Tag Archives: digital mobile consumer
Welcome to The New Digital Mobile Consumer.
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
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:
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.
We see six essential elements for determining and executing a superior consumer mobility strategy:
Exhibit IX-5: Q17 d,e,f,g,h/Leaders and Laggards:
Exhibit IX-5: Q9/Leaders and Laggards: Degree of change in products and
The opportunities from responding effectively to consumers who increasingly use powerful mobile devices to research, buy and use their products are substantial for many industries. But the learning curve is also substantial, which is why waiting to see what shakes out can be a mistake.
26 Nielsen article.
These and many other mobile initiatives to date will eventually show what “sticks” and what doesn’t. We believe every consumer company has an opportunity to generate more business with consumers and increase their loyalty through mobile technologies and new ways of doing business with them. That is, we see enormous opportunities for companies to follow consumers – even if they number in the millions — to use mobile technology and mobile-friendly ways of conducting business and reap substantial benefits. However, the value of the mobile initiative must be compelling enough to convince consumers to “follow” these companies back through their mobile devices – to want to download and use a company’s mobile apps, to want to search on and deploy its mobile websites.
In this way, one can imagine that simply spending heavily on mobility initiatives is no guarantee of success. From our survey, the biggest spenders on initiatives aimed at digital mobile consumers were not at all the most successful ones. How do we know?
We grouped the 664 survey respondents into two categories based on how they answered one of our questions: “Compared to your biggest competitors, how would you rate your firm’s success at addressing consumers who interact with your organization through digital mobile devices?” We provided a seven-point scale – from a 1 (“far behind”) and a 2 (“behind”) to a 4 (“neither ahead nor behind”) and a 6 (“ahead”) and 7 (“far ahead”). There was barely any difference between “leaders” (answering with a 6 or 7) and “laggards” (answering with a 1 or 2) in their 2012 spending on initiatives to win over the digital mobile consumer (technology, consulting, IT services, etc.). (See Exhibit IX-4.)
Exhibit IX-4: Q16/Global: What Companies Will Spend in 2012 and 2015 on
The ratio of mobile consumer spending as a percent of company revenue was virtually the same for “leaders” and “laggards.” And this was the case for both questions on investments – for this year and their projection for 2015. What that tells us is that being successful in this arena requires spending on the right mobile capabilities for consumers – not spending more than the competition.
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Our interviews with digital, marketing and mobile executives in the media and entertainment, insurance, industrial manufacturing and other industries, we heard of enterprising initiatives that have already commanded significant consumer adoption and endorsement.
In analyzing what we heard in those interviews, we categorized what they were doing in their consumer mobile initiatives in two ways:
Our hypothesis is this: Companies that are getting greater traction with their mobile consumer initiatives are those with consumers who a) get higher financial, health, convenience and other benefits from using the product, and have a greater urgency to buy and use it, and b) are more likely to be “in motion” when they research, buy and use the product. By motion, we mean “out and about” – not close to home or office, and thus with a greater need for a mobile device (See Exhibit IX-2).
Exhibit IX-2: Which industries have the greatest opportunities
The rapid consumer uptake of mobile apps and websites from the global tire company and Humana can be seen this way: Their products are of very high importance and urgency to consumers, and those consumers are often “in motion” when they need to purchase and use the products.” Health insurers such as Humana and Aetna are getting consumers with mobile devices to rapidly adopt mobile apps that can locate a medical specialist and hospital, clinic or pharmacy in a medical emergency. When consumers are in unfamiliar locales (on vacation, on business, etc.), these mobile apps become particularly attractive to consumers, especially those with life-threatening medical conditions.
It may appear that other industries – such as car insurance, banking, industrial manufacturing and food and beverage – sell products that are less critical to the financial, health and emotional well-being of consumers. It may also seem that those consumers don’t have the same degree of need to research, purchase, use and maintain those products when they are “in motion.” But upon further investigation, that would be misleading. Consider the auto insurance industry. Companies like State Farm and Progressive Insurance have found consumers to be embracing their mobile apps for dealing with car accidents (insurance becomes a critical product at that moment for a consumer, and he is typically “in motion” when he needs to file the accident report).
