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:
- Increasing revenue by pricing more accurately: Auto insurer Progressive Insurance predicts it could generate a $100 million increase in lifetime premiums per annum through an initiative called Snapshot, which places a mobile device in customers’ cars and tracks their driving habits. (Those who are better drivers than Progressive had predicted can save money on their policies. Usage of the device is totally at the customer’s discretion.).23
- Pleasing impatient consumers by speeding their purchases. Starbucks, which has grown into an $11 billion company over 41 years due to delivering what it refers to as “The Starbucks Experience” at its 17,000+ coffee houses, has been a retail pioneer of mobile payments. In the 14 months that ended in May 2012, the company had 45 million payment transactions that were scanned through its customers’ mobile devices.24 That no doubt helped the company boost same-store sales in 2011 by 8%.
- Helping consumers research their purchases. A growing number of entertainment companies provide mobile users with lots of information to help them decide what to purchase.
- Marketing and selling more effectively by reminding busy consumers of time-sensitive purchases. Geisinger Health System will soon remind patients with high cholesterol to refill their prescriptions.
- Providing a highly differentiated consumer experience in the usage of a product. Mobile apps help health insurers such as Humana give consumers a tool to improve their health and in emergencies quickly find the medical specialists they may need. Starbucks’ offers store visitors free wi-fi and free news and music content through its Starbucks Digital Network. That helps the company stay current on the interests of its customers. As Adam Brotman, Starbucks’ chief digital officer, told one reporter, “Digital has to help our store partners and help [us] tell our story, build our brand, and have a relationship with our customers.”25
- Providing superior assistance when the customer needs help. The mobile apps and websites of auto insurance companies such as State Farm and Progressive enable consumers to deal with accidents quickly and effectively – from being able to photograph the damage from their smartphones to calling a tow truck and booking a replacement vehicle.
20 Nielsen data.
21 Nielsen data on smartphone usage in Asia-Pacific.
22 According to data from CNNIC.
23 Progressive estimated this $100 million increase in lifetime premiums per annum in a June 12, 2012 shareholder/analyst call, based on a full rollout of the service in all the U.S. states in which it does business. As of the time of the call, the service had been available in only a handful of states. Read the transcript.
24 Forbes.com interview with Starbucks chief marketing officer, Adam Brotman, May 24, 2012.
25 Venture Beat, June 12, 2012.
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