Sticker Power

All retailers want to improve connections with their customers. That’s the thinking behind Tetherball, an Indianapolis-based mobile loyalty firm that helps clients “tether” themselves to customers through promotions, rewards programs and ads delivered to their mobile devices.

Tetherball manages loyalty and rewards programs, and provides analysis and reporting capabilities. It launched an RFID-enabled mobile loyalty program with Dairy Queen in mid-2009.

Customers who opt into the program affix an RFID sticker to their mobile devices; this sticker takes the place of loyalty cards that customers might otherwise attach to their keychains, and one sticker can be used for multiple retailers.

To enroll a customer, a store employee merely passes the sticker across a contactless payments reader. The customer will immediately begin receiving messages (like coupons or details on sweepstakes) on her mobile device.

While one chip can connect consumers with a variety of retailers, Tetherball doesn’t share customer data between and among retailers. In fact, the company doesn’t have a great deal of information on specific consumers beyond their cell phone numbers and affiliation with retailers’ programs.

Moreover, the data it does maintain is encrypted in the same way that credit card numbers are encrypted, says Tetherball president and COO Jay Highley. As a result, it can’t be stolen or read from the chip.

One key to a successful mobile loyalty program is crafting promotions and deals that are “of the moment,” Highley says. While any retail operation is a candidate for a mobile marketing program, some types tend to fit especially well.

For instance, a quick-serve restaurant may send its customers an electronic message promoting its new breakfast menu in the morning, and describe a dinner deal later in the day. In fact, 53 percent of respondents to a recent Harris Interactive poll said that they would be interested in receiving mobile alerts from restaurants.

Tetherball typically focuses on retailers with multiple locations, but a large member base isn’t required to make a program pay off: Many programs that boast just a few hundred members per location are generating positive returns on investment, Highley says.

Another critical component: store personnel must actively promote and explain the program to customers. When they do, the numbers of members can quickly accelerate. Some locations have captured more than 500 members in a matter of weeks: that’s typically a result of promotional activity and members forwarding information about the deals to their friends.

“Because it’s mobile, it’s a viral solution,” Highley says.

Integrated with POS
If the retailer already has readers to process contactless debit and credit cards, implementing a mobile marketing solution only requires installing set-up software at the retail storefront. “Our solution can ride over the existing network that accommodates contactless payment,” Highley says.

The mobile marketing solution must be integrated with the retailer’s POS system to track redemptions and purchases. The work required to complete the integration varies with the retailer’s system, but typically can be completed in a matter of weeks.

Because all members of the loyalty programs have to opt in, they’re likely to be especially loyal. On average, Tetherball’s clients are seeing redemption rates on their promotions of about 20 percent, with some programs hitting more than 45 percent, Highley says.

That compares with typical redemption rates on paper coupons that are in the low single digits. In addition, the opt-out rate for those enrolling in Tetherball-supported programs has been less than 10 percent.