How Mobile Marketers Can Build Brands via Coupons and Loyalty Programs

May 23, 2016

Article ImageMany marketers continue to make the mistake of applying the Field of Dreams credo--"If you build it, they will come"--to their mobile banner ad rationales. But based on compelling evidence, it's more accurately, "If they click it, they will become aggravated," and "If they click it, chances are they didn't mean to," based on compelling new evidence. A study, commissioned by Retale that polled American adults, reveals that 60% click on mobile banner ads by accident due to a finger slip or small screen size; merely 16% intentionally click on mobile banner ads because they like the product, service, or company being promoted; 66% believe mobile banner ads have little to zero value; and 68% find accidental clicks to be annoying.

For marketers who place strong trust in advertising and rely heavily on high click-through rates, these findings can be downright deflating. But many believe there are smarter ways to engage mobile users, including old-school strategies that can be adapted to digital and that aim squarely at consumers' wallets-literally: the coupon and the loyalty card.

According to the "2016 Mobile Consumer Report" by Vibes, coupons and loyalty programs provide compelling incentives for consumers to engage with brands via mobile. Here are some of the report's important findings after polling smartphone owners: 82% reveal that digital coupons are convenient versus printing out paper coupons and taking them to the store; 59% indicate their estimation of a retailer would be improved if they began to receive offers and coupons that could be saved on their mobile phone. Additionally, 32% currently use a mobile wallet, such as Android Pay and Apple Wallet, and 82% are inclined to save personalized mobile wallet coupons and offers. Another 73% are very or somewhat interested in saving loyalty cards to their smartphones, and 87% have at least one loyalty card.

Should you fear the fat finger and cater instead to the coupon-clipping faithful and rewards-seeking repeat buyer? That seems like sound advice to Stacy Smollin Schwartz, instructor of professional practice in the marketing department at Rutgers Business School. "Mobile-enabled coupons and loyalty cards work beautifully because they offer the benefits of both ecommerce and brick-and-mortar shopping for today's omnichannel shoppers and give the consumer control over which bits of each to use and when," Schwartz says.

Given the small screen sizes and task orientation we are used to with our smartphones, traditional ad banners often don't pass the test for effective mobile marketing. "Banner ads seek to distract consumers from adjacent content-not add function, convenience, or seamlessness to their task at hand," says Schwartz. "They often serve to be clunky road blocks-the antithesis to the invisible blending of online and offline worlds that mobile is so good at. We may trip over them trying to click on something else, artificially boosting click-through rates."

For publishers, not only does this potentially inflate their mobile ad inventory value and performance-creating an awkward situation with brands and marketers-it also means a site's visitors are generally not having an optimal experience. "Instead, they're accidentally clicking banner ads, which our data found to be very frustrating for customers," says Pat Dermody, president of Retale.

Unlike a banner ad-which serves as a delivery vehicle that could lead to a coupon or other enticement, but is more often used to deliver a brand message-a coupon is a promotional tool that incentivizes the consumer to engage and transact. And a loyalty/rewards program can be an ideal second tool to wield, after you've gotten the user to engage at least once; loyalty program apps can also be effective digital coupon delivery instruments.

"A good loyalty program will offer things to the customer that will make their life more convenient, save them money, help them recognize their value to the company, and reward repeat purchasing," says Jess Tiffany, president of the Marketing and Networking University.

Many cite the success of Starbucks' My Starbucks Rewards as a prime example of how successful a mobile loyalty rewards program can be. Using the company's mobile app to pay for an in-store purchase, patrons earn Stars that can be redeemed for free drinks and edibles. Following its most recent fiscal quarter ending late last year, the coffee giant reported a 23% increase in its loyalty program, which now boasts more than 11 million active members in the U.S. 

Digital wallet apps on smartphones-as well as loyalty card locker apps such as Key Ring-make it easy for consumers today to collect, manage, and use mobile coupons and loyalty cards and advantageous for marketers to push their products with inducements. "Mobile wallet apps provide great opportunities for brands to promote their coupons and rewards programs right there on their customers' phones, just centimeters away from a stored credit card," says Mark Tack, Vibes' VP of marketing.

Tack believes that banner ads still have an important function, because they're designed to get the consumer's attention and then work symbiotically with other marketing channels such as mobile coupons and rewards programs. "Marketers and advertisers are going to continue using mobile ads," says Tack. "The question is, once you have the customer's attention, where are you sending them as a post-click destination?"

Based on findings from Vibes' aforementioned study, 49% of respondents prefer to land on a mobile coupon page after clicking on a mobile ad versus a mobile commerce page (26%) or app download page (25%). "Why not use a mobile wallet coupon page or loyalty card splash page as the post-click destination for the mobile ad, which would provide a far better experience for users?" asks Tack.

Dermody agrees that mobile coupons, rewards cards, and ads can work together to support the customer experience. "Mobile banner ads are essentially a high-level branding tool, bringing customers into the funnel and increasing awareness and lead generation," says Dermody. "Mobile coupons and loyalty programs are mid-funnel down, driving purchase and buying decisions after the initial lead is generated."

When creating an electronic coupon campaign and/or loyalty program, differentiation is crucial. "Be as unique as possible, and make sure your program is a little bit better or more creative than your main competitor's," Tiffany says. "Also, make it easy and convenient, and add value to motivate the customer to use the program."

Schwartz, on the other hand, preaches caution when crafting any mobile marketing plan, maintaining her faith in omnichannel marketing that blends ecommerce and brick-and-mortar strategies. "Don't set out to create a ‘mobile coupon program' or a ‘mobile loyalty program.' Rather, create a loyalty or coupon program that integrates aspects of online and offline and that makes the most unique sense for your customer," says Schwartz. "It may make sense for a coffee shop to integrate payment with its mobile loyalty program, but it might not make sense for a warehouse store."

The key takeaway? "Don't design mobile programs for the sake of having mobile," she says. "It needs to seamlessly connect to your customer's larger omnichannel relationship with your brand or store."  

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