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How in-store mobile marketing can be more than just coupons

Despite the buzz surrounding mobile coupon apps, there is a deeper way to use the technology to drive purchases.

September 22, 2010

Store-based retailers work primarily on two big problems. The first is driving foot traffic into the store, the second is converting customers who are in the store into buyers. Mobile marketers have improved their ability to drive foot traffic to the store in recent years, using a variety of tactics from offers, loyalty clubs and sweepstakes all directed at enticing customers into the store. But the second problem of converting consumers standing in the store is a problem which has received little attention by mobile marketers. Until recently.

Shopkick launched a few weeks ago with much fanfare, raising awareness of the in-store opportunity that mobile marketers can affect. I've been engaged in many in-store mobile marketing programs over the years but I would never say it has moved past experimental. How many retail outlets have you visited recently that encourages you to pull your phone out of your pocket and engage with the brand? It is rare.

I'm intrigued by the dominant approach in the industry toward addressing in-store conversion: couponing. That is, how do I convert a shopper into a buyer when they're standing in the store? Well … I give them a coupon, of course. When all you have is a hammer, everything looks like a nail.

Crossview very recently published a study in Mediapost saying that most consumers (37 percent) prefer to receive their coupons and offers via email and only 11 percent of them are interested in receiving offers in-store. If so few customers are interested in receiving offers in the store, why are we pushing it so hard?

I recently had the honor of co-presenting on a panel with esteemed and respected mobile marketer Andrew Koven from Steve Madden. After discussing the broad range of impressive mobile activities he is undertaking at Steve Madden we got to talking about the new Shopkick app. Mark Walsh from Mediapost moderated the panel and drew the following insight out of Koven: "I don't want people to come into my stores and play games to get coupons. I want them reviewing our merchandise and converting to buyers."

The retailer CEOs I meet will tell you that coupons are a drug. Once you get hooked and let your customers get hooked, it's hard to come back. So there is a constant fight to reduce the reliance on coupons from a marketing perspective.

So if coupons aren't the answer, what is the answer to using mobile to help convert shoppers into buyers?

There is a well known store conversion statistic that applies at most retailers. I call it the 10-4-1 problem. Of 10 customers that walk into a store, four of them intend to buy. Three out of four of those consumers walk out empty handed, only one of them buys. The retailer's job is to convert three out of four non-purchasing intenders. Retailers have tried many different in-store solutions to this problem and they're all working hard on it. Most retailers know that the reason these intending purchasers don't buy is that they couldn't find anything they like. They didn't say, "It was too expensive and if they'd given me a discount I would have purchased." They said, "I couldn't find anything I liked."

So one of the biggest obstacles to converting a consumer is the lack of inspiration and education. Retailers attempt to use store associates to solve this problem. Retailers wage a war in maintaining the cost of getting great associates who are able to inspire and educate their consumers. We also know that consumers are often wary of commission-hungry store associates. This is why consumers do their research online then head to the store and hunt straight for the item they're after. By providing critical inspiration and education tools to consumers in the store, the consumer can find what they're after quickly and easily.

We know mobile can bridge the divide between the store and the online website. How do we make that happen? How do we use mobile to inspire customers when they're in the store?

Imagine for a moment you are standing in a Banana Republic store. There are no store associates around, and you see an in-store poster encouraging you to try their "mobile companion." You pull out your phone and the companion entices you to scan the barcode on the pants you're admiring. You scan the pants and the companion offers you 10 ensembles containing the pants. The ensembles are in BBQ mode, casual mode and work mode. Why be limited to a store of only 10 mannequins, when I can have 1,000 mannequins in my hand built around any item I'm interested in?

The companion then tells you where in the store you can find these other items in the ensemble. If the items are out of stock, Banana Republic gives you free shipping for the item (still closes the deal). Since the companion is bridging the store and the online world, I'm able to easily see any reviews and complaints about this product. The pants come with a recommendation to a tie and so the companion offers up a summer 2010 "how to wear a tie" education article.

Sound far-fetched? I don't think so. These forms of inspiration and education are going to become commonplace in the very near future. I believe that bridging the gap between stores and online is inevitable and an exciting new adventure in the progressive world of mobile.

I had a recent conversation with Michael Boland of BIA Kelsey, a boutique research firm that specializes in the local social mobile space. He saw the "in-store mobile" domain to be a rapidly growing sector. He also agrees that the foursquares and Shopkicks are going to have to move beyond game mechanics and that "…there is going to be a shakeout where there has to be an exchange of real value going on between the retailer and the consumer."

Patrick Collins is CEO of mobile marketing firm 5th Finger.