The more value that a company can provide to a digital mobile consumer, the more likely it will get that consumer to do business with it through a mobile device. So what can companies do to increase the value they can provide the digital mobile consumer? One way to think about this is through the lens of the consumer’s entire consumption experience with a product. Every consumer can be seen as going through five steps in the purchase and use of any product (see Exhibit IX-3).
Exhibit IX-3: Additional Examples Of Companies That Have Used
From our interviews and secondary research, we have found examples of ways to improve the life of a digital mobile consumer in all five steps, and across industries.
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With each passing day, consumer companies have a greater ability to do business around the clock with more and more of their consumers in every way because of the huge uptake in mobile devices. Companies whose consumers have feature phones, smartphones, tablets and other mobile devices can continuously market and sell to consumers, serve them after the sale, help them research their purchases before they buy, and renew their purchases.
In other words, if they can reshape the way they do business in the ways that digital mobile consumers want to do business with them, companies will have unprecedented opportunities to attract and keep them as customers. The breathtaking adoption of mobile devices is making this opportunity real. Consider how rapidly consumers are becoming wedded to smartphones. In March 2012, about half of U.S. consumers (50.4%) had smartphones, up a remarkable 10 percentage points from the previous 12 months, according to consumer market researcher Nielsen Co. The average consumer downloaded 41 mobile apps (vs. 32 in 2011), and spent 39 minutes a day using the phone.19 And about half of American smartphone owners (47%) – 45 million people in all — were shopping on shopping apps by June 2012.
In many Asia-Pacific countries, the majority of online adults in April 2012 had smartphones: China (66%), Australia (65%), and South Korea (67%), to name a few countries.20 Smartphone adoption in Japan and India has lagged. In Japan, 26% of mobile phones are smartphones (vs. 74% for feature phones); in India, the percentages are 10% smartphones to 90% feature phones, according to Nielsen data.21 But that doesn’t mean that consumers in these countries are shunning the Internet from their mobile devices. In fact, 86% of Japanese consumers accessed the Internet from their mobile device in June. In China, the number of people who access the Internet from a mobile device – 388 million in August 2012 – for the first time surpassed the number who had accessed the Web from a desktop computer.22
The result today is that some companies now have millions of consumers who are tracking them through mobile devices.
So what’s been the impact for these companies? What kinds of returns are they getting, given the average company that we surveyed ($10 billion in annual revenue) will spend $17 million this year to respond to the digital mobile consumer? For some companies, the results have been eye-opening:
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In viewing the digital mobile consumer segment as a substantial business opportunity, many (although certainly not all) of the organizations we studied already have instituted substantial changes in the ways they market, sell, service, develop products, and work with suppliers. For example, for drivers who use the mobile website of the global tire manufacturer that we interviewed, it’s no longer an ordeal to find someone to fix a flat tire when their car has broken down in an unfamiliar place.
Providing these types of valuable customer experiences – experiences that increase customer loyalty — has been the mantra of consumer companies for years. The enormous investments these companies have made over the last decade in websites and customer relationship management (CRM) software speaks to this need. Consider what websites have done for consumer companies since they emerged in the mid-1990s. (Amazon.com was born on the Web in 1995.) Through their websites, consumers have been given an around-the-clock channel for getting information on products and services, and for some sites the ability to purchase those offerings. These websites have empowered consumers – i.e., those who could access them from computers with Internet connections.
Also consider that the amount companies are spending on CRM alone is staggering. Gartner estimates that companies worldwide this year will collectively spend more than $12 billion on CRM software, up 33% from 2008.16 Consumer companies have used CRM so that their marketing departments can tailor direct marketing campaigns, telesales people can prospect for the best customers, and call center agents can have a better picture of the irate consumer on the other end of the phone line.
Yet CRM technology allowed consumer companies to get only so close to their customers. For most of the last decade, those customers would receive the sales call on a home phone, get the direct marketing pitch in the postal mail, and call a contact center from a phone that could do little more than dial a number. For most of the 2000s, if consumers had a mobile phone, that device probably didn’t have a web browser. And if it did, the websites that consumers viewed were almost never designed with a tiny screen and a time-starved viewer in mind.
