Going Mobile? Text Messaging Is Still the Way

(Direct) Mobile marketing is on the way, and it will usher in a Golden Age. Soon we’ll all be receiving rich-media ads over our Internet phones, being enticed by retailers with GPS capabilities to replace those worn jeans at 20% off, and watching TV—complete with ads—on our handsets.

Get real.

Mobile marketing is indeed coming, but more slowly and more narrowly than many of its most zealous promoters are projecting. Not every cell phone in the United States can accept streaming video or reach the Internet, and heaven knows not every user wants to. Business models are up in the air: Who owns these customers and gets the lion’s share of the revenue—the Web portal or the carrier? And federal regulations require that customers opt in to let advertisers market to their handsets, either via their phones or over a Web site, a slow process in either case.

So while mobile marketing’s more high-flying forms sit on the launch pad, the near future is likely to see more use of that earthbound medium, the text message or short message service ad. Users give permission to receive these messages from a specific advertiser either by Web sign-up or by sending a message to a five-digit short code. Messaging is low-impact on the recipient, works with almost all U.S. phone models and plans today, and has gradually expanded from its core teenage market to reach most users. For these reasons, perhaps the best candidates for such efforts are retailers and merchants that already have a relationship with customers and want to retain and win more of their business.

That’s why Potash Bros. Supermarts, a small chain of upscale groceries around midtown Chicago, has decided to use a mobile marketing/loyalty/payment platform from Boston-based MobileLime.

President Art Potash says the grocer’s primary aim in rolling out the MobileLime system was to strengthen the loyalty bond among existing customers. “Most of our customers are young couples or singles with busy lives,” he says. “They work downtown, and they choose to live in town because things are happening. They’re in a hurry, they’re comfortable with electronic media, and they certainly all have cell phones.”

They also tend to change addresses more than most people, Potash says. In those circumstances, getting permission to market to their cell phones could amount to lifetime access, thanks to mobile number portability. Customers who may have moved out of the immediate neighborhood can still be persuaded to stop in and shop weekly if the mobile offers or rewards are right.

Another reason for incorporating mobile was the competition. Independent grocers often appear to be behind the technological curve compared with the big food chains, Potash says. His company has online ordering at its Web site, but it can’t pace the big guys on other innovations such as thumb-scan payment systems. “This was a chance to one-up the competition, to be at the head of the pack for once.”

The MobileLime system Potash chose lets marketers push text messages out to registered users. It also offers a loyalty component that can keep track of customer purchases at the checkout and notify shoppers how many points they’ve accrued. And at its most advanced level, it can serve as an electronic wallet that can speed shoppers through the checkout process.

The system is just getting started at Potash, but MobileLime CEO Bob Wesley says he’s seen what mobile marketing can do for similar grocers. One example he cites is another urban gourmet chain that wanted to promote its line of prepared dinners. The store sent an e-mail to registered mobile customers on a Wednesday, alerting them to a “secret sale” of those ready-to-eat meals on Thursday and offering a 50% discount.

“We knew from tracking that these shoppers tended to shop between 4 and 7, and research told us that most people decide around 2:30 what they’re going to eat for dinner that night,” Wesley says. “So we pushed a text-message reminder about the sale to their phones at that time. The store manager said his security videos showed people lining up 20-deep at the counter, and he’d never seen that before.” Register tapes also indicated a 23% boost in overall sales over the average Thursday.

Merchants that want to take their customer relationships further can set up rewards programs incorporating MobileLime’s platform. Buyers can give the cashier their mobile rewards number at the point of sale and rack up points for visit frequency, buying specific items—whatever the merchant chooses. They’re notified of their points level on their register receipt, on a Web site or through text messaging, depending on the platform’s integration.

The benefits of using mobile-based loyalty programs, Wesley says, are fewer administrative headaches (no lost cards) and truly individual marketing (no more one-card households—mom, dad and the kids all have their own programs). Potash actually started integrating mobile marketing through the loyalty channel, out of concern that customers might be turned off by receiving straight marketing messages before they could see any benefits from signing on.

“Potash usually has about 100 [stock-keeping units] for which he offers mobile rewards,” Wesley says. “So he’s able to understand who’s coming in the store and what products appeal to them. It gives customers immediate benefits for signing up, and it makes Potash’s rewards program work harder. Now he’s starting to set up special clubs, such as a baby club, a gourmet club and so on, around which he can run events.”

“The savings are the big part for the customer,” Potash says. “The marketing will come second. We’re trying to keep it low-key and likely will restrict it to two text messages a month, plus maybe some others around specific events. We do wine tastings every Friday, so we’ll probably text customers at 2 that a tasting is starting at 4. That’s how many of them live their lives—in terms of what they’re doing two hours from now—so that ability will be unique to us for a while.”

As the post-grad step in mobile marketing, MobileLime lets registered users set up electronic wallets to pay via phone at the checkout. The wallets are linked either to a credit or debit card or carry a prepaid balance. Users give their mobile phone number to the cashier, and the total is automatically deducted from that account, with no fumbling for cards or coins. The biggest issue is making sure customers keep their prepaid accounts loaded. So reminder signs are posted at the front door directing customers to call a central number and use a voice-recognition menu to fill their wallets.

The immediate benefit for Potash is increased buying frequency and higher average tickets. But he expects the mobile marketing function also will help retain some of those loyal customers after they move out of the neighborhood. “We have customers who come back. They don’t shop as often, but they do come back. Rather than losing them completely, we’ll settle for part of their shopping. That’s how we build our customer base.”

“There’s ways of using the technology we haven’t thought of that will come to us as we open up the system,” Potash says. “When you’re dealing with technology these days, it just becomes smaller and easier and faster. It’s opportunity on top of opportunity.”