & Entertainment Conference in San Diego.