R.J. Reynolds Pilots Retail Technology Program

NEW YORK — Reynolds American Inc. (RAI) is turning blue, the next evolution of going green. As part of its sustainability focus, the Winston-Salem, N.C.-based company's R.J. Reynolds Tobacco Co. subsidiary has been piloting a digital marketing solution in the Midwest to replace paper coupons.

"The Turning Blue trend is what Going Green wanted to be when it grew up," Brice O'Brien, executive vice president, consumer marketing for R.J. Reynolds Tobacco Co., said during RAI's Investor Day in New York on Nov. 16.

As he explained, "green isn't just for tree huggers anymore." Notably, 69 percent of consumers say they are motivated to lead an environmentally conscious lifestyle because it enables them to save money, and nearly 80 percent say companies that make an effort deserve their loyalty. At the same time, 58 percent of consumers say they won't compromise on the convenience of the products they already use to lead a more environmentally conscious lifestyle.

Sustainability is an important focus of all RAI operating companies. As CSNews Online previously reported, RAI was once again named to the Dow Jones Sustainability Index, achieving its highest score this year. 

Expanding that sustainability focus to its marketing approach is now the next step.

"A hot topic between us and our retail partners has been the rise of the mobile consumer and mobile marketing. Digital marketing/couponing [holds] great potential to eliminate paper, printing, postage and reduce the waste, gas and pollution to deliver mail, all while being more consumer relevant — just what turning blue is all about," O'Brien said.

The tobacco company's journey with digital couponing began in 2012 with the goals of being greener, more cost effective and consumer relevant. However, the company learned that the digital coupon platform it was using at the time wasn't going to work. It wasn't easy, nor was it convenient for consumers or retailers. Back then, "the fact is paper coupons were not broken and they were really simple to use. The platform created up to a two- to three-minute headache for a consumer standing in a store who was logging in and out of mobile websites and apps, monitoring a timer when all they wanted to do was simply redeem a coupon,"  O'Brien recalled.  

As a result, Reynolds developed "a simple but powerful new technology, and it is patent pending," he said. The Spot You More system allows Reynolds to deliver digital coupons and promotions with the ease, simplicity and convenience of paper coupons. The system eliminates pass-along fraud. It also provides real-time data to improve efficiency, as well as effectiveness.

Spot You More is small standalone hardware device that is placed at the register of a convenience store. It only requires a power connection. It is wirelessly connected to the Internet and enables retailers to accept digital promotions regardless of their point-of-sale equipment.

Consumers can be sent and redeem digital coupons from a smartphone via text, email, apps and social media.

"It works quite simply. A consumer simply places the phone under the Spot You More device, with a digital coupon displayed. No timers, no store selection required," O'Brien said. "The coupon is then scanned and validated on Reynolds' servers in real time, and it can never be used again."

The device displays to the clerk the promotion value — either a UPC code or text instructions, whatever works with that store's point-of-sale system.

According to O'Brien, Reynolds launched the digital solution in 64 stores in Columbus, Ohio, and Des Moines, Iowa, in July and August with two major c-store chains and both continue to perform well. To date, consumer acceptance has been "exceptional." He shared the following metrics:

• 99 percent of consumers are satisfied with the experience.
• 94 percent claim it is easier or the same as a traditional paper coupon.
• 90 percent say they will definitely redeem future digital promotions.

"Spot You More has definitely been a big win for our brands, but it has importantly been a big win for our retail partners," O'Brien said. "Sixty-four percent of consumers have purchased additional items, and retailers saw a sustainable 6-percent growth rate of their Camel sales."

Reynolds also sees Spot You More providing other business solutions for its brands beyond mobile couponing. According to a video shown at Investor Day, the solution can be used as an incentivized path to purchase. Once Spot You More is activated, every alert is tailored to the customer's purchase history and preferences, which makes every promotion relevant to that customer, customizing every visit with items of interest to that customer.

Spot You More also provides real-time improvement to store operations. It utilizes the "Internet of Things" to enhance a convenience store's operations and improve efficiency, productivity and profitability by adding a new level of intelligence to the day-to-day processes such as:

• Responsive visual indicators, including real-time in-store promotions and adaptive shelf set lighting to cue more impulsive lighting;
• Dynamic fresh food preparation to ensure maximum freshness and visual appeal with minimum waste; and
• Shelf alerts to avoid inventory out-of-stocks.

"This technology has the potential to create value beyond just redeeming coupons for our brands," O'Brien explained. "Right now, it holds the potential to open up digital marketing and fraud-free couponing to any other CPG [consumer packaged goods] in the convenience store channel, a channel where there is currently very little digital coupon penetration. Additionally, it has the capability to seamlessly bring the Internet of Things to the c-store channel."

Reynolds is working with a number of technology companies to develop these broad business applications and commercial plans for Spot You More.