Younger Customers Would Switch Banks for Targeted Digital Coupons, Offers

A high percentage of younger consumers (26% of 18- to 25-year-olds and 31% of 26- to 34-year-olds) say they would switch banks to gain access to a bank’s targeted digital coupons and offers, according to the latest AlixPartners Mobile Financial Services Tracking Study.

Speaking at the first annual CardLinX Forum, hosted by The CardLinX Association in Las Vegas, Bob Hedges, managing director at the global business-advisory firm AlixPartners, shared key insights on trends in mobile shopping and couponing from the study in a press release.

“We appear to be on the verge of a significant expansion of the role of mobile and digital coupons in the consumer shopping experience,” Hedges said.

With growth in smartphone and tablet ownership, and strong increases in the use of those devices for activities beyond making and receiving phone calls, there seems to be clear signs of acceleration in digital consumer behavior. According to the study, the percentage of consumers using their mobile devices to access the Internet increased from 14% to 37% in the past four years.

“Consumers’ engagement in digital coupons should be seen as just an extension of their increasingly digital behavior in shopping and commerce, with parallel rapid growth expected ahead,” Hedges said.

The study showed that consumer participation in mobile money-related transactions showed significant growth in the second half of 2013, reaching 41% among smartphone/tablet owners, up from 32% in the first half of 2013.

Mobile money-related transactions include mobile browser or app activities such as making a purchase through a website, paying a recurring bill, making a purchase at a physical location with a mobile device, paying for a service, gifting money or reimbursing a friend or relative.

“We are seeing mobile payments become more common, and the consumer awareness and adoption increasingly widespread,” Hedges said.

While mobile payment activities are rapidly growing, they are only one part of the retail shopping experience for consumers. Consumers can chose from a wide range of mobile and digital solutions available today to support virtually all of their shopping and payments activities. They have access to tools like for discovering products, comparing prices, making mobile purchases and making mobile payments. Tools are also available to review products, manage rewards programs and create shopping lists that integrate and optimize the value of coupons.

The study notes that there has been acceleration in mobile-shopping behaviors across age cohorts.

74% of smartphone/tablet owners in the most recent survey said they use mobile shopping-related features, up from 65% at the end of 2012. The research shows that coupons and discounts have emerged as an important element of mobile shopping.

Among consumers surveyed between the ages of 18 and 54, more than 40% are using digital coupons, with the coupon usage rate increasing to 81% for ages 26 to 34. According to the survey, digital and mobile coupons have become an important shopping tool for consumers and appear to have a significant impact on what consumers choose to buy and at what price, across all age groups:

61% of smartphone/tablet owners report regularly receiving mobile or digital coupons

26% purchased an item they did not plan to buy because they received a coupon and

23% purchased an item they were interested in from an alternative physical retailer who offered a lower price.

According to the survey, only 33% of consumers reported being aware of bank-sponsored mobile or digital coupon programs. While awareness is low, among consumers who identified themselves as “aware” of bank-sponsored mobile or digital coupon programs, the adoption rate for couponing programs was 39%. What’s more, consumers who participate in bank-sponsored targeted mobile or digital coupon programs tend to be satisfied with their banks’ coupon programs, with 90% saying they were “satisfied” or ”very satisfied”.

“When consumers are aware and informed, adoption of digital couponing appears to be very strong,” Hedges added. “The value to consumers is real and measureable in their resulting retail purchase decisions.”

According to the study, the “trust” advantage that banks have in using purchase transaction information in their customers’ best interest seems significant.

“We are entering a dynamic period when consumers will likely be assessing who they are willing to trust in this complex world of digital/mobile shopping, payments and couponing,” Hedges said. “Banks seem to start with a significant trust advantage. However, banks must either actively exercise their advantages or risk being made irrelevant in couponing as new digital entrants seek to play the dominant role.”

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