Mobile Couponing

Engadget reports on another entrant into the mobile couponing space – Vivotech.

TheyÌre working on using kiosks at the storeÌs entrance (which probably no one will stop at) to send ads, sales and specials to cellphones and PDAs via Bluetooth or IR.

Firstly, I’m not as sceptical that consumers won’t stop. In the UK, Sainsbury ( multiple grocer) and Boots (who aren’t sure what they are – could be their problem!) have used instore kiosks pretty successfully for 5 years or more.

However, I think that the dream, practical scenario for mobile couponing at the moment goes like this:

1. Consumer gets sent a coupon to their phone.
2. Uses a kiosk-type device to change the coupon into a paper one (via Infrared, Bluetooth, SMS or barcode reader).
3. Consumer presents paper coupon at retailer till for redemption in the normal way.
4. Optional – redemption at either stage triggers further mCoupon(s) to be sent to the user’s mobile phone.

This might be perceived as a fudge of new technology and old. But on a practical level, it’s the only way realistically that’s going to work.

Why? Well, on the surface, a model that allows you to send a mobile coupon direct to a phone, allows the user to present the phone at the point of sale and then have the retailer’s EPOS system handle the transaction is definitely the most sexy. And I’m sure that eventually, this is where we’ll end up.

But, there’s a few very practical problems that this needs to overcome.

1. The time it takes for someone to find the phone, then find the barcode/mobile coupon and for it to be scanned. This will seriously screw up till throughput. If the transaction could be done automatically by Bluetooth, for example, in the future, it would remove the need for the till operator to DO anything – every punter’s phone would just be automatically scanned and coupons deducted.

But until then, any Ops Director worthy of their name will fight this tooth and nail on the grounds of increased inefficiency and thus, increase in staff costs.

2. Retailers make a lot of money out of misredemption currently (I’ve used the term misredemption to mean redemption of coupons inappropriately by the consumer or the retailers). Do retailers really want to be held accountable to the manufactures like this? Not impossible to argue with, but it seriously disrupts the status quo, which is never very easy to overcome.

3. There’s a HUGE need for retailer staff training, which everyone always underestimates.

4. Even more complex is that all couponing relies, to an extent, on slippage (ie coupons issued and not redeemed. This type of scheme should (if it works) increase % redemption, especially if you move to an automatic redemption system, like Bluetooth.

Now you can argue that as long as the transaction is profitable, it doesn’t matter if you get 100%, provided that the misredemption issue is tackled. However, this is a marketer’s view – the FD would have a very different one, considering it a balance sheet liability. Again not impossible to overcome, but difficult.

5. Direct redemption needs a significant investment in educating the consumer.

6. You’ve also got “AirMiles syndrome”, to an extent, especially with the grocery retailers (who handle most coupon redemption). In other words, you can’t get a grocer until you can prove you can get consumers to use it. But you can’t get consumers until you have a grocer.

7. Inertia or “if it ain’t broke, don’t fix it”. Paper couponing largely works for all concerned – consumer, retailer and to an extent manufacturer, albeit with the misredemption issue. But the manufacturer, with most to gain from the new system, has the least power. The retailer, who has the power, has the most to lose in the short term ie the millions in misredemption it pockets every year and a considerable Ops headache.

In summary, mobile couponing is going to happen. But I’d put my money on half-way house solution that will be acceptable to the retailer. Direct to EPOS just has too many barriers to overcome in the short term.

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