7-Eleven's Mobile Coupon Trial Improves Scan Accuracy, Raises Marketing Ethics Questions

Still in its infancy, the mobile coupon is struggling to prove its value to retail. But these coupons have found a powerful ally in the $54 billion, 37,100-store 7-Eleven chain. The global convenience merchant is most of the way through a two-month trial of mobile coupons in some 200 7-Elevens in San Diego, with company officials preparing to extend the trial.

The chain has thus far avoided some of the read-rate accuracy problems that have plagued other trials (A&P last month swore off scanning directly from cell phone screens due to concerns about inaccuracies), pointing to an approach that determines the make, model and carrier of a phone before trying to scan. It then adjusts the scan parameters to be the most effective for that particular device.

But 7-Eleven is also running smack into the delicate ethics issues around mobile marketing, where chains need to collect phone numbers and E-mail addresses to begin. In this case, for example, many of the consumers being targeted are children, officially as young as 16 and potentially as young as 14. Those youngsters are mixed with a target group of young adults, as old as 24.

Given that the trial doesn't ask age—something typically seen with age-restricted beverages, such as beer, and certainly not with Slurpees and Big Gulps—there's no way to differentiate the phone numbers that come from children as opposed to adults. Is a retailer courting perception trouble when it offers free sodas to try and get under-age customers to give up their phone numbers? Without knowing ages, does this force the chain to treat all of the participants with—please forgive me—kid gloves? That approach certainly seems safer than assuming they are all adults and risking parental wrath for marketing to a 14 year-old.

The chain has outsourced many of the trial’s logistics to a mobile marketing firm called GMR Marketing. TJ Person is a senior vice president at GMR and in charge of the 7-Eleven trial. Asked about the difficulties of a campaign that includes underage consumers, Person said that the opt-in covers the company. "When we ask for an opt-in, we assume they're more than 13."

The trial began November 1 and is slated to end on December 31, 2009. Daniel May, the 7-Eleven marketing manager in charge of the trial, said the results thus far—which he wouldn't quantify—have been good and that the chain is "possibly expanding this, going somewhere else next year," referring to launching a new trial outside of the San Diego area.

But May stressed that this trial was done as a strong opt-in campaign, which should minimize later complaints of unsolicited ads. The consumer must initiate the trial by texting a message--"FAST"--to 72579. Consumers are then told that they've been granted a free beverage (Slurpee, Big Gulp or coffee).

Once the consumer shows up at the convenience store, that person is offered two ways to redeem the chosen beverage."Customers with Internet access on their wireless devices will be able to click through to a screen displaying a UPC bar code, which can be scanned at the cash register. For other wireless users, the 7-Eleven sales associate can enter the selected numeric code on the cash register for redemption," said a statement issued by the chain to explain the trial. "The codes are only good for the free beverage indicated in the coupon. The message also includes an invitation to receive future text messages with 7-Eleven news and offers."

The trial was designed to test several concepts. Goal one is seeing whether consumers would be comfortable using their phones in this way, a program intended to attract Gen Y/Millennial consumers, an extremely important (and frustrating) marketing group for major retailers today.

"Our marketing programs try to reach [consumers] where they are, by radio and outdoors, when they’re in the car, at movies and sporting events, or online at Facebook, Twitter and slurpee.com,” said Rita Bargerhuff, 7-Eleven’s vice president and chief marketing officer. “Mobile marketing is the next step to reach our target customers: the Millennials who don’t go anywhere without their phones.”

But the trial is also focused on seeing how well the mobile marketing offer plays in various Hispanic communities. The "mobile marketing test is supported by both general and Hispanic-targeted radio, outdoor and mobile advertising," the 7-Eleven statement said. "Participating 7-Eleven stores will communicate the promotion with bilingual point-of-purchase signage."

The most interesting technology of the trial involves its capability to improve scan read accuracy by incorporating the size and shape of the phone's screen and whether it will reorient the barcode image.

The phone itself reveals most of those details when the consumer clicks on the link to start the redemption process. The mobile browser will telegraph those details. If it says it's merely a generic browser, the software will make appropriate changes, Person said. Without that capability, he added, the variations on the devices could be huge. "It could be an old handset or it could be a brand-new handset," GMR's Person said.

Other retailers have pointed to non-tech issues as most often interfering with accurate barcode reads, things such as a dusty or dirty screen or the consumer holding the phone at a bad angle, perhaps causing excessive glare. Person and 7-Eleven's May both said that the accuracy has been reported to be quite strong thus far. "We have seen no issues with the stores scanning coupons," May said.

Person said his reports indicated 100 percent accuracy, but it wasn't clear if an associate who had gotten an accurate read after rescanning the barcode two or three times would have simply said it was an accurate scan. Does that mean that it scanned perfectly the first time?

As a practical matter, the trial has an ideal safeguard. If the barcode doesn't scan, the consumer can simply read the number to the store associate, who can manually enter it into the POS. Or the consumer can hand the phone to the associate, who can copy the coupon info into the system. But it wouldn't take too many manual inputs to undermine the speed of the trial, which will likely be essential for a convenience store chain. In short, the lack of scan accuracy would be a deal-killer.