Opinion: Why mobile coupons are not the answer

July 28, 2010

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.

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.)

Topics: Marketing , Omnichannel / Multichannel , Technology

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