Opinion: Why mobile coupons are not the answer

A couple of interesting statistics were published recently about Facebook, the dominant force online. The first, to no one’s surprise, is that Facebook passed the 500 million user mark, putting it firmly ahead of Google as the most-visited site on the Web. The second statistic is somewhat astonishing. According to the 2010 American Customer Satisfaction Index (ACSI) E-Business Report, Facebook scored 64 on a 100-point satisfaction scale, putting the site in the bottom 5 percent of all measured private sector companies. This ranking is so low that, according to ACSI, even the Internal Revenue Service scored higher.

The natural question is, why the exponential growth when so many people are unhappy with the service? The primary reason is most likely a value question: Facebook is free, so users are more likely to use it despite their complaints. Another reason is momentum. Once you’ve invested the time and effort to engage your friends and developed habits with Facebook, it’s tough to change. And that leads to a third reason — there isn’t a strong alternative. MySpace is arguably worse than Facebook, so absent a viable option, Facebook keeps its fans and keeps growing.

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There is an apt analogy to the world of coupons. Coupon use has skyrocketed in the past 24 months or so, as the economy faltered. Shoppers looking for ways to save money returned to their old habits and started clipping coupons. In addition, websites have popped up that allow coupons to be printed for offline use, and other sites have appeared as aggregators where participants can trade coupons with one another. In fact, a new study from Performics relates how social media is affecting consumer behavior, and one notable point from the study is that people want more coupons delivered via social media.

It was a short leap from there to putting a coupon on a mobile device. 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.

Steve Jobs, Apple’s CEO, was recently quoted in Fast Company magazine, himself quoting 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.

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. No one is thinking “affordable car.” They are thinking — you guessed it — “faster horse.”

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.

Given the near-ubiquity of mobile devices, 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 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.

The goal of loyalty cards has long been to more effectively market to shoppers based on behavior. But while gathering and analyzing data was relatively simple, getting relevant offers to shoppers based on that data was considerably more challenging, as well as costly. Mobile devices will sooner or later become the preferred way to connect to consumers and will ultimately take on the role of loyalty device, replacing not just coupons, but cards and key tags as well.

Thanks to mobile devices, and the smart phone in particular, reaching shoppers in real-time is easier, cheaper, and more effective than ever. But putting a barcode on the screen to be scanned like a paper coupon makes about as much sense as putting a saddle across the driver’s seat of your new hybrid, and will have about the same effect on its usefulness.

Jeff Weidauer is Vice President of Marketing for Vestcom International Inc., a provider of technological retail solutions. (Photo by Marco Arment.)

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User Comments – Give us your opinion!
  • Jill Ruttenberg
    Ok, so what is he really saying? He just doesn't mobile coupons are good? What is the alternative, what can make the situation better? Don't just give us a problem, also have a solution please.
  • Eladio Trabazo
    Dear Mr. Jeff Weidauer:
    I agree with you, the coupon may not be the solution, which could lower prices directly, we have to seek new formulas to save money and attract customers, think of all these new formulas and how to apply.
    But to this day, is what it is.
    We are many companies that try to give a solution, practical, convenient, innovative and "ecological" solutions that really have little profit, but the mobile phone increasingly becomes our laptop, which can store coupons, tickets, identification cards , payment cards, etc ...
    And all we're trying to make good use of new technologies and make these come to all people. People who become increasingly user of new technologies.
    But if you want to reattach coupons in a big book how I did with my mother, I'm not going to do, and not just the taste that stays in the mouth, but because for some there are new technologies that make these coupons out cheaper and less trees we cut our planet earth.
    If you have a solution, report it. And see ... as all these companies just applying it to the phone.
    And if you do not have a solution ... please do not destroy our projects.

    Eladi Trabazo.
    Development of new applications.
  • Eladio Trabazo
  • Jodi Woosley
    Quite frankly, coupons are becoming obselete. Don't forget that putting a coupon in the news paper costs money of the person putting in the coupon, which was sold to them by the newspaper. The consumer then has to buy the paper to get the coupons. Now coupons are free, coming to us via e-mail. Not only are they free, they're pointless because anyone who has given their e-mail address to a retailer can get an e-mail from the retailer on their smart phone on the "Sale/Special/Special Sale of the Day/Week/Month, etc." In other words, we don't need coupons, just tell me what the price is going to be today.
  • Steve Crane
    Ask any direct response marketing consultant worth their salt and they will tell you that coupons/discount vouchers do work. They've been working for the last 100 years and they will continue to work, because of human behaviour. The medium used to view and redeem the coupon is simply down to personal choice. Having them on mobile phones is simply moving along with the times. But it won't completely replace clipping out coupons from a newspaper. Not everyone like technology. But for those that do, having a coupon on the phone is quick and easy. SO I don't see any problem what so ever with using the phone as yet another medium to get special offers out to a highly targeted audience.
  • deirdre williams
    I agree with you Jill...what's the solution?
  • Dan Slaughter Jr
    I just wanted to chime in elsewhere people are saying that consumers are loving coupons folks i talk to on the street (cause I am unemployed but refuse to sit at home and do nothing) they say that they use coupons AND they like the idea of coupons on the cellphone. With that said.

    I am with Jill That is where the forward thinking come in whoever can come up with a solid plan to replace coupons (which I think sucks) ok why?

    Because it's just like now people have MP# players why because of small and compact and unlike Cd's they are not like records.

    Haven't you thought that before CD's were made by people who were thinking records fashioned new technology, In My opinion while MP3 makers (I think) were thinking better more convenient, Music solution.

    I am just a layman but I am more in favor of the idea that you have a card that registers you discounts gives you rewards and already has your favorite discounts inside.

    Kind of like that Ralphs rewards card it (oops if I am not allowed to name names please arrange it better) calculates your rewards but also keeps track of what you buy and then they send you coupons in the mail.

    However if they could just mobilize it totally by not sending paper coupons or cards and just have it as an app or something so that when you get there you give them the number and all the items you have selected or they have determined from your shopping patterns just automatically happen when you check out.

    Well like I said I am just a guy with an idea but maybe someone who has that ability to do that for many stores can git-r-done
  • mobile shopper
    of COURSE everyone wants an answer/solution to an observed problem or old paradigm of doing business. haha... if Jeff had the solution, you'd hear about it in a press release from his company (or a company he's affiliated with) before you read it for free in an article! :) good points made... I agree that the paper coupon is a very dated medium in an arcane system that needs to be "re-thought." I suspect the "obvious" evolutionary next step will be revealed in the near future!
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