Passbook: A Smart Move for Brands and Apple

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It was pretty surprising to hear the iPhone 5 doesn't offer NFC or a payment solution to compete with Google Wallet. But after some consideration, I think it might be a very smart play by Apple, which does have a history of doing smart things.

Today I want to work through why Passbook, as a voucher/coupon platform, is the right play for Apple right now, and why brands should be looking to leverage it and others in this space.

Why? Because we need brands to invest in this technology to make it available, and to justify investment, brands need to be able to increase revenue. Coupons/vouchers can drive in-store (online and offline) transactions quickly and measurably. Because price is one of the last influencers in completing a purchase, discounts, savings, special offers, and limited-time only deals help us finalize our decision and act. Price is much more influential in our decision than which payment service we use, whether it be credit card, PayPal, Google, or cash.

And of course, there are lots of important steps a brand must take in the lead up to a purchase decision, but this is one very valuable step in influencing customer behavior.

First let's look at the path to purchase.

There are many ways of categorizing a consumer's journey but they all tell the same story. For today, I'll use awareness, consideration, shortlisting, intention, purchase, and post. Customers broadly move through this process in some order using a range of channels to get to the end purchase.

Disclaimer: Steps in the purchase process vary dramatically by category. If you're buying a car they are all fundamental, if you're buying milk, the process is very different.

(Here's a different path to purchase model created by Nielsen)

• Awareness: The goal is to be on our customers' consideration list. There is a plethora of ways a brand can do this, and Apple already owns the mobile, which is a great way for brands to drive awareness.
• Consideration: The goal is to be on our customers' long list, as per above. Apple is already helping brands influence this step.
• Shortlisting: Our goal here is to be one of a couple of brands someone is looking to purchase. They're using sources like Google search, reviews, ratings, friends' recommendations, and maybe price, to help them shortlist. Again, Apple is dominant in this space, allowing users to browse the web, talk to friends, and use apps to narrow down their search to a final two or three.
• Intention: At this point, our goal is to be the brand/product our customer wants to buy. While there are lots of influences at this point, price is a big one. There are few great ways for brands to offer deals; Facebook is trying, Google provides coupons in search, daily deals kind of help. In short, this is an average experience; one that Apple has a good chance of capturing because it's a dominant mobile player. If it does it well, it'll help brands drive intention and very likely purchase.
• Purchase: At this point, it's very functional, and not necessarily rational. A customer simply wants to pay with ease, and at a low cost, so they can get on with using their product. There are so many ways to make the purchase - cash, credit card, digital wallets, Square, store card, PayPal. Also it's a space that's very heavily invested in and the banks won't be giving up control easily. So in short it's a high risk space for Apple, and low value for brands.

Now let's look at discounts, coupons, and vouchers - every country has a different label for it.

Everyone's trying but nobody's nailed deals yet. Here are a few:

• Google has been rolling out deals for search, but hasn't changed the world.
• Facebook is trying but poor user experience among other things are slowing its take-up.
• Group buying: The industry has yet to figure out whether this category is boom or bust material.
• Brand controlled CRM: This works well for brands who invest heavily. Passbook actually supports and helps this.

So, the space is open for someone to get it right. Enter Passbook and Apple.

First signs look promising, but it all relies on good user experience.

A range of brands have jumped on board and initial results aren't earth shattering, but do show some promise. Sephora had 17,000 card holders take up its Passbook offer in 24 hours, by promoting it in its iOS apps, CRM program, and on its website.

While it doesn't prove success, lots of big brands are jumping into Passbook (for different reasons). Virgin in Australia, Starbucks, American Airlines, United, MLB, Live Nation, Walgreens, and Fandango in the U.S. are just a few getting on board.

From what I see, Target is setting the benchmark. It's stayed on brand and integrated it into the customer experience properly, so watch this space.

GAP in Japan has launched a "Passbook only" offer to redeem merchandise only promoted via social media (Twitter, mixi, and tumblr) and the initial results are very positive.

We've already seen examples of terrible user experience, but check out this very average example from a cinema chain in the U.S. reported by TechCrunch.

How do brands utilize Passbook as a voucher/coupon tool - the basic version?

Firstly, creating anything in Passbook is a programming/development task; there's no simple system but there are already solutions emerging like http://passbookgenerator.com/ (watch this space). There's plenty of documentation from Apple in the developer center and look at this developer's introduction to Passbook.

More importantly, brands need to ensure the experience is seamless. It needs to integrate with your systems, ensure staff can easily and confidently work with the vouchers and customers, and it must deliver real value to the customer. My suggestion: trial it first.

Once you're ready to launch, it's about promoting it clearly from iOS apps, websites, CRM programs, social media, print, TV, or any other channel you see fit.

Remember to make it simple and easy to understand; this is a new space for consumers too.

In short, it's a pretty smart play by Apple and brands should investigate because:

1. It's a tool to drive purchases
2. No other platform has nailed discounts/coupons/deals
3. Initial results are positive, but be wary
4. Success is 100 percent dependent on good user experience

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