How to create a cost-effective, high return, mobile loyalty coupon campaign
This article first appeared in the December 2010/January 2011 issue of Marketing magazine.
Take a look at the typical American family fridge and you’ll see a litany of well-organised coupons and vouchers. But the typical Aussie fridge is mostly void of coupons and is instead covered in kids’ artwork, photos and magnets from the local plumber and lawn mowing service. In my case, its void of anything.
Australians have never taken to coupons with the same passionate embrace seen in the US and Europe; however, mobile is changing this with the Australian mobile coupon market being embraced with vigour. As an extension to a loyalty platform or simply an isolated tactical play, coupons and vouchers on mobile can be extremely successful and the ROI staggering.
I see some incredibly well-structured and run loyalty programs (such as the Ritchies IGA supermarket loyalty coupons program), as well as some very poorly considered and badly executed ones, which I won’t name for obvious reasons! So let’s run through what is needed to create a cost-effective, high return, mobile loyalty coupon campaign.
The first stage is a list. And I wouldn’t recommend buying a list, because in my experience this leads to more problems and complaints than benefits. You need to build your own list. It isn’t hard. In fact, many organisations I speak with who want to migrate their VIP club from email to mobile claim to have no mobile numbers, but actually have at least 10 to 15 percent of their list with mobile numbers.
Regardless of when you plan to embrace mobile coupons or augment your loyalty program with a mobile channel, you should immediately start collecting names and numbers, as well as email addresses. This change can happen immediately and prepare you for when you do decide to join the rest. Remember also to have in your terms and conditions that the provision of their details entitles you to “communicate with them through any or all of the methods for which they have provided contact information”.
You need to understand your target customer to align an appropriate campaign. Yes, this may sound like I’m teaching you how to suck eggs, but amazingly I see many people misalign their endeavours in mobile with the behavioural models of their target customer. It seems when it comes to mobile, the diligent planning and rigour behind the strategy gets lost or forgotten.
Mobile won’t fix a bad campaign. As a loyal reader, drop me an email and I’ll be happy to comment or help critique a planned investment in mobile.
Not to harp on the negative, but let me give you three quick examples of some recent disasters. And these were from very creative companies and very switched on brands, but when they tackled mobile all common sense seemed to be ignored. Sorry, no names here, due to obvious legal reasons!
The first was a radio-based drive time targeted inbound SMS campaign, asking listeners to text in their answer to a question, as well as their name and address. Ignoring the legal problems in most states with texting and driving, the ability to recall the number and then type in the answer all while driving isn’t logical. But, worst of all, was that the follow-up SMS simply thanked them for their entry and contained no branding and no coupon inviting in-store redemption.
The second was targeting 14- to 16-year-olds, which is a problem on its own with mobile. The next issue was that the points of discovery were busy bus shelters and train stations near affluent schools – good thinking, except it launched for the three weeks of school holidays.
The final was, in fact, the most frustrating. Having built a great loyal customer list, this brand sent its entire list video clips three days in a row, which were the three different TV adverts showing at the time. The MMS contained no offer, no benefit, no call to action and, from the consumer’s point of view, absolutely no value. Sure enough, the brand wrecked its list with over 25 percent of people sending in a ‘stop’. All that work in building a solid list was destroyed with a poorly considered blast of self-indulgent videos.
The important thing to consider is how you measure and track the performance. In many regards the nature of the offer can be used to measure redemption, but you should also consider an initial trial looking at email versus SMS versus MMS. There is a wealth of online statistics and case studies showing well-structured MMS messages attain a significantly higher conversion rate. My belief, however, is that the messages need to be mixed to keep them fresh and compelling.
Use a provider or online system that can support email, SMS, extended SMS (multipart for longer messages) and MMS. There are a number of systems around, so make sure you pick a partner that can support all four, as well as providing the detailed statistics.
Think about who you use for your mobile execution. There are a lot of gateway providers, but you need a platform you can control, track and measure yourself.
For a trial, use all methods. Don’t be fixated on a single message to the entire list with the same offer. With the right system you can change the offer per member based on, for example, their aggregate spending in the last six months. You can even vary per store and send out over different days. Think about the power of the medium and leverage the features – immediate, personal and trackable.
Tracking is important. There is no value in having anecdotal evidence. The benefit of mobile is the ability to track directly to an individual, so why wouldn’t you? There are a host of methods that can be adopted and using a variety on a single trial campaign can help determine your ideal model. Existing VIP clubs and retail loyalty programs usually have a membership number. Use this number in vouchers and use the POS system to track which person received which type of offer and who ended up purchasing.
Include a link in each voucher to a mobile website explaining more details. That link should be unique per voucher and enable you to measure conversion and then the ultimate statistic: who purchased and who spent the most. Even if you can’t integrate and use the POS system, make sure you have a manual logging process to track. The value of the information enables you to continually refine and better target the types of offers and discover what format delivers the best success.
Track, measure and, where possible, individualise, personalise and link to POS system transaction data.
Next – to the content of the message. This is where many fail and many campaigns deliver suboptimal results. The immediate and personal nature of the medium is powerful, but it also demands a well-considered offer. Consumers expect something great. It may seem obvious, but don’t send messages without any offer. This just frustrates consumers and they are likely to unsubscribe. Don’t replicate offers in other mediums that anyone can get access to; make your loyal customers feel special.
