The article doesn’t call this out per se, but does strongly imply that engaging in-store strategies such as SMS text message promotions are an absolute necessity to address the potential threat to retailers offered by comparison enabled mobile shoppers:

“…when it comes to consumers, nearly 65% acquired information about the programs in retail environments at the point of sale, compared to only 2.8% who did so on social media networks.”

The article is based on results of a study released today by the Chief Marketing Officer Council and conducted by IBM and Ricoh.  Its key finding is that although marketers are focusing spend on social networks to communicate loyalty programs, consumers are unreceptive to this channel as opposed to strong calls to action in and around the point of sale.

A similar focus on email marketing is also cited as a disconnect between marketer priories and consumer preferences.  Speaking of preferences, relevancy is found to be at the core of effective loyalty programs regardless of how an offer is delivered.  Certainly, data is crucial to developing targeted offers, the kind of which can be efficiently collected also via text message programs such as customer surveys.

Marketers need to as well be aware that even relevant offers may struggle against the tide of comparison shopping enabled consumers expected to change the retail landscape this year and beyond.  Successful retailers will build relevancy into their loyalty programs, but also recognize that engagement strategies such as SMS text message promotions advertised in store can prevent customers from leaving for better deals, addressing key challenges threatening to make loyalty a mythical concept.

This January 7, 2009 post on MobileMarketingWatch.com describes an offering by a new company called JagTag that offers a very similar service to SnapTag (which we blogged about here back in October of 2009).

These services appeal to marketer’s fears about the limited reach of smartphones capable of reading bar codes.  This is due to the somewhat real issue of handsets often needing special software to interpret the codes.  When marketers think about bar codes on mobile devices, they should break down the options as follows:

• As a coupon delivery and redeeming method.
• As a replacement for plastic cards (like your grocery store loyalty or video store cards).
• As a means of communicating information and/or pointing consumers to rich mobile interactions.

What Jag and Snap Tags do is imply that by using relatively ubiquitous MMS-enabled camera phones, consumers can be called to action as follows: take a picture of a code, send it via MMS, then receive of something of value – pointers to websites, a text message, offer, coupon code, etc.

I fail to see how this adds value to an interaction in the mobile channel versus even more common SMS text messaging.  The only case I can identify is when a brand wants to create an arguably fun activity for a consumer whereby they have a chance to use the camera feature/MMS sending capability of their phone.  That is a very weak scenario in my view.

Instead, marketers need to consider ways of driving consumption of their products across all kinds of customers, be they classified loyal or not, in the most efficient manner available. SMS text message sweepstakes contests promoted at and around the point of sale, and offering many rewards versus one, are a proven tactic that could be packaged and presented to customers as a loyalty program.

Such promotions can be executed quickly and largely in “hands off” mode for the marketer when using a mobile campaign management system like that offered by Interactive Mediums. That benefit came to mind as I came across additional research into customer loyalty that underscores the importance of an effective engagement strategy, more so than one designed to create “loyal” customers, who many in fact be a mythical concept. Consider the following from an article titled, “The 30 major factors behind a successful customer loyalty programme,” from TheWiseMarketer.com (registration required):

Focus on data value, not just repeat business: “The smarter operators used loyalty programmes not to buy repeat visits but to garner information from their customers in order to learn more about them: who their most profitable and least profitable customers were, what they wanted, and what changes or offerings would be most likely to make them truly loyal.”

Spend more time on engagement strategy, less on selling to customers you don’t want: “In Philip Kotler’s version of a Pareto Principle chart, the top 20% of customers generate 80% of the profits, while the bottom 30% of customers eat up 50% of the profits that the others produce.”

Paradoxically, attempting to sell to past customers is a distracting exercise: “Customer win-back expert Michael Lowenstein (of Harris Interactive) says that the success rate in approaching ‘lost’ customers can be three to four times as high as it is when prospecting for new customers. For example, the rate for converting prospects might typically be 5%, while that for reactivating inactive customers might be as high as 15% – 20%.”

These are just three of 30 different points, but were especially notable given the fit with mobile marketing tactics such as sweepstakes promotions. Interactive Mediums’ Customer Engagement Platform has powered effective promotions for many marketers who didn’t likely approach the project with the facts in hand regarding loyalty.

Marketers yet to embrace mobile marketing tactics such as sweepstakes as part of a broader engagement strategy need to get started now; because if you don’t your competition will, making it that much harder to break through the engagement barrier.

When attempting to use this with my Jewel/Osco grocery preferred card, it failed to work, leading me to conclude that widespread adoption was far from certain.  This evening I had a chance to try the application again, this time with my Blockbuster account.  And it actually worked.

Perhaps Blockbuster stores have more advanced scanning equipment.  No matter why it worked in this case, the experience would have been enhanced further by connecting my debit or credit account so I would not have to separately pay for my DVD rentals.

