CEO’s Point of View: It’s Time to Empower the Digital Mobile Consumer

N Chandrasekaran
CEO and Managing Director, Tata Consultancy Services

When the internet became popular and reached critical mass, zeitgeists of the time were quick to dub it as the era of “anytime, anywhere” communication – as long as your were tethered to your desk and PC! 

Maybe they were just a decade too early. Because it is only after the advent of the new generation of telecom networks and smart handheld devices over the past 18 months, have we truly seen the “anytime, anywhere” paradigm come to life. 

In our work with global corporations, we have seen the trend towards Wireless intensify: major companies are scrambling to respond to their customers and consumers who want to be able to transact or do business with them anytime, anywhere using their smart devices. Companies realise that they need to offer customer service anytime and anywhere consumers want it. And smart devices are becoming the new battleground for attracting and retaining the most profitable consumer segments. 

So are you ready to do business with these “digital mobile consumers?” How much do you interact and transact with the 50% of U.S. adults who have smartphones, a percentage that is even higher in other countries? That was the fundamental question behind our latest major research study. We wanted to know whether and how Global 2000 companies are responding to shoppers who increasingly use their mobile phones and tablet devices to research, buy, get help, and renew their purchases. What are large organizations doing to deal with this fast-emerging and potent economic force – the person who today carries the Internet in his pocket? 

The short answer is a “great deal,” perhaps even more than you may realize as you read the pages of this report. This summer we surveyed 664 executives and managers at mostly major companies in North America, Europe, Asia-Pacific and Latin America. We also talked in-depth to executives spearheading mobility initiatives at eight leading companies: two large airlines; a big entertainment company; a major cable, wireless and phone provider; a global tire manufacturer; a producer of building materials; a big health care system; and a major retailer. 

Numerous insights can be found in this report. The first one is about the high attention companies are paying to the digital mobile consumer, measured in spending. The average-size company in the four regions ($11.2 billion in annual revenue) will spend between $13 million and $22 million this year to market, sell and service these consumers through their mobile devices. By 2015, they expect that spending to be between $22 million and $26 million annually.

What Companies Will Spend on Technologies and Services
to Respond to Digital Mobile Consumers ($ Million)

Chart: What Companies Will Spend on Technologies and Services to Respond to Digital Mobile Consumers ($ Million)

The study also revealed that companies are making substantial changes in the way they do business to win over this digital mobile consumer. Many companies are not only investing heavily; they are also fundamentally changing the way they do marketing campaigns, sell their products, and handle post-sale customer inquiries—all to win the loyalty of these consumers. Over half the companies have made the digital mobile consumer its own market segment. A good portion of these firms are also creating new products and services to please the market: consumers who are often “in motion,” meaning outside of home and office, when they do their shopping homework, make their purchases, use the products, and need help with them. 

So where is all the action? Which consumer industries are gearing up faster to do business? Of the industries we surveyed, the sectors whose consumers used mobile devices more often to purchase their products, get after-sale service and read their marketing messages were the airlines, energy and telecommunications companies. 

Many companies were generating big benefits from their skillful interactions with digital mobile consumers. Those benefits included:

  • Higher revenue through more accurate and attractive pricing: A major U.S. auto insurer has been placing a digital device in the cars of willing customers to better understand their driving habits. Those who prove to be better risks than the company originally estimated can get lower premiums. The company predicts the initiative could generate a $100 million increase in lifetime premiums per annum.
  • Increasing customer counts by speeding the purchases. Coffeehouse giant Starbucks in the 14 months ending this May conducted 45 million mobile payment transactions through store scanners, with consumers using their smartphones. The $11 billion company also used mobile technology to make its vaunted store experience even more intellectually stimulating. Through free Wi-Fi, Starbucks provides access to premium news, music and other online content. Same-store sales rose 8% in 2011. We sense there may be a connection.
  • Treating customers after the sale like they’re special, even if there are hundreds to deal with at the same time. A major European airline has given its cabin crew members tablet computers that keep track of the personal preferences and flight connections of frequent passengers. The early signs are that the passengers love the added personal touch, and so does the crew. Customer satisfaction scores are already growing.
  • Helping customers in emergencies. Several auto insurers, health insurers and even industrial companies (a tire manufacturer) are using mobile apps and websites optimized for mobile devices to help consumers in a bind. The health insurers (which include Humana and Aetna) have popular mobile apps that help people in unfamiliar places to quickly find medical specialists in emergencies. Several auto insurers (including State Farm) have highly popular mobile apps that help consumers deal with accidents – take pictures, push buttons for help, and file claims. A global tire manufacturer’s mobile website not only helps drivers select the right tire, it enables customers with flats to get road assistance.
  • Not letting customers miss out by being out. A major entertainment company’s highly popular mobile application (2 million+ downloads and registrations) is reducing the number of sales that never happen because customers didn’t realize the product was available. Customers now get emails and text messages to remind them of purchases they are likely to make. The mobile channel is starting to become a noticeable sales channel.

The most aggressive companies are not limiting their mobility strategies to just smartphones and tablet computers. Health insurers, auto insurers and other companies are looking at other mobile devices, especially technology that could monitor consumer behavior and usage of their products.

The examples we uncovered in our research also tell us that leading companies are looking at how mobile technology can improve the entire experience that consumers have with them – not just the purchase transaction. These firms are starting to transform the way consumers research, buy, use and troubleshoot their products and services when they are on the go.

With the spoils going to the innovators, the race to empower the digital mobile consumer has just begun.