A year-long analysis of nearly 9,000 mobile marketing campaigns in the quick-service industry found that more chains are relying on mobile couponing to drive traffic.
The study was done by Cellit, a provider of mobile customer relationship management (CRM) systems, and included 125 of its QSR clients in 2011. The data shows the most effective ways to acquire subscribers into a mobile text program, the most effective content and the optimal timing and frequency for campaigns.
The first step in establishing a successful mobile program is to build a subscriber list. According to Cellit's study, many QSRs did this by offering low cost, easy-to-execute tactics such as leveraging existing social media and email databases to convert customers to mobile.
Social media channels quickly drive traffic into a mobile program and an average of 10 percent of these online communities signed up for the mobile program at little or no cost.
On-premise menu call-outs, in-restaurant signage and box-toppers for delivery service/take-out also are cost-effective ways to build a subscriber list.
To get a wider reach, some brands tapped into their existing advertising campaigns. The call to action is typically short and is easily integrated into existing media buys for no incremental spend.
Finally, about 21 percent of subscribers participated in a refer-a-friend program. While the average conversion rate for referred friends was 6 percent, the average increase in database size after one refer-a-friend program was 16 percent.
However a QSR decides to attract a stronger mobile base, the message should be clear so customers know exactly what to do (i.e. "Text PICKLES to @12345 to receive a discount and subscribe to our mobile club ...").
Employees also should be properly trained so they can answer any questions about the program.
Most effective content
Once a customer subscribes to a mobile program, it's important to make sure the content is compelling enough for them to stay subscribed. Content can include announcements, contests and promotions, but the most popular by far is mobile couponing. All of Cellit's clients in the study have used a mobile coupon at least once.
The top three mobile coupons include:
- Set priced "value deals" such as a buy-one-get-one (BOGO) offer. Overwhelmingly, 68 percent of clients in the study preferred a BOGO deal with their mobile program. They believe the perceived value of a BOGO is higher than other deals;
- Free item upon opt-in for a new subscriber or special occasion; and
- A discount off a menu item.
Coupon redemption technology was not an issue for most QSR brands studied and, for those that reported data, redemption rates were extremely high. With a minimum of 6 percent, an average of 23 percent, and a max of 40 percent, the redemption is well ahead of other promotional or traditional coupon redemption rates, producing a substantial return on investment.
It's important to note from the study that a mobile program needs more than just couponing, or guests will come to expect discounts. To avoid stagnation, many QSRs ran promotions (such as a text-to-win a prize) to diversify their mobile marketing campaigns and keep things exciting.
Couponing leads to higher purchase intentions
Cellit's data about the effectiveness of mobile couponing could have something to do with the psychology behind such a tactic. The information complements another study recently released by a team of researchers that included Dr. Sy Banerjee, Dr. Amit Poddar, Scott Yancey and Danielle McDowell, published in the Journal of Research in Interactive Marketing. The group found that, although QSR specials and discounts expire shortly after being sent out, the information is often remembered, leading to higher purchase intentions and higher actual purchases at a later date.
"When messages are received from mobile phones, we are often distracted while in other activities. Surprisingly, we find that the memory of mobile messages (with fair amount of accuracy) often outlasts the expiry dates on the coupons themselves. This could mean that the mobile device itself generates an enormous amount of engagement," said Banerjee, an assistant professor of Marketing at the University of Michigan.
Their study found that even when people opened the messages while engaged in an unrelated activity, despite not redeeming the coupon (and no follow up interactions with the store), they were able to recognize the product information with 73.5 percent accuracy. Overall, the memory positively affects a purchase intention which further affects actual purchases a week later.
Yancey, founder and CMO of Tetherball, believes this will change the way QSRs view the benefits of a mobile marketing campaign.
"This implies that mobile coupon campaigns generate significant consumer engagement, which may have long term impacts on memory and purchases. So what we send out are not just sales promotions, they are also engagement tools for a company," he said.
Optimal timing and frequency
Particularly with the real-time nature of mobile, timing is everything. Cellit found higher engagement for QSR customers when messages were timed to target their customers during periods when they are most likely to be interested in the offer. For example, sending an offer for a free dessert will get more traction at 3 p.m. than at 10 a.m.
The study found that the best days to send text messages are weekdays. Subscriber numbers were higher and unsubscriber numbers lower for messages sent during the weekdays than on the weekend. The average daily subscriber number on weekdays was 7.67 per QSR, but only 5.12 on the weekends.
When it comes to message frequency, QSRs typically follow the Rule of 1's: no more than one message a week, and no less than one message a month. The average number of campaigns QSRs conducted was 1.84 per week and an average of 7.88 per month.
Mobile trends predicted
With this research, Cellit has pulled three trends that are expected to accelerate in the short term. They include:
- Near Field Communications (NFC): NFC technology allows payments and other communications to take place directly between equipment at the point of sale and the phone. This trend is picking up speed as evidenced by Subway and Jack in the Box's testing of a mobile wallet system. Cellit predicts this technology to hit most QSRs in 2013 or later.
- Location Based Services (LBS): Many phones, through either GPS systems or tri-angulation off of cell towers, can determine a customer's exact coordinates and provide offers based on that location. Subway has been testing this technology in the United Kingdom. Adoption is expected to be slow, as customers are reluctant to divulge additional information and costs are high.
- Coupon Redemption: As more QSRs rely on mobile couponing to drive traffic, redemption solutions will move into the spotlight. More POS vendors will work closely with mobile marketing providers to integrate these systems.
To read more stories on this topic, visit the Restaurant research center.
Alicia Kelso has been a professional journalist for 15 years. Her work with QSRweb.com and PizzaMarketplace.com has been featured in publications around the world, including Good Morning America, Voice of Russia radio, Consumerist.com and Franchise Asia magazine.