Mobile platforms allow marketers to get their message to shoppers within inches of the point of sale -- but can they persuade a shopper at the last second to shift brand allegiances? Would the right promotion reaching someone by mobile phone while they are in just the right location actually move them to buy? The short and preliminary answer is ‘yes’ from one professor of electronic commerce at Munich’s Maximilians University. Working with funding from the Wharton Customer Analytics Initiative, Prof. Spann used a German smartphone app with customized coupons to test what kinds of promotions would move someone to buy.
In the test, Spann and colleagues were able to send people coupons at the right time and place to demonstrably increase the consumer’s likelihood of visiting a store in the area and making a purchase. “The major conclusion is that location-based coupons do have a strong impact on behavior,” he said when presenting the work at the recent WCAI conference. But the role of location in relation to the offer is complex, Spann finds. The distance between the user and the retailer is not necessarily the chief factor. Spann found that factors such as the order in which the coupon appears in an app, the number of conditions in the offer and the face value of the offer all influence whether it will impact a consumer’s habit. In fact, even the time of day in which the user encounters the offer can affect whether the promotion has an impact. For instance, coupons for coffee were much more likely to be redeemed in the afternoon.
Spann and his colleagues studied 900 different coupon campaigns and over 147,000 user logins. In the end, the offers resulted in 17,394 who were moved to look for more information around an offer and 6,151 who redeemed the coupon. The study was conducted from December 2010–August 2011.
In running the numbers on all of the variables, they found that distance had a negative impact on a consumer’s willingness to learn more about an offer or redeem the coupon. The face value of the offer had a significant effect on the user searching or redeeming. Using an equation to demonstrate the tradeoff between the impact of offer value and the distance between the consumer and the point of sale, the researchers claim that increasing the face value of an offer 1% has the same effect on consumer behavior as reducing the distance from the opportunity by about 100 meters.
While some aspects of the research may seem obvious, and are limited to a single app, the study does suggest the complexity of local mobile marketing. A range of variables interact on the user to determine the attractiveness of the offer. It is not just being local. Proximity changes impact in increments of hundreds of meters. The convenience of redemption must be considered, as well as the immediate timeliness of the offer. In other words, relevance is relative.
Some mobile shopping app vendors have been trying lately to make the case that their apps can change shopping behavior by being in the right place at the right time and with the right offer. Popular retail partner shopkick claims that its in-app promotions for retailers such as American Eagle, Best Buy and Old Navy on Friday Feb. 24 succeeded in driving foot traffic. The app offered users twice the number of rewards points or “kicks” for coming into the stores on that day, and it resulted in a record-setting number of walk-ins by shopkick users.
The in-store purchasing app provider AisleBuyer issued survey results from over 1,000 respondents (via Zoomerang) showing that almost three quarters of shoppers say they would switch brands if they received special offers from a rival brand over their cell phones while out shopping. According to the survey, 81% of smartphone owners go to the store with a shopping list but only 8% have specific brands on that list, while 76% say their purchase decisions are based primarily on price, a majority (51%) say their purchasing decisions are based on coupon availability.