Companies that wanted to lather personal attention on each and every consumer – or at least the minority of the customer base who represented the majority of revenue – could only go so far. They couldn’t give consumers who were on the run access to their online repository of self-help information. When the consumer was in motion – with her desktop or laptop computer long out of reach – she was essentially on her own.
In other words, consumer companies have been able to get only so close to the people who buy their products and services, whether they are airline passengers, bank checking and savings account holders, or drivers with tires and auto insurance policies to care about. This is one big reason why consumers who are “out and about” have not been able to get close to those companies in any meaningful way.
Perhaps this is one reason why the bellwether index of the US consumer satisfaction of companies they do business with has barely budged since 1994. The American Customer Satisfaction Index, which registered 74.2 at the end of 1994 (on a scale of 0 to 100), stood at only 75.9 in the second quarter of 2012 – a scant 1.7% increase over 18 years.17
This is all to say that websites and CRM technology have helped companies get a lot closer to their consumers – but only so close. They haven’t been able to stay electronically connected to consumers at all times. But with a wave of powerful and easy-to-use mobile devices that have flooded the market since 2007, this is no longer the case.18 A consumer with a smartphone or tablet device can now easily get the information she needs from just about wherever she happens to be (that is, wherever wireless service exists, especially wi-fi).
Now companies can electronically connect their businesses to consumers (even if they have millions of them) around the clock and around the world – if those consumers have powerful mobile devices. Increasingly, they do.
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16 From Gartner press releases dated Feb. 8, 2011 and Feb. 26, 2009.
Who has the bragging rights for spending the most on technologies and services to respond to the digital mobile consumer? Which industries are investing the greatest amounts? Energy, telecommunications, and airlines are at the top of the chart, spending an average $27 million to $31 million per company on consumer mobility annually. (See Exhibit VII-9.)
Exhibit VII-9: Q16/Global Industries: Average Company Spending in 2012 on
Two industries are at the bottom of the chart: transportation services/logistics and food and beverage manufacturing. Notably, retailers’ spending is less than the cross-industry average — $13 million vs. $17 million per company.
But what about future spending? (See Exhibit VII-10.) By 2015, the industries whose projections would put them in the lead are:
Exhibit VII-10: Q16a/Global Industries: Average Company Spending Projected for 2015 on
At the bottom: food and beverage ($10 million), transportation services ($11 million), and media and entertainment ($12 million).
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The 90 Latin American organizations that we surveyed (from Brazil, Mexico and Argentina) indicated that they have already made substantial changes in consumer-facing and supplier processes, as well as their products and services on behalf of consumers who use mobile devices to do business with them.
On our scale of 1-7, the Latin American survey respondents measured the degree of change in their products and processes as nearly a 5 – a higher average score than those in the other three regions of the world. And in asking Latin American companies to gauge the amount of change in these areas by 2015, they indicated greater than 5 scores on all five measures. (See Exhibit VI-1.)
Exhibit VI-1: Q9+10/Latin America: Degree to Which Companies Have Made
These measures of product and process change were even more pronounced by industry sector. Among our 90 Latin American respondents, we received sufficient samples in four industries: retail, banking/financial services/insurance, pharmaceuticals, and consumer products manufacturing (food, beverages and durables).
The retailers we surveyed indicated the largest degree of change in product and process to appeal to mobile consumers: 5.62 on this 1-7 scale (Exhibit VI-2). In comparison, consumer product companies gave an average score of 4.40 on product and process changes – a number that was below the average for all 90 companies (4.95).
Exhibit VI-2: Q9, 1-5/Latin America: Comparing Industries in Degree of Change in Products and Processes to Date to Respond to Digital Mobile Consumers
However, when asked about the degree of change in these five dimensions that they expected to make by 2015, the consumer products companies indicated they would move much more quickly. They projected their average degree of product and process change to appeal to digital mobile consumers at 5.54 on this 1-7 scale, second only to the degree of change that the retailers projected (5.80). (See Exhibit VI-3.)
Exhibit VI-3: Q10, 1- 5/Latin America: Comparing Industries in Degree of Change in Products and Procsses expected by 2015 to Respond to Digital Mobile Consumers
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