If any doubt remains about the impact of the mobile revolution, consider the effect of Apple's flagship product, the iPhone 5, on the mainstream market.
Leading up to the launch in mid-September, the only certainty was that the magnitude would be great. Lines snaked around city blocks as eager iPhone fans camped out in front of every major Apple store in the world. Wireless carriers struggled to keep up with demand as Apple delayed its shipping date by a week. Nearly 2 million devices were preordered before the official rollout, and analysts estimated that as many as 10 million or more iPhone 5s would be shipped by the end of that month.
Total sales reached the 5 million mark in the first weekend alone, leaving mobile marketers and brands looking to get into the mobility game with one conclusion—that having a concrete mobile infrastructure plan and strategy is no longer an option, as it had been in recent years, but rather a must to compete in any customer-facing situation.
But marketers and brands are now tasked with the challenge of meeting their customers' expectations for myriad channels and devices. As Elana Anderson, IBM's director of enterprise marketing management, points out, mobile is one of the top items on most of the company's customers' to-do lists. Mobile is so predominant that IBM estimates that 20 percent of online sales this holiday season will be mobile transactions.
Similarly, Jonty Kelt, cofounder and CEO of Group Commerce, a technology company connecting major media companies and platforms to digital revenue streams, says he has seen up to 40 percent of traffic to customers' e-commerce sites coming from mobile devices, with three times more dwell time and page views on a mobile device than on a simple Web page.
With a surge in mobile traffic comes the added potential to connect with and sell to customers through mobile commerce. However, Kelt says that conversion rates on the path to purchase via mobile are much lower than on traditional Web sites. Unless a brand has an HTML 5, iPad-optimized presence, "it's going to be a problem for conversions because of the payment process."
The Form Factor
In the latest Shop.org and Forrester Research Mobile Commerce Survey, it's estimated that U.S. smartphone commerce will grow to $31 billion by 2016. But despite this upward trajectory, retailers and other consumer-oriented companies still express some hesitancy about investing in multidevice environments.
As Anderson points out, there has been a lot of excitement, but still some apprehension by companies, when it comes to moving forward with mobile planning. One fear is that of the unknown, but security, data management, and simply proving a use case and subsequent return on investment are concerns as well.
According to the Mobile Commerce Survey, about 44 percent of retailers still have not optimized their mobile presence, with few expressing any differentiation between strategy and objectives for smartphones and tablets. The fact of the matter is, each of these devices is extremely different in their use cases, and companies must factor in the varying degrees to which a customer will use each device.
"In many cases, whether an app or a mobile-optimized site is more preferred depends on the retailer's customer base and the strategic value of mobile to their organization," says John Andrews, vice president of product strategy at Oracle. "Mobile-optimized Web sites are great catchalls for quick hits and high-volume sites," but factors like network and device limitations can hinder mobile access and create latency issues for mobile Web sites, he adds.
According to the latest ForeSee Mobile Satisfaction Index: Retail Edition, companies still struggle to maintain uniformity across multiple device experiences when there are various screen sizes, operating systems, hardware specifications, and loading speeds to consider.
The key issue in smartphone shopping continues to be the form factor, which can make navigation more difficult for customers, states Sucharita Mulpuru, research vice president at Forrester Research and principal author of the Shop.org/Forrester report. In addition to slower page load times on smartphones, some customers are concerned about the security of the transaction or simply complain that the experience just isn't the same.
ForeSee, which surveyed 4,500 consumers for the September release of its Mobile Satisfaction Index, found that 68 percent of respondents accessed a brand through a retailer's mobile Web site versus 32 percent who used the retailer's app. First-time users of a mobile site or app tend to be less satisfied with their mobile experiences than frequent users because of their lack of familiarity with layouts, navigation, and functionality. However, customers who are familiar with a brand are likely to be "more satisfied" than consumers who are driven to a mobile site or app via a search engine or shopping comparison site.
A successful mobile experience, like many other customer experiences, is about fulfilling customers' needs for the particular channel they're in. When customers' needs are met, companies are rewarded. Satisfied customers are 69 percent more likely to make a purchase using their mobile device, 72 percent more likely to recommend a retailer, and 58 percent more likely to visit the mobile site or app again than dissatisfied customers, ForeSee finds.
Conversely, companies that fail to measure the customer experience and do not meet customers' mobile needs will miss an important opportunity to foster customer loyalty, according to Larry Freed, ForeSee's president and CEO.
Banking on Mobile
In the case of Wells Fargo Bank, the propensity of banking customers to transact on smartphones and tablet devices has continued to shape the company's mobile strategy and investment over the years. From five years ago until now, Wells Fargo's mobile channels have culminated in 8.7 million active customers completing a banking transaction via their mobile device at least once every 90 days, maintains Brian Pearce, senior vice president and head of the retail mobile channel for the company's digital channels group. Driving the development of Wells Fargo's mobile banking site, Wf.com, Pearce's group has also created a series of downloadable apps and a text-banking service.
Forty percent of Wells Fargo's online customers access the bank via their mobile device, which Pearce describes as "the fastest growing channel in the history of the bank."
But before it even broke into mobile, security was Wells Fargo's paramount concern. The bank had to ensure that it did not store any data locally on mobile devices. All transactions had to be conducted over encrypted lines. Wells Fargo adopted a layered security approach that it first tested in its online banking environment. Once security clearance was granted, the bank considered more mobile-specific features and functionalities.
