Grocers Turn to Mobile Phones for Customer Loyalty

A U.K. company has come up with a way to use mobile phones for a new type of customer incentive program that’s starting to catch on in supermarkets in Asia.

M Cashback has teamed up with mobile phone operators and grocery chains in Indonesia and Thailand to offer store customers credit on their mobile phones in return for buying promoted products.

The promotions work like this: A user signs up for an M Cashback rewards card, which carries his mobile phone number. He then goes shopping, filling his cart with Coke, Dove soap, Gillette razors and other products that are part of the promotion. At checkout, the cashier scans the rewards card and the groceries and generates a receipt that includes a tally of how much credit the customer earned while shopping. Overnight, a server matches the rewards earned to the card scanned and sends a short-message service saying the money has been credited to the user’s mobile phone account.

The system offers grocers a digital alternative to incentive programs such as coupon clipping, which has been tried in Asia but never caught on, and loyalty card programs, in which customers accumulate points for shopping in a certain store that can be redeemed for discounts and other offers.

Grocers have been enthusiastic about working with M Cashback because they don’t have to offer as many promotions of their own, which can save them money.

“They brought us a new, innovative customer incentive program,” said Jariya Chirathivat, a vice president at Big C Supercenter Public, a major grocery chain in Thailand. “Instead of giving away the traditional premiums, we give customers the free top-up for their mobile phones.”

Mobile phone companies like it as well. They are always looking at ways to increase the time that users talk in order to generate more revenue.

The system is particularly suited to Asia because it appeals to people who use prepaid subscriber identity module cards, and in countries such as Indonesia, Thailand, China and India, most users are on prepaid plans.

That benefits operators, because if people have more free minutes on a prepaid phone, they are more likely to talk longer, said Charles Kruse, head of Asia-Pacific for M Cashback.

Traditional coupon promotions, the kind cut from newspapers, have never been popular in the region, Kruse added. It’s something that never caught on like it did in the United States, parts of Europe and elsewhere.

Supermarkets are fertile ground for new technologies. Kruse and Bob Cooper, M Cashback’s chairman and chief executive, are both former grocers. They understand the need for stores to keep up with the latest checkout technologies, such as bar-code scanning, to move people through stores faster. Food is a low-margin business, so any edge helps.

M Cashback worked with software developer iMeta Technologies in the United Kingdom to tie the checkout scanners, electronic cash registers and other systems together with mobile phone operators and M Cashback.

The Thai mobile operator working with M Cashback hopes to extend the program to other types of stores beyond supermarkets.

“The program started in mid-April and 500,000 people have already signed up,” said Arunporn Limskul, assistant vice president at Advanced Info Service, one of Thailand’s largest mobile operators. Her company hopes to extend the program to book stores, electronics retailers and other outlets.

The companies involved with M Cashback say it may be one of the first systems to accurately match customer buying habits with products. The system provides M Cashback with a detailed record of which promoted products each user bought. It plans to use this information for targeted ad campaigns, but insists it will ask users for permission first and never reveal data they want to keep private.

“If you’re targeting a promotion to a customer who regularly buys a certain product, it’s good for everyone. The customer will get money toward their phone bill, and the product maker, say Coke, sells their product,” said Kruse.

In Thailand, customers at Big C can get M Cashback promotions on 600 to 700 items, up from about half that number when the program started a few months ago.

“Customers like the system because they spend their money anyway, and this is a way for them to get cash back,” Limskul said.

-Dan Nystedt, IDG News Service (Taipei Bureau)

Check out our CIO News Alerts and Tech Informer pages for more updated news coverage.