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Retail technology problems hinder mobile coupon initiatives

June 10, 2010


Bill Catania is founder/CEO of MDot networks

NEW YORK – Marketers must address retail technology problems to take advantage of mobile couponing, according to an executive presenting at the MMF.

The good news is that technologies are emerging to bridge the gap between mobile providers and retailers, according to Bill Catania, founder/CEO of MDot networks, Erie, PA. While brick-and-mortar establishments have traditionally been leery of integrating mobile couponing into their marketing mix, new services called digital incentive networks appear poised to support an ecosystem for such tactics.

“What we’re seeking here is a complete pathway from promotion issuance to redemption and audit fulfillment,” Mr. Catania said.

Simplifying the coupon life cycle
The successful execution of mobile coupon programs depends on an unbroken chain of interactions –what Catania called a “life cycle” – extending from targeting, content creation and delivery to the redemption and settlement of coupons at the point of sale.

Digital incentive networks facilitate this cycle where the process becomes most problematic – during coupon redemption.

Difficulties often arise because the retail infrastructure is not equipped to assist in the redemption process, leading to problems like poor integration, fraud and hardware failure.

“[Couponing programs] run into issues with the point of sales system, pin pads, payment devices, scanner or bonus cards,” Mr. Catania said.

“Digital incentive networks will enable the real-time settlement of many different types of media and stored value products,” he said.

cataniammf06102010Likes and dislikes
Mr. Catania outlined a number of tactics that would improve the attractiveness of mobile coupon campaigns, to retailers.

The strongest campaigns are those that leverage retailers existing technology stack and work within the framework of their current point of sales systems.

“[Retailers] don’t want to be told they have to integrate some kind of new hardware,” Mr. Catania said.

Minimal cashier involvement is also advantageous, because turnover at those positions is so high.

Retailers also appreciate coupon programs that synergize with shopper card and loyalty programs, which enjoy burgeoning popularity in the retail industry as unique customer identifiers.

It is also vital that mobile coupon campaigns appeal to all handheld users – not just those with smartphones, who make up only a small portion of the market – in order to maximize customer involvement.

“[Retailers] want to know its good for all shoppers,” Mr. Catania said. “Think about the shopper who has a track phone, and might not have a data plan.”

Finally, as Mr. Catania put it: “Do it for me.”

“Retailers don’t want to hear about them having to do work and integration,” he said. “They want everything delivered in turnkey fashion.”

On the other side of the spectrum are a series of practices that drive retailers away, including those tactics that involve new hardware, that slow down checkout.

“For every second that checkout lane is slowed down, its x amount of dollars lost,” Mr. Catania said.

Scanning the field
The digital coupon industry is divided into a few key categories.

Making up 80 percent of the market, major networks such as MDot, Zavers and You Technology provide mass volumes to grocery and pharmaceutical clients.

By contrast, there also exists a class of niche coupon marketers focused on mobile, location based and scanning technologies in a more merchant-based environment.

Digital incentive networks could present an opportunity for these vendors to streamline their models and improve scalability.

A third set of vendors are geared towards one-on-one purchases with individual businesses.

Scaling the pyramid
Mr. Catania described the hierarchy of the digital coupon ecosystem using the analogy of a pyramid.

At the base is the point of sale where the transaction and coupon redemption actually takes place, which retailers update once or twice a year. This provides a level of stability to support the rest of the system.

Built up from the base is the network transaction level, where digital incentive networks figure into the equation.

This layer of the system is highly configurable, and API, tech standards, security and compliance, and business rules can be adjusted for best practice.

The top layer in the pyramid is the application network, where mobile marketers can integrate through networks to interface with the point of sale.

The ecosystem allows for a wide variety of marketers and vendors to interact with retailers.

“Retailers prefer an open framework – not just one – and lots and lots of mobile content,” Mr. Catania said.

As integration improves, and the coupon life cycle is streamlined, opportunities for mobile marketing and promotion through digital coupons will expand significantly.

“Once we’ve gone through this process flow, we can start running targeted campaigns, and that’s where the fun starts,” Mr. Catania said.

“The final mile is starting right now,” he said.

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