Here’s what mobile expert and Impact Mobile president/CEO Gary Schwartz has to say about Coca-Cola’s mobile credit campaign and its potential as a role model for others of its ilk.

My mobile pitch has always been “put an M in front.” Take existing retail and consumer packaged goods processes such as end cap, spiff, circulars and point-of-sale receipt and put a mobile element in the mix to add incremental business value.

Well, here is another process. All signs indicate that this will dramatically enhance stores’ shopper marketing objectives and replace the antiquated rebate model.

Airbonus
In August 2009, British wireless carrier O2 ran a Cola-Cola promotion giving British consumers 50 pence (82 cents) of mobile credit every time they bought a Fanta, Sprite or Dr Pepper product.

In July this year, Canada followed with a national promotion on the Rogers Wireless network that rewards Cola-Cola shopper with 75 cents on their phone bill. On a $2.25 beverage, that is a nice thank-you. Bottles in both countries were labeled with a clear call-to-action to drive impulse conversion at the beverage aisle.

Running a PIN – alphanumeric code – on product to drive mobile affinity services is not new. 

Promotional PINs have been a standard promotional feature on Coca-Cola bottles in Canada and the United States. These PIN codes, which can be redeemed on both via mobile and online, give registered MyCokeRewards members in the U.S. and iCoke in Canada the chance to collect iCoke Points and instantly win prizes.

Coca-Cola’s program works as an affinity channel in any store, allowing the consumer to text the PINs to collect Coke Points. Consumers diligently work to accumulate points to redeem against tickets and other valued swag.

Coca-Cola has successfully turned the Coke bottle into a mini-retail environment to run affinity D2C programs. The beverage marketer prints a unique PIN under the bottle cap which acts as “proof of purchase.”

Now, Coca-Cola and the wireless networks have taken this to the ultimate mobile exchange where “Coke Points” can be instantly redeemed on O2 and Rogers Wireless networks for an instant credit on wireless minutes. 

In addition to the service providing a revenue role for the carriers who have increasingly become disenfranchised from the mobile marketing and advertising value chain, the airbonus service can revolutionize a dying rebate business.

Rise and fall of traditional rebates
As many know, traditional rebates are sales incentives on a product purchase usually in the form of a mail-in rebate (MIR).

The shopper uses the coupon, receipt or cut-and-send bar code as the proof of purchase to receive the rebate dollar amount.
Rebates are not just cash – they can be BOGO, credit to account, services, extended warranties, gift cards and premium items. 

Traditional rebate processing fees are expensive. The clearinghouse manages all the moving parts – and there are plenty. Many are manual and costly. For example:

Redemption: collection of data mail, online, mobile, fax or other, redeeming for initial data collection.

Validation: program parameters/purchase – validation of data depends on the program criteria such as SKU, dates, value, when redeemed, participating dealers and other relevant details.

Issuance: various forms and values based on program specifics.

Notification: compliance with various states and non-compliant together with resubmissions and subsequent re-validation and other considerations.

Rebate clearinghouses also need to manage all stakeholder timelines and expectations.  They are responsible for providing data on redemptions, compliance, issuance, collection, accruals and many other activity reports to allow the “funder” – whether retailer or manufacturer or both – to have full transparency. 

The MIR – direct mail and paper reconciliation – industry died a slow death a few years ago when Best Buy got rid of a bevy of redemption clearinghouses. Why? Because Best Buy, followed soon by Target, wanted to control their shopper’s experience.

These retailers’ solution was to provide an instant rebate in-store. It is good for Best Buy as it controls the shopper experience end-to-end, but bad for manufacturers as this was nothing more than a direct discount off the product.

Worse than this, there was zero breakage. Everyone saved on the manufacturer’s back. At least with rebates, only a fraction of the shoppers redeemed the offer.

Giving rebate more credit
Well, we now have a chance of a rebate rebirth with airbonus.

Using existing carrier credit APIs, there instant advantages:

•        No need for clearing houses

•        Shopper does all the work

•        Instant two-way mobile CRM opt-in channel

Most importantly, although there is a perceived instant rebate – cash in hand for the mobile consumer – there is significant breakage. This is a dream commerce exchange: redeem loyalty points on your handset and the brand will top up minutes on the same redemption device.

Coca-Cola is using the phone in the same way as retailers use a plastic loyalty card. The value exchange can be moved seamless on and off the card or, in this case, phone. No need for rebate or coupon clearing houses, time delays or intermediaries between the brand and the shopper.

It also offers the wireless carrier a new business model. Yesterday, it was credit APIs that were used for customer refunds. Today, the same APIs can be leveraged to run clearinghouse service with a profit margin.

While carriers, aggregators and service providers across the U.S. are evaluating their options, here are some points to consider:

The business model is the least of the barriers to this new channel. Consumer packaged goods companies are already lining up with clear interest.

The challenge is the necessity for a mechanism for proof of purchase. Coca-Cola’s process was easy. It has an existing mechanism for PIN provisioning under bottle caps. With the next packaged good marketer in queue, this will be a challenge. Why?

Well, for ten years there has been clear proof that inserting a PIN in confectionery, quick-restaurant service products and beverages significantly drives a lift in sales. Cadbury showed a 30-point lift in Britain. In North America, Subway drove sales up by 15 percent.

However, inserting proof-of-purchase PINs in product is a logistical challenge.

Putting the product and call-to-action in market and taking it down in a timely fashion is almost impossible. Unless you have an always on mobile PIN channel, such as Coca-Cola, airbonus is difficult to implement.

The market needs to work on a way of taking PIN provisioning pain off the table. There are only two options and they are both – much to the chagrin of the manufacturer – at retail checkout. They are:

1.      Automated EPP (Electronic Proof of Purchase) based on product in basket

2.      Dynamic PIN-on-receipt based on product in basket

EPP can be used to trigger a credit event off the shopper’s loyalty card based on purchase behavior.
If there is an existing mobile opt-in, SMS can be sent to shoppers advising them of the credit reward after a single purchase or based on a group of product bought.

The retailer can allow for breakage by requesting that the shoppers’ respond to the SMS for a credit to be triggered.

Likewise, a mobile PIN can be printed on the receipt based on purchase behavior.

This is a more optimal channel as there is natural breakage as well as the opportunity to capture mobile opt-in. 

Pinned-down marketing
As long as the retailer has an always-on PIN reward at the bottom of the receipt based on end cap call-to-action, this channel can be effectively used for airbonus, mobile surveys, general mobile promotions and, of course, mobile CRM activation.

As Dave Hunt from the Rebate Company says, “Mobile together with online and offline strategies will move the redemption process to be a virtually instant consumer experience with immediate feedback and engagement – something mailing to a PO Box could never possibly attain.

“This is a true win-win as every stakeholder will have access to a direct dialogue with the consumer with the opportunity to engage them ongoing, costs will be managed with ‘good breakage’ and consumers will enjoy better offers from retail and manufacturers.”

Whether the manufacturer or the retailer do the work, the reward for all parties in the value chain is too great to be ignored. Everyone wins: Carrier, service provider, manufacturer, retailer, and of course, the shopper.