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Forrester Research exec: Mobile makes the rubber hit the road with loyalty

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February 1, 2013

Passbook aggregates loyalty cards

SAN FRANCISCO – A Forrester Research executive at the 2013 Mobile Marketing Association Forum San Francisco said that mobile offers a way for retailers to create loyalty with consumers who invite themselves to be part of a brand.

Executives from Urban Airship, the Association of Coupon Professionals, Forrester Research and Merkle spoke about how mobile is affecting how consumers receive offers and deals during the “Mobile loyalty and couponing within the marketing mix” session. The session was moderated by Adam Lavine, cofounder/CEO of FunMobility, Pleasanton, CA.

“From our perspective at Forrester, it is easy to be lazy and think that you have loyalty from the customer,” said Sarah Rotman Epps, senior analyst at Forrester Research, Cambridge, MA.

“With mobile, the rubber hits the road and people see where they are actually invited in from your customers,” she said.

“As devices get used more intimately and these experiences are with us 24/7, consumers get pickier about the brands that they want to interact with and they want to invite into their devices. I think from the consumer perspective, you will see a narrowing of the brands that they want to engage with that they trust and have a relationship with, and that they would not mind that anticipatory push from.”

Bank on mobile
Since consumers get more finicky about brands that they want to engage with on their mobile devices, marketers need to be thinking of the best ways to put the consumer first.

From a brand perspective, it is about getting smart and knowing that mobile is a great way to have an engaged experience with customers but is probably not the best avenue for gaining new customers, per Ms. Epps.

Marketers need to think of ways to disaggregate what a mobile coupon is. It could mean a varity of things from tracking a mobile coupon to either an online or physical store, for example.

Additionally, Ms. Epps said that consumers think about mobile coupons broader than marketers do.

For example, recent research from Forrester found that 14 percent of U.S online users claimed that they had used a mobile coupon in the past month. With smartphone users, the number jumps to 25 percent.

Younger demographics overindex on their mobile coupon usage.

When it comes to mobile payments, some experts believe that Google could be coming up with a way to combine loyalty into its payment service Google Wallet.

The company has certain pieces of the infrastructure in place such as Google Now, which is a virtual assistant that gives advice to users.

However, product groups do not necessarily coordinate with each other at Google, which could make it difficult to commercialize a mobile loyalty product, per Ms. Epps.

On the other hand, technologies such as Apple’s Passbook let marketers directly integrate loyalty into their apps.

“I think one of the cool things about apps like Passbook is that there is an anticipatory element in it as well,” Ms. Epps said.

“So for example if there is one that is related to a particular store like Starbucks, you walk near the store and it automatically prompts you to use it,” she said. “I think that the promise of mobile is that the offer can get personalized and more relevant for the right person at the right time at the right place, but there is also an element of push that you could not do with paper.”

“The mobile phone or if you think of what might be coming in the future with Google Glass or a vibrating wristband – whatever the form factor is – is that you have the ability to engage your customer in new ways because you have that relationship of trust established.”

Tailored offers
In order for mobile coupons to gain full-on scale, consumers need to be able to use them in online and offline places that they shop, according to Chris Wayman, vice president and general manager at Merkle, Columbia, MD.

If there is permission-based marketing in place for marketers to communicate with consumers, marketers can reach out to those users for a long period of time.

However, context is crucial in getting mobile coupons right. The first time that a consumer receives an offer after opting into a program, redemption rates can be as high as 89 percent. From there, ongoing redemption rates can be around 25-40 percent.

Additionally, consumers who use mobile coupons spend more money.

“It has to do with context, so you are delivering based on the analytics work and the understanding of your client and why they engage with you as the brand,” Mr. Wayman said.

“You are delivering the right offer to the right person at the right time, and realistically I don’t think we are going to vary it where we are a full scale of full-on context, but we do know for a fact that it is what is driving consumer adoption – that is why they are redeeming and engaging,” he said. “If you can deliver that way and be more timely and personalized, they are going to come back a lot sooner.”

It is important to remember that mobile couponing will not solve all the problems that brands have. However, it does help to drive new revenue.

“If you look at the wallet and where all of this is headed that is a perfect storm, Mr. Wayman said.

“The wallet on the phone is literally a combination of the ability to process financial transactions, loyalty and rewards,” he said.

Higher redemption
According to Brent Hieggelke, chief marketing officer at Urban Airship, Portland, OR, the biggest opportunity with mobile coupons is around redemption rate. One of the main reasons that coupons do not see high redemption rates is because they are inconvenient.

Therefore, opportunities around the digital wallet and Passbook are technologies that hone in on the consumer perspective.

“If you give these consumers who are downloading 100 apps, surfing lots of mobile Web sites and looking at social channels one place to store coupons, they will probably use them a lot,” Mr. Hieggelke said.

“It is a simple response, but it is the way that we have doubled the effect for the consumer,” he said.

“If you do not affect the upstream then it really does not matter what you solve in the downstream.”

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York

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