Welcome to The New Digital Mobile Consumer.
An overview of the topics discussed in the TCS Global Trend Study – September 2012:
We see six essential elements for determining and executing a superior consumer mobility strategy:
- Consider the digital mobile consumer as a new customer segment – one that may very well require new products or services, and (for sure) new ways of marketing, selling to them, and serving them after the sale. About three times the number of “leaders” in our survey (82%) said they made the digital mobile consumer a unique market segment than did laggards (only 28%). And many more leaders (85%) created a new product/service offering for this segment than did laggards (30%). Even after segmenting consumers by which ones use mobile devices, you may find that some are far bigger users of the devices than others.
- Segment consumers not just on their value but also on the extent to which they are “in motion” and need different product features in each step of their consumption process. Progressive sends weather alerts to drivers to warn them of bad weather ahead – a mobile feature that will help consumers avoid accidents. Geisinger and Humana’s mobile apps or mobile websites remind patients of important medical appointments and prescriptions they need to refill. And during medical emergencies, the mobile apps of Humana and Aetna direct a consumer to quickly find the right medical specialists and facilities. In these situations, the consumer’s need is indeed urgent, and if they’re “in motion” (meaning in an unfamiliar part of the country or state) the importance of such mobile apps becomes even greater.
- Look broadly at mobile technology – not just at today’s popular smartphones and tablet devices. In addition to developing mobile apps for consumer’s mobile devices, auto insurance companies are experimenting with mobile instrumentation that they can install in your car. Other industries are following suit – particularly those that stand to gain substantially by tracking the way a consumer uses its product or service (a goal of health insurers).
- Determine what data and analysis of that data is required to provide a superior consumer experience. Starbucks has a grand vision for how mobile technology and “big data” can reshape the coffee shop experience – that is, how by knowing the reading, music, food and other habits of the patrons of each store, it can tailor the offering to suit those interests. One of the biggest differences between leading and lagging companies in our survey was in how they use consumer and other data to tailor their responses to them (see Exhibit IX-5). Leaders were more than four times as likely as laggards to send promotional offers to consumers’ mobile devices based on where they were geographically located in their shopping process (i.e., their proximity to their stores); more than five times as likely to use real-time GIS and consumer data to interact with consumers; and more than three times as likely to change pricing for consumers who were “in motion” and shopping.
Exhibit IX-5: Q17 d,e,f,g,h/Leaders and Laggards:
Comparing Them on They Way They Market to the Digital Mobile Consumer
- Tailor mobile consumer experiences to the type of device (e.g., smartphones or tablets). This is especially important for companies whose consumers are more likely to be “in motion” when they use mobile apps or mobile-optimized websites. Nielsen’s research in 2012 found that consumers use smartphones and tablet devices differently in some ways. In the U.S., smartphone users were much more likely to use those devices while they were “on-the-go,” as Nielsen put it – e.g., to locate a store (73% of smartphone users do this vs. 42% of tablet users), use a shopping list while shopping (42% for smartphones vs. 16% for tablets), and redeem a mobile coupon (36% smartphones vs. 11% tablets.)26 In our survey, the leading companies were more likely to tailor their mobile apps to tablets or smartphones than were the laggards: 25% of leaders’ mobile apps were developed just to run on tablets vs. only 17% for the laggards. And by 2015, leaders project that 23% of their mobile apps will be designed exclusively for tablets vs. 16% for laggards.
- Experiment quickly, but be prepared to make major changes in products and consumer-facing processes eventually. Companies such as State Farm, Humana, Progressive and Starbucks appear to have started their initiatives by putting themselves in their customers’ shoes, and working back from that – rather than essentially trying to retrofit the way they operate today and miniaturize it for a mobile device. Starbucks, for one, is rethinking the whole store experience for consumers given that it can get a strong sense of what visitors want to read and listen to while they’re sipping their Caffe Mochas. Even the global tire maker that we spoke to has found that responding to mobile consumers is changing its view on its role in the consumer purchasing process. (See Exhibits IX-5 and IX-6.)
