Push or Pull Mobile Coupons?

Mobile phones allow consumers to receive coupons in context, which increases their relevance and therefore redemption rates. Using your current location, you can get coupons that can be redeemed nearby for the things you want now. Receiving a coupon for something you wanted last week or something you might buy next month just isn't as valuable.

I previously talked about Placecast and their concept of pushing offers to mobile phones that transgress "geo-fences" around points of interest, like store locations. This push model is an automatic reminder there are good deals just up ahead.

This model works well in dense cities where people walk, but I question how effective it will be in the suburbs where people are driving. McDonald's recently ran a campaign in Finland where they pushed offers to GPS devices when cars neared their restaurants. Amazingly, they achieved a 7% click-through rate.

NY search map.jpg
But 8coupons.com sees things differently. They prefer the pull model that requires customers to initiate a search for nearby coupons, and they've done some studies to better understand what "nearby" means. It turns out that there are concentric search circles that emanate from your home and work. From inner to outer, people search for food, drink, shopping, and entertainment. Intuitively, that feels about right.

So the question is, do consumers prefer the push or pull model for offers? No doubt the market is big enough for both.

These days its not good enough to just know who your customers are -- you also need to know where they are so you can catch them in the right moment. According to Borrell Associates, redemption rates of mobile coupons are 10x that of traditional mail and newspaper coupons.

One thing is for sure; assuming 85% of consumers regularly spend money within 5 miles of home and work, location-based coupons make tons of sense.

Comments:

You can get coupons off of your phone now? What cave have I been stuck in? I really think that I would really enjoy the 8coupons.com model, being able to isolate where you are and what deals are available to you in your current location.
Thank you for this!

There is an interview series of social media experts discussing a wide range of current social media trends and practices, that you might find very interesting.
http://www.ourblook.com/topic/social_media.html

Posted by Maguire on April 29, 2010 at 11:51 AM CDT #

Very interesting stuff. It's really the Wild West out there in mobile advertising. Most of what's out there will fail, but I agree that some form of location-based coupons make tons of sense. The determinant will be profit generation for the retailer. Just like Google Search -- if you can prove it works, it'll stick and grow.

Which is why I get anxious anytime I hear the word "redemption". Redemption is NOT profit. In fact, redemption by customers who would have come anyway is a direct hit to profit. What matters is incremental lift. Here's more on that theme from my blog:
http://www.aptfoodforthought.com/?p=134

Posted by Jonathan Marek on April 30, 2010 at 02:19 AM CDT #

Jonathan, great point about redemption. Its a similar case with loyalty. Businesses need to drive customer behavior without giving away profit.

Posted by David on April 30, 2010 at 02:39 AM CDT #

One of the boring challenges with coupons is that there is no off the shelf "MDM" system for coupons, so that you can correctly control what you accept (validity, threshold conditions) and who needs to be recharged for it (the buyer? the supplier? the co-fund partner?) and ensure that defective coupons are rejected or charged correctly.

As far as I know, there isn't even a global data pool for coupon.

It would be great if someone could solve that problem first, since it would then allow social couponing to start on a sound footing.

Posted by Miles Thomas on May 05, 2010 at 02:25 AM CDT #

Miles, I know of no such solution, but I agree the market needs one.

Posted by David Dorf on May 06, 2010 at 04:27 AM CDT #

Mobile coupons is the new mobile platform of the century. Being able to virtually access coupons right from your mobile phone is pretty incredible. For example, I found some really good deals through the Shooger app for iPhone and Android. Give it and try and hopefully you will find some deals in your demographic.

Posted by Kevin B on May 24, 2010 at 01:23 AM CDT #

Things are moving towards the pull method every day. I think some of the mystique around groupon is finally subsiding and people are tired of being bombarded with "deals" that aren't really deals. They'd rather search for them in their area or for the type of deal they are looking for. Lots of companies are still working to carve out their own niches still.

Posted by Chris on May 06, 2012 at 06:26 AM CDT #

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David Dorf, Sr Director Technology Strategy for Oracle Retail, shares news and ideas about the retail industry with a focus on innovation and emerging technologies.


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