SMS-Based Promotions Fuel Grocer’s Interest in Cell-Phone Payments

Four months after introducing a marketing system that communicates with customers' mobile phones, Broadway Marketplace has had such positive sales results its top executive says the Cambridge, Mass.-based supermarket will add an electronic payment function within the next two months. The store, which last September began using a service called MobileLime to send text-message promotions to customers, saw 70% of its customer base sign up for marketing messages in the program's first 11 weeks by giving their names, e-mail addresses, and cell phone numbers, Charlie Bougas, owner, told an audience today at the Food Marketing Institute's Marketechnics trade show in San Diego. He said 1,700 customers are now enrolled in the service, which drives customer behavior by sending e-mails and SMS messages promoting discounts and other incentives. A recent promotion, for example, sought to increase dinner-time sales at salad bars and other dinner-related bars in the store by offering a 50% discount good only between the hours of 4 p.m. and 7 p.m. The promotion was reinforced by a text message sent to enrolled customers at 2 p.m. that day. “We hit a home run,” Bougas said. “People were lined up at the salad bar. It proved to me this product really works.” With that in mind, Bougas says he now plans to introduce the ability for customers to pay for groceries in his store through MobileLime. With this feature, customers designate PIN-protected payment accounts at enrollment. They access the accounts with a call to MobileLime on arrival at the store. At checkout, they indicate they are paying via MobileLime and give their seven-digit mobile-phone number to the cashier, who completes the transaction by pressing a “MobileLime” key on her register. Boston-based Vayusa Inc., which started nearly three years ago and manages both mobile marketing and payments for retailers (Digital Transactions News, July 28, 2004) as part of its MobileLime service, acts as a payment gateway, funneling transactions to any of a number of third-party processors. Bougas said he started with the incentive marketing plan to get customers comfortable with the system before introducing payments. The store has been able to gather cell-phone numbers and e-mail addresses from customers by offering discounts and other rewards available only to those who enroll in MobileLime. The flexibility of cell-phone promotions has helped Broadway Marketplace create fast swings in customer behavior, he added. “We can get a response within a couple of hours” of sending out a text-message blast, he said. He said the program has produced a 30% month-over-month increase in loyalty-based transactions for the grocer. Speaking to Digital Transactions after his presentation, Bougas added the store will not turn down credit card and signature-debit accounts but will encourage payment channels offering lower acceptance costs, such as electronic checks, possibly by offering discounts or other incentives.