5 Mobile Retail Technologies with Fast Results
Mobile Retail Technology Short List
We attended an executive roundtable at the just completed NRF show. The topic was mobile retail technologies and the conversation sought to identify those that offer relatively short deployments and fast paybacks.
Perhaps because the emphasis was on cost and payback, the conversation and comments were heavily marketing focused. Several high impact retail mobile execution use cases and examples were discussed.
The takeaway from the conversation, and our own experience from having deployed each of these solutions for more than two decades, found the below mobile retail technologies offered straight forward deployments and delivered significant payback.
- QR Codes. Retailers have responded in mass in placing QR codes on goods, display ads or other in-store product labeling. When done right, QR, UPC or barcode scanning delivers product-centric positioning at the point of purchase consideration.
However, research shows that QR codes deliver varying effectiveness largely based on what the QR code delivers to the consumer. QR codes that display retailer websites and contact information are ineffective while coupons, detailed product specifications or information that aids the buyers purchase investigation can be highly effective.
A consumer study by Nellymoser found that readers of national magazines scan QR codes, Microsoft Tags and similar mobile-action barcodes at an average rate of 6.4%. Compare this with landing page average response rates of 3.5%, catalog average response rates of 4.3% or direct mail average response rates of 4.4%.
QR codes by themselves are not likely to impact store purchase conversions or revenues. However, when used in combination with other mobile marketing methods such as SMS marketing, geo or location-based marketing and branded retailer mobile marketing apps, they can contribute to higher performing marketing programs.
- SMS Marketing. SMS is a 35 year old no-frills consumer communication service that takes advantage of brevity and immediacy. On average, SMS messages have delivery rates in excess of 99% and are read within four minutes, making them highly convertible if deemed relevant by the consumer. By comparison, open rates on marketing e-mails average about 20%.
Even better, as reported by WebDAM, SMS coupons are redeemed 8 times more often the email offers. Short codes (5 or 6 digit numbers) are increasingly effective for brand campaigns and MMS (Multimedia Message Service) campaigns which deliver rich text, video or slideshow images, and are very effective in getting socially propagated. They significantly extend the retailers marketing message and contribute to ongoing social network engagement. Like other consumer mobile marketing technologies, SMS is a double opt-in only channel. Sending mobile spam to consumers will alienate them, and some of which may publicly flame the retailer in mobile and social networks.
- Location Based Marketing. B2C marketers know that getting shoppers into their stores is much of the challenge. So, using location-based marketing to engage consumers already in the vicinity removes a physical barrier. Geo-targeting or geo-location marketing uses GPS or cell tower triangulation to deliver personalized content based on not just who the consumer is, but where the consumer is.
This is a powerful combination that can be particularly influential in achieving retail marketing objectives. Location-based marketing allows brick and mortar retailers to apply geo fences around store perimeters, urban areas, venues or events. This is not only effective in offering a passer-by a coupon to come into the store, but also by targeting consumers in competitor stores, and offering aggressive incentives to lure them away at their time of purchase.
Despite privacy concerns that shoppers may react negatively to marketers sensing their location, research from the Yankee Group shows that consumer uptake rates are three times higher as geo fences get tighter. 100 meter radius fences show optimal consumer participation.
However, from my experience, simply delivering mobile marketing messages based on consumer location alone is not effective. Instead, you need to apply a consumer's location along with their profile (from CRM or loyalty systems) or behaviors (from marketing automation systems) in order for location-based marketing campaigns to achieve worthwhile results.
- In-Store Wi-Fi. Research from Usablenet found that 68% of U.S. shoppers are receptive to receiving personalized messages and promotions in a store. This offers a substantial opportunity for brick and mortar retailers to engage consumers using personalized and location sensitive mobile marketing techniques.
By offering in-store Wi-Fi, retailers are afforded another channel to reach consumers with a custom landing page, mobile app or loyalty program offer. When combined with beacon technology, retailers can even make product offers based on consumer position, right down to the individual isle.
- iBeacon. Beacon technology has been revived with Apple's iBeacon indoor positioning system. Apple didn't manufacture a physical beacon but instead enabled its iOS devices and other hardware (i.e., Android devices) to receive and transmit mobile messaging (marketing coupons, offers, incentives, etc.) and perform payment processing with other iOS devices in close proximity.
Retailers can tap into the technology to pinpoint a shopper's location in the store, send notifications of nearby goods that are on sale, announce flash sales and accelerate POS checkout processing by permitting consumers to make payment without removing their wallets.
From our experience, we know there are a few barriers to success. First, there are multiple shopper activation permissions that must be enabled to tap into the technology. Shoppers must turn on their Bluetooth, accept location services on a mobile app and opt-in to the store network.
Second, like most retail marketing methods, success is improved when the beacon technology is integrated with CRM so that the retailer advances from anonymous mobile spray and pray broadcasts to relevant, personalized and contextual messaging.
Notwithstanding the hurdles, beacon technology brings unquestionable promise for in-store sales uplift. Research from Swirl found that 72% of consumers say they are likely to make an in-store purchase as the result of receiving a mobile offer tailored to their interests and location while shopping.
- Mobile Ads. Mobile advertisements, especially when a part of paid search marketing, are clearly under-utilized by most retailers. According to a recent Mobile Advertising Survey, 64% of survey respondents who have smartphones have made a mobile purchase after seeing a mobile ad. But nearly three-quarters (74%) have not received mobile ads from their favorite brands.
This is a big missed opportunity for many retailers. Putting mobile advertising in perspective of the total marketing budget, the Mobile Marketing Association did a study which found that based on performance, mobile ads should account for 7% of marketing budgets, but instead they account for about 1%. Those figures are skewed because so many retailers don't invest in mobile ads at all. When you just consider marketers who do invest in these ads, the Interactive Advertising Bureau reports that spending accounts for 25% of digital advertising budgets – a sizeable allocation but still low considering the response and conversion performance.
Many retail marketers tend to believe mobile ad displays will convert better for impulse purchases than considered purchases. My experience, and now some excellent research, prove otherwise. Researches at Columbia Business School compared utilitarian (i.e., high utility value) against hedonic (i.e., pleasure purchase) and high involvement against low involvement mobile ad effectiveness. The research was published in the Journal of Marketing Research, in a report titled "Which Products Are Best Suited to Mobile Advertising?" and found the following:
- Mobile ads work well for products that have a practical and important use, like a lawn mower or a washing machine.
- Mobile ads work well for high-involvement products (where a lot of time, thought and energy is placed into the decision, like a family car).
- Mobile ads don't work as well for just-for-pleasure items.
- Mobile items don't work for low-involvement purchases like movie tickets or toothbrush (ones that pose a low risk to the buyer).
When applied to utilitarian, luxury goods and considered purchases, my experience with mobile ads delivered as part of search marketing campaigns has shown an average keyword conversion of about 12.5% and CTA or landing page conversions of 9.5%. That's essentially triple the results of desktop conversions. Exact conversions will vary, but regardless mobile open and response rates will exceed all other channels.