Assuming other cards may work as well as this example, you could say the application is redeemed.  Just like like mobile codes at the point of sale should.

Setup was a snap.  I simply keyed in the numbers on my cards and the application generated visual bar codes that presumably serve the same function as the code or magnetic strip on the cards.  I had visions of being pushed discounts and special offers to enhance my shopping experience.  So it was with this excited point of view I stopped at Jewel last night to pick up a few things and try out my new mobile loyalty card.  I handed my iPhone to the cashier, they hovered the device’s brightly lit screen over the scanner, and…

Nothing.  It didn’t work, so I had to fish the plastic card from my wallet for the cashier to scan as usual.  If Jewel needs to replace its scanners and point of sale systems for this to work, we are a long ways away from replacing plastic with mobile devices.  My hope is that there was just some kind of glitch, but if not, then it suggests ubiquitous SMS text message-based loyalty programs and coupons have a strong future in enhancing the shopping experience.

Another term I would add is “involvement.”  Creating mobile experiences that involve consumers in the buyer/seller relationship in a value added way itself has the ability to render cards worthless, static and forgotten – as the article points out is happening already:

“The use of many loyalty cards has become almost automatic and mundane, and that there is little consumer engagement with many of their offers. One study found that over 30% of consumers never remember to carry their loyalty cards, or have lost them, and almost 20% of active loyalty point collectors never actually redeem them.”

The fact mobile devices are always on hand instantly creates a much larger base of potentially more loyal customers.  The key is implementation and target audience; broad reach using an SMS text messaging approach, or potentially less reach but a targeted demographic via Smartphone application?  The answer is probably some blend of the two, raising again the importance of the Mobile Customer Experience in leveraging mobile most effectively.  As marketers discover every day, the mobile channel’s high engagement factor transforms traditional static marketing methods like loyalty cards into high-po strategic relationship enablers:

“Already, test campaigns and live promotions in the field have shown that mobile voucher redemption is dramatically different to paper-based promotions (for example, Heineken achieved a redemption rate of over 80% in one campaign).”

“Not only is the scanning equipment and point of sale integration a black hole of challenges and issues, the consumer usability issues are numerous.”

He is referring to a number of variables in this statement, including low adoption of mobile devices capable of displaying digital bar codes, limited scanning capabilities at the point of sale (POS), to say nothing of the integration between the couponing campaign and sales transactions necessary to determine ROI.  Perhaps most importantly for any such program to succeed is the customer experience, which is not enhanced by customers fumbling with their devices at the POS, a point also raised.

In this recent blog post , I raise the concept of the “integrated customer” to facilitate effective and measurable customer engagement programs such as coupons or loyalty.  The approach I describe gets to the very heart of the author’s prescription:

• Focus on SMS text because it’s most widely used, as opposed to iPhone which has a loyal but currently smaller following.
• Make the goal engagement, so that customers remain “opted in” to your program over time.
• Focus on closing the loop to understand effectiveness and ROI:   “A well developed mobile solution should provide information on member growth, redemption rates, purchasing behaviors, predictive purchasing patterns and ROI – down to the store location and individual member level.“

The author notes as well that “the devil is in the details.”  To that end, it isn’t readily apparent how a marketer could implement a measurable program in the absence of POS/transaction integration.  That is why I proposed creating an “integrated customer” to serve as that glue, by incenting them to play this role and by doing so remaining engaged in an ongoing dialogue with the marketer’s firm. In this way, marketers can accelerate the deployment of effective loyalty and couponing programs which are measurable and long lived.

As I begin thinking about the application of mobile marketing techniques to foundational marketing processes such as customer acquisition and retention, it makes me wonder how mobile is different than other approaches such as direct email/snail mail or multi media advertising.

Within a competitive context, I see mobile as highly unique in that it provides an avenue to customers in near real-time, wherever they may be.  For example, a new brand entering the market could utilize a mobile marketing campaign to more quickly gain marketshare in a space usually coveted by a few gorilla brands.  Advertising a short code on billboards or during sporting events to register for coupons or product samples, for example.

Not to be outdone by more nimble new entrants, established brands may also use mobile to nurture relationships with existing customers, preventing newcomers from gaining ground.  This might take the form of a loyalty program geared around driving consumption of the brand’s product via a points rewards system.  Like the new brand, traditional media might be used to encourage registration via mobile means.

What’s interesting is when both happen simultaneously and there is competition for the customer’s mindshare.  In this case, the medium truly becomes the message.

The way a customer perceives the delivery of a message via mobile medium, as well as the contents of the message itself, work in concert to achieve a desired outcome.  For this reason, I think it’s key for marketers to remember that when considering mobile as a marketing channel they also plan the message accordingly, for both its content and form.