Some of the things I have seen work really well are offers that enable a member showing the coupon to enter the store on a sale day an hour before the general public. This has a double impact, as your members appreciate the opportunity to shop early and in a privileged way, and it also creates in the general public a desire to be a member. Reward your biggest spenders with extra discounts and encourage the new members with ‘first time member discounts’. Mobile is powerful in that you can vary the offer easily by using any number of metrics and the message personalised.
The very nature of the personalised medium means that the content of offers needs to give the consumer true value and real benefit.
The second part to the content of the coupon is the type of message. Emails and standard SMS messages play their part and can be used to create variation. But the best results are always seen by using multipart SMS messages and MMS with an embedded animated gif. The challenge with a single SMS is the restriction of 160 characters. Once you add the required Spam Act components of an opt-out message (txt STOP to 04xx-xxx-xxx) and identify who the sender is and why they are receiving the message (as a member of ABC VIP Club), you have very little space to get your message across.
A multipart SMS is simply that: multiple SMS messages that are coded so that the majority of phones automatically join them into a single message. Surprisingly, in two SMS messages you can articulate a clearer and more readable and compelling offer. But, for true impact, use an MMS with an embedded animated gif. This, in my experience, delivers amazing results.
An animated gif is effectively a series of images that scroll. It’s a great way to create a visual impact. There are some golden rules though. When creating an animated gif for mobile, you must observe a few very important principles:
- don’t use partial frames – some phones won’t display them properly
- don’t use transparency – again, some phones won’t display it properly
- iPhones show the animation in the thumbnail, but only the first frame when in the message, so make the first slide the key message and always have the full message in the text of the MMS as well
- stick to about eight frames maximum, with around three-second transition times
- ignore normal image framing rules; make all text and objects fill the image right to the borders – high impact
- don’t have more than three or four words per slide; make it easily readable and a simple message, and
- create the source images as portrait-shaped and high resolution, and rely on the messaging platform to convert and resize.
Using the same styling and visuals as in the animated gif, have a mobile website replicating the imagery and containing further information, including detailed terms and conditions if required. The benefit of an embedded link, especially where they are unique per member, is being able to measure click-through rates and then link click-through to actual purchase using the membership number as tracking.
Use a mixture of message formats, include animated gif for greater impact and personalise content and links to provide greater granularity in tracking.
Now for the ‘final mile’ of the coupon: the delivery. There are a number of things to consider from timing through to follow-up. It is amazing how many organisations fail to properly communicate the campaign to staff at the coalface. Ensure that all staff understand what to do when someone walks in and shows the coupon. A blank look from the staff member doesn’t reflect well and will most likely cause the member to never use another coupon or at least walk off in frustration without spending money!
Educate all staff on how the offer works from opt-out through to what POS processes to follow.
Think about when to communicate the coupon. Mobile is relatively instant, so alerting a member to a special day or sale item three weeks in advance will be forgotten. A message the day prior may not give people the time to plan and organise attendance. For a significant program, a two-week lead time message, then two-day reminder, will work.
Sending a coupon offer two to three days prior seems to be the optimum period. But also remember, if you have a self-managed system, then sending an alert in the morning, for example, for a one-hour extended trading and 30 percent off for members only can often have great impact on the day itself.
Think carefully about the lead time for sending and be ready to send immediate offers to enable a tactical reaction to a slow sales day/week.
Finally, and most importantly, track and measure the coupon success; especially if you use multiple mediums, different messages and offer a varied benefit. Try and tie back to the core POS data, because in reality the key measure is cash in the register. Having a store filled with people and no one buying is not a success. If you have member numbers linked in the sales data, then link it back to the mobile number and the message sent. Use this data over time to evaluate the best mix of messages, timings and who spends the most each visit. This is ‘retail loyalty 101′, but surprisingly I see a lot of organisations and agencies that fail to close the loop and use the valuable data to refine and improve. The insight gained can be invaluable.
A trial coupon campaign can cost as little as $500. It requires strategic thinking aligned with the mobile medium, but can deliver amazing results and become a core communications channel and key facilitator for any loyalty program. For less than $500, think about this real case study (names changed only):
- Bob is standing in line at Joe’s Pizza to get his lunch
- Bob sees a sign at the register with a simple message “text joe’s to 04xx-xxx-xxx for free drink today”
- he texts, receives a coupon, shows it to the staff member at the register and gets a free drink.
- a week later at around 11am when most people are thinking about lunch, Bob receives a coupon from Joe’s Pizza for a ‘two for one deal’ (make sure the T&Cs on the original offer state somewhere “you will receive offers from Joe’s Pizza from time to time”), and
- Bob invites his co-worker and they share a meal and the co-worker texts in to get a free drink and is now on the program.
This very simple eight-week coupon campaign, created for less than $500, generated a membership list of 430 people, led to only seven opt-outs for the whole period and, with just one offer a week, saw an increase in sales of 22 percent. For a single store, this was more than three times the sales increase of any other medium.
As an extension, they have now reprogrammed the POS to capture mobile numbers, which is only used for those who have opted in, but allows them to track sales by person. They now offer ‘fourth pizza half price’ and are able to introduce a range of tactical coupons never before considered for this kind of establishment.
If any insight can be taken from this, the most important is that mobile coupons can be extremely successful and running a trial for very little cost can lead to some extraordinary long-term benefits and customer communications improvements.