Aug. 2, 2010
By Gary Schwartz
My mobile pitch has always been "put an M in front": Take existing retail and Consumer Package Goods (CPG) processes like end cap, spiff, coupons, loyalty and POS and put a mobile element in the mix to add incremental business value. Well, recent Coke mobile promotions that allow for instant rewards without product discounts or coupons may show the way for the QSR industry to do the same.
Mobile PINs driving purchase
In August 2009, UK mobile phone provider O2 England 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 products. 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.
Coke’s program works as an affinity channel in any store, allowing the consumer to text message the PINs, unique alphanumeric codes, to collect Coke Points. The consumers diligently work to accumulate points to redeem against tickets and other valued swag. Coke 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 England, and Rogers Wireless networks for an instant credit on wireless minutes. The instant redemption service, called Airbonus, could be an interesting channel for the QSR vertical.
Giving Rewards More Credit
As many know, traditional paper processes like over-the-counter redeemed coupons are difficult to manage in the mobile world. But mobile coupon and discounting can be more unwieldy for the chain and franchisee to track, fraught with logistical and fraud issues. So most QSRs simply use mobile to send out non-trackable offers. This does not allow for affinity reward programs and is open to fraud (duplication of the offer, etc.).
Trackable (uniquely numbered) mobile coupons may not even be an option in the QSR space. “Digital paper” cannot be counted as a unique unless the POS has the ability to ping a central server and validate the number. Most QSR POS systems do not have this ability. Even if they could, there are challenges in reading the code. Manual entry is too slow and error-prone. Scanning is too expensive as it requires optical scanners with specialized software. Lots of obstacles.
Enter Coke’s PIN solution. Armed with the knowledge of Coke’s approach to instant rewards redemption, we now have a chance to rethink how rewards work.
First, there are instant advantages, such as instant two-way CRM opt-in channels, no need for traditional clearing houses, and no discount of the product.
Most importantly, this is a dream commerce exchange for the consumer (at least, the model is): Redeem loyalty points on your handset and the brand will top up minutes on the same redemption device. Coca-Cola is using the phone as retailers use a plastic loyalty card. The value exchange can be moved seamlessly 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.
Of course, to utilize such an instantly gratifying promotion in the QSR space, you need to figure out how to integrate PINs as seamlessly as Coke did.
The Pesky PIN problem
The business model is the least of the barriers to this new channel. The challenge is the necessity for a mechanism for proof of purchase of products. Coca-Cola’s solution was easy: They have an existing mechanism for PIN provisioning under cap. Now, some QSRs have run mobile PIN on products by stickering or putting codes on wrappers and cups. When SUBWAY ran a “text the PIN” hockey-related promotion five years ago, national sales rose by 15 points over a similar period the previous year. However, franchisees don’t like to sticker.
However, inserting proof-of-purchase PINs in-product to run a promotion is a logistical challenge, especially for a franchised chain. Therefore, 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 at retail point of sale:
1. Automated EPP (Electronic Proof of Purchase)
EPP can be used to trigger a credit event off a shopper’s loyalty card based on purchase behavior. If there is an existing mobile opt-in, SMS can be sent to shopper advising them of the credit reward after a single purchase or based on a group of product bought. The retailer can allow for “good” breakage by requesting the shopper’s respond to the SMS for a credit to be triggered.
2. Dynamic PIN-on-RECEIPT
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. 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, mSurveys, general mPromotions and of course mCRM activation.
Importantly, the solution does not slow down the aisle or require the retail clerk or franchisee to do anything beyond business-as-usual. Fraud is unlikely (unless the clerk pockets the receipt) and we are entering into a mobile relationship with every participating shopper.
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 consumer.
Gary Schwartz founded Impact Mobile in 2002, having worked in the IT and telecommunications industry for over 20 years. Over the past eight years, Gary has played a leadership role in the mobile industry, running the first cross-carrier short code campaign in North America, and founding the CWTA Mobile Content Committee to establish policies and increase awareness to promote standards and adoption. Gary is the founder and co-chair of the Mobile Marketing Committee for the US Interactive Advertising Bureau (IAB) and is a director on the board of the Mobile Entertainment Forum (MEF).