Another mobile consideration for Wells Fargo was the kinds of devices its customers were using. The average customer texts the bank 27 times per month, indicating the group is highly engaged. However, knowing the different kinds of mobile devices customers use is critical because, as Pearce points out, "Fifty percent of the phones being sold in the U.S. are smartphones, but that also means that fifty percent aren't." Understandably, companies shouldn't alienate customers based on their choice of phone, so Pearce says it's pertinent to develop a strategy that encompasses all types of customer scenarios.
Before embarking on any one mobile strategy, Wells Fargo reaches out to its customers to see how they'd most like to use their mobile devices. In 2007, the bank's offerings were what Pearce calls simple, such as checking balances or doing an account transfer. But over time, the bank has added bill-pay, person-to-person payments, and comprehensive ways to manage one's full financial life straight from a smartphone.
According to Pearce, the bank begins by asking customers, "What would you be interested in doing using mobile? How can we help you when you're using the new technology?"
In addition to enabling customers to interact how they wish, any company looking to optimize its mobile presence must naturally consider the effects on the business as well, and how mobile usage will impact other lines of business and cross-channel marketing efforts. Companies are willing to invest in anything that adds to the convenience factor and makes it easier to increase the value of a sale, says Bob Egner, a vice president at Web content management company EpiServer.
Panago Pizza, a Canadian pizza delivery and takeout chain with 180 locations in six provinces, needed a way to enhance its ordering experience to account for mobile orders. It had to do so in a way that would work with its online site, physical stores, virtual agents, and multiple call centers. So it turned to Orckestra, a Canadian Web developer, to build out its mobile Web site, which launched in November, to secure orders from customers who are out and about.
Pizza delivery is all about convenience, which drives the whole segment, says Paxton Robertson, Panago's CEO. The company realized that it had a customer base that was on the go. People pick up pizzas on their way to soccer practice or dial in for a quick meal with friends or family. Because the primary function of the chain's mobile strategy was to enable a seamless, quick transaction, the company began its mobile strategy first with a mobile-optimized Web site. Eventually, there are plans to address other aspects of the customer experience, but Robertson says the priority is to perfect the seamless order.
Once an efficient ordering process is in place, organizations can focus on other revenue-generating areas. "The really hot transitive points here are rewards and loyalty," maintains Tim Hanlon, founder and CEO of investment advisory and strategic consulting firm The Vertere Group.
Restaurant chain P.F. Chang's took its Warrior Card loyalty program a step further with the help of Rockfish Interactive, adding restaurant search and navigation and full menu ordering with the ability to "favorite" menu items, make reservations, and earn and redeem Warrior points, all through a dedicated iPhone application.
When a solid mobile strategy is in place, brands can get the return they're looking for, says Jen Todd Gray, vice president of marketing and creative services at ePrize, a developer of multichannel promotions and loyalty solutions. She has seen redemption rates of mobile coupons that are eight to 10 times higher for clients with two to three times the basket size over email coupons.
Moving Deeper into Mobile
In addition to justifying a use case and ROI for mobile, companies that wish to get into the mobile game must be aware of its limitations. Under ideal circumstances, marketers and retailers want to engage with their customers and cultivate a one-to-one relationship while taking into consideration CANSPAM and privacy regulations, according to Mark Bower, data protection expert and vice president of Voltage Security.
With issues related to behavioral advertising and do-not-track policies coming to light, companies are adhering to better calls for security by establishing what Bower calls a "secure channel under the consumer's control" by implementing smartphone email encryption, a practice that banks have championed over the years for secure transactions.
As Bower points out, companies that can develop a direct relationship with the customer, as a trusted and secure provider of specific, targeted, and private offers with instant feedback and acceptance capabilities, will be the ones that will succeed in mobile customer interactions.
According to Oracle's Andrews, mobility has served as a catalyst in forcing retailers to think about unifying their cross-channel efforts while emphasizing consistent customer experiences. (For more on cross-channel support, read the feature story "Piecing Together Multichannel Support.") Retailers that view mobile technology as a stand-alone interaction channel will ignore a tremendous opportunity to connect with customers.
"To deny that the mobile device is an important part of a consumer's retail journey is ignorant," concurs Hanlon. "There are plenty of upsides if it's done correctly. It's much more than a mobile strategy. It's a key plan of your marketing strategy. They're all interconnected. Don't think of these in silos."
Mobile Commerce Dos and Don'ts
Optimizing your mobile site or developing a native application is no simple task. There are security considerations, as well as device-specific functions, to consider. Several mobile experts weighed in on what companies can do to embrace mobile rather than shy away from or prolong the process of implementing a strategy.
Don't take a cookie-cutter approach. Some companies make the mistake of simply cloning online information without considering that consumer behavior on the mobile phone is dramatically different, according to Joyce Chen and Viral Shah at Acxiom Mobile.
Justify mobile ROI with consumer insight. If it is implemented correctly, the investment may level out (or be absorbed into) normal operational costs, Chen and Shah state.
Consider security. Create a military-grade security infrastructure, while maintaining user-friendly design. Hire the best user interaction designer to design the security setup interaction, Chen and Shah suggest.
Utilize mobile wisely. "Once someone has discovered your brand through search, referral, or a marketing message, and they download the app, this may indicate a loyal customer. The app can be a great way to maximize and monetize that loyal relationship because it's in a controlled environment," says Jonty Kelt at Group Commerce.
Use showrooming to your advantage. "Use devices to reinforce a purchase from a store," advises Tim Hanlon of Vertere Group. Retailers can't outlaw smartphones inside their stores. So "whether it's generating a QR code or some promotion code or incentive," Hanlon says there is a world of opportunity to get customers to buy in-store while using mobile devices as the driver to get them there.
Associate Editor Kelly Liyakasa can be reached at email@example.com.