The Subway restaurant franchisees for the Buffalo, New York, area are recording a redemption rate of 5 percent to 6 percent for mobile coupons. Now compare that with the typical 1 percent to 3 percent redemption rate for paper coupons.

More than 100 Subway restaurants in Buffalo participating in the My Subway Mobile effort are using mobile coupons to drive retail traffic with periodic coupons and last-minute special offers. Retail media delivery services firm Modiv Media is helping the Subway Franchisee Advertising Fund Trust with this program.

"We wanted to do a traffic-builder," said Michael Lewkowicz, chairman of the Subway Franchisee Advertising Fund Trust and president of Subway franchisee QSR Brands, Buffalo, NY.

The My Subway Mobile effort has attracted approximately 6,000 consumers to sign up, with 150 new registrants every week for Subway mobile coupons that are delivered three to four times a month.

Consumers text in sub030 to 35562 to receive offers including a six-inch sandwich with 32-ounce drink, $2 off on a foot-long sub or a buy-one, get-one-free push. The franchisee texted a family offer coupon during the recent football game between the Buffalo Bills and New England Patriots.

A common thread through all these coupon offers is the call to action: redeem within 24 hours to 48 hours for Subway sandwiches comprising cold cuts, fish, chicken and other items including chips and cookies.

So this quick expiration is another point of difference with paper coupons, whose usage has declined 40 percent in the last few years, according to the Food Marketing Institute. Lack of immediacy and the manual effort of clipping are blamed.

Foot-long traffic
It seems logical, but mobile coupons can help drive business when it rains or snows too heavily. An average Subway store has 1,000 visitors a week, but this number can decrease if the temperature drops, for instance.

"Our business is very affected by weather," Mr. Lewkowicz said.

Mr. Lewkowicz's company first started using Modiv Media's services in October. Sixteen stores tested mobile coupons, expanding to the current 107.

Modiv Media started working with 345 Subway franchisees in the Seattle-Tacoma area of Washington State around the same time as the Buffalo franchisees. Again, the goal was to drive traffic to Subway restaurants and reward loyal customers.

Subway franchisees in Rochester, NY; Nashville, TN; Philadelphia and Maine are now looking to incorporate mobile coupons in their marketing efforts.

Subway franchisees typically use in-store signage, table tents and flyers to inform people about the mobile coupons. MarketSmart, Raleigh, NC, handles the creative for the Buffalo franchisees' mobile coupons effort.

Mr. Lewkowicz admitted that his local marketing budget is not big. The ad budget is pulled from royalties sent to the Subway headquarters, but the bulk of the ad spend is earmarked for national campaigns including television. So, the Buffalo Subway stores bear the cost of deploying the mobile coupons.

Still, the goal is to ramp up daily mobile-coupon registrations from 150 to between 1,000 and 2,000.

"If we can get this program on a national level, we can get some national signups, we can get 20,000 signups a week," Mr. Lewkowicz said.

One frustration that he has is with retail technology.

"Our point-of-sale systems aren't geared up to tracking the offers," Mr. Lewkowicz said. "The POS systems aren't integrated enough to track codes."

But that will change as mobile coupons gain more recognition within the Subway system for their potential to retain and acquire business.

Consumer packaged goods companies, food and beverage firms and entertainment firms are aware of the shift from print-coupon usage to online and mobile.

Online, a leading player is Coupons Inc., whose click-and-print technology last year won over clients such Kraft, Kellogg Co., H&R Block, PepsiCo, Unilever and Hewlett-Packard Co.

Coupons Inc.'s digital FSI network now has more than 2,000 Web sites. The company's plans for this year include network expansion, retail-specific marketing services, local advertising, all-electronic coupons and mobile promotions.

Rage of age
While there is a debate whether a text messages or bar codes are more effective compared with image-recognition technology from a company such as Palo Alto, CA-based SnapTell, there is no doubt that mobile coupons are here to stay.

A recent independent survey from ABI Research shows that 63 percent of consumers felt that a coupon would be the most effective incentive to get them to respond to a mobile marketing message.

ABI also found that 52 percent of consumers would use mobile coupons for a discount at a local store.

Another study, from national mobile coupon and discount offer service Cellfire Inc., confirms that mobile coupons are gaining wider acceptance with older people -- the same crowd that clips the paper versions from freestanding inserts.

Findings from that study show that mobile coupon usage increased 119 percent over the last six months, with 94 percent of metro areas reporting a jump.

Shoppers under 34 made up 70 percent of mobile coupon usage, the Cellfire study said. But redemption by consumers age 34 and up tripled in the last six months, representing 30 percent of mobile coupon users.

"It is widely held that 18-to-34-year-olds are mobile-savvy and while this is true, the data suggests that adults aged 35 and greater recognize that the cell phone can be used for more than just talking," said Dwight Moore, vice president of corporate marketing at San Jose, CA-based Cellfire, in an article published earlier this month (see story).

Even a haircutting salon chain such as Supercuts sees the virtue of using mobile coupons. A New England area franchisee will next month wrap up a three-month test of mobile coupons to attract business for hair care services (see story).

Cellfire handles mobile coupons for Supercuts as well as Hardee's and Taco Bueno.

Subway's technology partner, Modiv Media, specializes in retail and grocery. The company claims that its Modiv Mobile service has helped retailers generate a 50 percent coupon redemption rate on certain promotional campaigns and personalized offers.

Customer trip frequency has also increased to retail stores with mobile coupons based on opted-in membership to a database, Modiv Media said.

In Subway's case, the target demographic is consumers ages 18-35 -- also the heaviest text-message users.

"There's 240 million phones and text messaging is getting bigger than email," Mr. Lewkowicz said. "Our demographic is youth and youth has the phone and we have to get them to email and text. That's where our youth are. They can type the numbers 1 to 10 better than they can do the ABCs."