With cafes on nearly every corner in Vancouver, British Columbia, Ethical Bean Coffee Co. needed a way to stand out. The answer was an odd bar code with a maze of black boxes instead of the usual straight lines.
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About eight months ago, the three-store chain started putting these "quick response" codes in its train ads. When customers scan the little squares with their smartphone cameras, a coffee menu pops up on their screens. Then they can order a cup of coffee on the train—and have it waiting when they arrive at one of Ethical Bean's shops.
Business has doubled since then, says Chief Executive Lloyd Bernhardt. "We catch people who are on the go and don't have a lot of time," he says.
With smartphone use soaring, many small companies are turning to these quick-response, or QR, codes to connect with customers on the go. They're placing the codes in ads, direct mail, in-store displays and product packaging, and using them to link to a host of features—discounts, websites and videos. And, like Ethical Bean, many companies say they've seen a big sales boost.
But the codes present some challenges. Businesses often have to educate customers about how to use the codes. What's more, even though businesses can download and use the codes free of charge, it can cost a lot to develop the promotional material that pops up on customers' phones. There's also the question of format. QR is the dominant technical standard, but there are more out there—which may confuse businesses and customers.
Outside the Box
QR codes have been around for a while, and many big corporations use them. In the past six months, though, small companies in the U.S. have flocked to the technology, thanks to services that let them easily create codes free of charge. Meanwhile, numerous phones, including many Androids and BlackBerrys, come with an app that reads QR codes. (Others, like the iPhone, must download the software.) Scanbuy Inc., a New York company that develops and manages QR codes, estimates that 30 million people in the U.S. have a code-reader app on their phone.
For businesses, generating a QR code can be as easy as traveling to a website. Consider code-making service Kaywa AG. A small business just needs to go to qrcode.kaywa.com and choose the type of content that it wants customers to get when they scan the code, whether it's a Web address, text, phone number or SMS. Then the business enters that content and clicks "generate." A bar code pops up on the screen that the company can copy and paste onto its advertising or packaging, at no cost.
Businesses can also generate QR codes by adding ".qr" to shortened links from Google Inc. or bitly Inc. When customers scan a code that was created this way, their phones call up whatever is at the shortened address.
Many businesses use QR codes to send customers to their website—like Skylight Books in Los Angeles. One of the managers, Justin Jasper, says he displays codes next to staff-recommended books in the store. If the books are sold out, customers can scan the code and order a copy from Skylight's site, instead of heading to a big online seller or chain store.
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Other companies are getting a lot more complex. Larry Golden, chief executive of RSVP Publications, a direct-mail provider in Tampa, Fla., says he always links to video and interactive options, among other features, when he puts QR codes in his clients' promotional materials. For instance, there's the direct-mail postcard that RSVP created for Adam Gorski Landscapes Inc., a landscaping firm that works in the Bellevue, Wash., area. Next to the QR code on the card is an arrow pointing to the code, saying, "Scan me, I talk!" Upon scanning, customers are linked to the firm's mobile site, which features a video of owner Adam Gorski discussing his work. There's also an offer to receive a free tree with any installation, along with buttons to connect to the business via phone, email or Facebook.
The cards went out in February. In the four weeks after that, Mr. Gorski got double the usual number of calls and later hired two new employees to help handle the work.
Other businesses use the codes on packaging. Ethical Bean puts them on bags of coffee to share roasting secrets, among other things. In July, Pacific Natural Foods in Tualatin, Ore., will roll out QR codes on Soup Starters, which let cooks add fresh ingredients to a premade base. After scanning, customers will see a recipe, shopping list for ingredients and demo, says Jennifer Herrick, marketing communications manager for Pacific Foods of Oregon Inc.
Unscrambling the Codes
Still, the codes come with some headaches. For one, a lot of consumers don't know what QR codes are. Lydia Puller, an agent with Alain Pinel Realtors in Northern California, has been using QR codes since last June. She says clients and agents sometimes see the codes and ask, "What the heck is that picture?" So, she has to explain.
There's also cost. The codes are free, but the work behind them is not. Mr. Gorski pays RSVP $500 per postcard mailing to film his videos, and he says he got that low price only because he was a guinea pig for the company's QR-code efforts. RSVP's Mr. Golden says he has spent about $100,000 on mobile technology and content for clients.
Finally, there are technical standards. QR is the code most widely used by U.S. businesses. But there are competing standards available free, and even some that aren't free are gaining traction. Customers could get confused, since not all reader apps unscramble all the codes. Meanwhile, there's no guarantee QR will win out as the U.S. standard, so marketers might have to go back to the drawing board with new codes.
"QR codes are not the end-all, be-all," says Ryan Goff, vice president/director of social-media marketing at marketing firm MGH Inc. "They may not exist in two years. But they're a temporary solution to the problem of, 'How do you connect people to online things in the real world?' "
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