• by Steve Smith , Staff Writer @popeyesm, February 21, 2012

It has become a mantra among cheerleaders of mobile 2D codes that marketers must return real value to consumers when the user goes through the bother of scanning a code. Of course, one person’s “value” is another person’s mobilized version of another TV commercial. And using QR or other codes merely to push coupons and promos to customers is not encouraging the type of ongoing relationship a retailer or merchant wants or can afford over the long haul. But what mobility does allow is to make just about any context a moment of true engagement where the marketer can provide what just about any customer wants anytime, anywhere -- a bit of fun.

An interesting mobile company out of Kansas City is working with some regional franchises of Hooters, Chick fil-a and Old Chicago, and even some local tanning and cleaners merchants in Kansas City and Dallas to engage customers repeatedly in-store and then use that data to understand customer behavior. The Frontflip model is a simple virtual scratch card on an app. A QR code on in-store signage activates the card, which, when scratched, reveals an instant winner or perhaps a discount that can be redeemed instantly. The rewards are calibrated to include an element of chance and scarcity, to include a "wow" offering and a number of other little rewards, as well as avoid the margin-killing allure of the daily deal.

“We felt that retailers and brands didn’t have a way to engage customers when they were in the store,” says CEO Sean Beckner. He was also looking for a way for merchants to get a better sense of their return customers. People generally don’t want to bother filling out forms for loyalty cards or handing over email addresses that will only get them spammed. This way, the merchant can give the user a lottery-like experience they will want to try every time they come back to a store -- and in return the merchant can manage the costs of promotion and track these customers’ return rates and redemption rates over time.

But does it work? FrontFlip has only been in the local markets since late 2011. Beckner says, “We have a customer on the platform that within 90 days has had 25,000 unique scanners and is approaching 50,000 scans. That is a little over two scans per person.” The model is reminiscent of the QR-code campaign that Thomas & King is using at its Applebee’s shops, in which table tents engage the lunchtime customers in fun mobile videos -- something that groups of people like to share.

Beckner says these simple virtual scratch cards have a similar viral effect. People use the app in-store in groups and will often push them to friends. And Frontflip is modeling its business on volume of locations. Beckner claims to have 500 merchant customers already on the platform, and is in talks with numerous national franchises and retailers.

The art of this system is managing the relationship that the little bit of app-ertainment establishes with the customer.  FrontFlip is managed by the business via a portal where merchants can set up to four prizes for a campaign. The app is designed to limit any user to one scratch-to-win a day in any single establishment. The win rate is kept to 40% to 50% of entrants, but most prizes are low-cost promotions.

The data the app can deliver becomes richer over time. Activating the app requires gender, ZIP code and date of birth, but the app can track how often a customer is coming back to the store and engaging in the game. The engagement can be broken down by basic demos, but also compared across store locations and in response to different promotions. “We let them send a gift directly to their customer with a personalized message through an app alert,” Beckner says.

The system can trigger rewards for high-frequency reuse. The merchant can also send the user a social gift that can be sent to a non-app user via Facebook. “The client can track all of the campaigns and even do A/B testing,” he says. “They can send different groups different gifts and test response rates -- how many redeemed and how many shared, and how different promotions generated new customers.”     

But does it achieve the kind of scale that can give a merchant metrics reflective of the loyal customer base? Beckner says one merchant has acquired over 10% of its clientele in the scratch-to-win habit in just 60 days. “We are approaching 100,000 users just in Kansas City and 200,000 scans in just a few months,” he says. “Dallas is growing even faster.” Anecdotally, merchants report they are generating more revenue from the model. Beckner says they seem to think that more customers are returning regularly and spending a little more.

Three months into a mobile program like this, and it's still hard to say how it plays out over the long haul. Do customers really want to load their app every time they go into the store for a chance to win, five or six months after the novelty has worn off? And of course, Frontflip has the same hurdle that many third-party shopping apps like Checkpoint and shopkick have to vault: building a startup brand amid familiar retail brand partners with their own apps. Is this a functionality that is best embedded within a retail brand app, or as a relatively unknown third party?

Moreover, is the model really defensible? Couldn’t an agency or retailer construct a similar model on their own? Beckner says that patents are pending on some of the technology and back-end systems, and he feels that mobile users will prefer a single app to use across merchants to separate apps for each of their venues.

Whatever the success of Frontflip, the core notion of using mobile to engage customers in-store in an entertaining way is simple, sound and altogether too rare. The desperate need to promote and sell sometimes overwhelms the more sensible and subtle process of genuine engagement. People return to experiences they enjoy. Scratch-to-win may be a trifle, but it is something more than standing on line or staring at other customers.

I still recall a lunch shop in my north Jersey hometown that opened tback in the '70s called The Road Runner. Using the cartoon characters as its motif (likely violating Warner Bros. property rights to boot), the restaurant ran silent comedy films and cartoon shorts on a wall of the dining area. The place was packed from day one. The food was okay. The experience was excellent -- and 35 years later I still remember it.

Get beyond the mobile coupon and perhaps even this simple scratch-to-win idea. Think about it this way. Your customer just walked into your store with a camera, an HD screen, a music player on a single device that also happens to be wrapped in her contact list of like-minded friends. It is a moving, personal funhouse just waiting to be occupied. The creative challenge here is, how do you turn this new situation into a truly engaging mobile moment?