Stuck inside during an all-too-frequent winter snowstorm in Buffalo? Maybe a text message to your cell phone, complete with a coupon for a Subway sandwich, will help to convince you to get out of the house and get something to eat.
At least, that's the idea behind the new My Subway Mobile program, a cell phone-based promotional program that is already paying dividends. A partnership between the Subway Franchisee Advertising Fund Trust (SFAFT) and QSR Brands, a Subway franchisee in the Buffalo/Rochester market, the program is an opt-in promotion that sends customers timely product offers and coupons via email and text messages.
The project was piloted with QSR Brands' 16 stores.
"It went extremely well," said Michael Lewkowicz, chairman of Buffalo SFAFT and president of QSR Brands. "Every time we would send out an email blast or an SMS message, our redemption rate was in the 8% to 10% range."
That's far better performance than coupon inserts in the local paper or direct mailings, which typically hovers around 1% or 2%, Lewkowicz said.
Mobile marketing, long hailed for its promise, is starting to realize some of its potential, and a number of technology vendors are stepping up to fill demand. The world market for mobile marketing and advertising is expected to total about $3 billion this year, according to ABI Research, a New York-based market research firm.
"There are a lot of small vendors making a lot of noise," said Elana Anderson, independent consultant with Nahant, Mass.-based NxtERA Marketing. "The key with mobile marketing is it's got to be pull and not push. Basically, at the end of the day, consumers have no desire to be bombarded with mobile marketing pitches."
Orbitz Worldwide, the online travel company, announced last month that it had sent out 100 million OrbitzTLC alerts to its customers. The alerts notify customers of anything that might affect their travel plans via their choice of cell phone, text message, PDA or email.
Buffalo-area Subways, which partner with Quincy, Mass.-based Modiv Media Inc. for their mobile marketing, promoted the My Subway Mobile program through materials on tabletops and at the cash registers and added a tagline to their television and radio buys. Over the last several months, they have signed up 5,000 customers, Lewkowicz said.
Upon signing up for the program, customers receive a text message with a string of letters and characters that they can present at the cash register. The first mobile marketing coupon for new members offers a free six-inch sub with the purchase of a 32-ounce drink.
Over the last several months, Subway has sent out roughly 13,000 messages and seen a redemption rate of 8.8%. While direct mail touches a larger number of people, the rate of return pales in comparison, Lewkowicz said. With the mobile program, Subway is targeting people who are already Subway customers, and so far, they appreciate the service. Opt-out rates are less than 1%.
"Most people do like what they're getting," Lewkowicz said. "It increases satisfaction, we know our customers a little better, and we're giving them offers that they like. What we like about the product is you can do target marketing."
For example, on snowy days -- which Buffalo has more than its fair share of -- traffic to the stores comes to an abrupt halt. With the mobile campaign, Marketing can send out an SMS blast that offers a buy-one-get-one-free promotion.
"Some of the consumer goods companies have had some successful campaigns, but when and why is that better than through email?" Anderson asked. "Only if it's immediate and I as the end consumer want it, and I want it now."
Subway has determined that the offers need to be immediate and have an expiration date, and they cannot overwhelm customers. The area stores have set up a two-month calendar of promotions and typically send out three to four messages a month.
While the rules for mobile marketing are still being determined, the Mobile Marketing Association, of which Modiv Media is a member, offers a code of conduct that sounds much like the CAN SPAM Act, which requires that customers opt in and have the ability to opt out and prevents marketers from renting, selling or sharing information with outside companies.
With Subway, where Corporate is watching the success of the Buffalo franchises, word is spreading. More than 400 Seattle-area Subway restaurants launched a program three weeks ago, and restaurants in the Knoxville, Tenn., area are considering a similar program.