Exhibit IX-5: Q9/Leaders and Laggards: Degree of change in products and
processes TO DATE to respond to digital mobile consumers
Exhibit IX-6: Q10/Leaders and Laggards: Degree of change in products and
processes companies will have to make by 2015 to respond to digital mobile consumers
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.
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.
- The benefits of winning over digital mobile consumers may be greater in some other sectors. In analyzing our qualitative research (case studies and literature searches), it became clear to us that many companies which sell products/services of high relative importance and urgency for consumers – and whose consumers were more likely to be “in motion” when they researched, purchased and used the product/service – had achieved major benefits from and consumer interest in their mobility initiatives.
- Companies that win over the digital mobile consumer will not necessarily be the ones that spend the most in this area. The “leaders” from the survey are spending about the same percent of company revenue on their mobility initiatives as the laggards.
The data that we present in this report illustrates how companies across industries and across regions of the world have begun to change to respond to the so-called digital mobile consumer. In our interviews, we found that executives of companies that are leading the way don’t look at this consumer segment as a burden. Rather, they appear to see them as a great opportunity – a rapidly expanding market segment that will give their business to companies that can reduce the many hassles of their time-starved lives.
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.
17 The ASCI index has been a strongly watched number for many years. The organization, whose index was developed at the University of Michigan’s Ross School of Business, polls consumers on their satisfaction with the companies whose products and services they purchase, ranging from airlines and retailers, to computers, media and banks. See the trends since the organization began tracking consumer satisfaction in 1994.
18 Most mobile industry observers would assign the “easy to use” bragging rights to Apple and its iPhone, the first of which came to market in June 2007.
When a global tire manufacturer began developing a mobile site for consumers last year, it thought its greatest usage would come from roadsters in distress — those with a flat tire. “Our original expectation was that consumers were more likely to use mobile to get a tire replaced, get a tow truck, and so on,” says a marketing manager at the company. But that hasn’t been the case. Since launching the mobile-optimized website, the company has found consumers are using its mobile site more to determine what kind of tire to buy, and less to get roadside assistance.
That has opened the eyes of the company to wonder whether it could play a larger role in shaping the consumer’s buying decision than it does today. The firm traditionally has its retailers be the entity that helps consumers to purchase the right type and size tire for their vehicle. But with 20% of its website traffic now coming from mobile devices, the question about who should educate the consumer in the research stage of his buying process is no longer clear. “The ability to take a consumer all the way into a purchase is a huge open question that we have to answer,” the marketing manager says.
The company does not plan to sell direct over the Web. Its website today explains its tires, prices them, helps consumers determine which ones they need, but then directs them to nearby retailers.
Recently, the company launched its first customer-facing mobile website, enabling consumers with mobile phones and smartphones to learn about its tires and locate retailers that sold them. Tire selections and recommendations are by vehicle, tire size or tire name. Through a mobile device’s GPS capability, the shopper can find the nearest retail locations. The site also provides the manufacturer’s suggested retail pricing (MSRP), access to promotions and discounts, and click-to-call functionality. At the dealer location, the consumer’s research is either validated or the retailer recommends the right or better tire for the consumer’s car and driving habits.
Prior to launching the mobile website, 6% of the company’s website visitors accessed the site via mobile devices. Now 20% do so from mobile devices that are redirected to the mobile website.
The company believes today’s tire buyers need and want expert advice before pulling the trigger on a tire purchase, and most also want installation services (since they require expensive tire balancing equipment). It wants to make absolutely sure it puts customers into the right tire for their vehicle.
The company’s research has found that consumers buy tires when a friend, family member or an event points out the need, such as having a flat tire. “People rarely say, ‘Oh, I think it’s about that time, I think I will buy new tires.’” So the company modeled its mobile site on how desktop computer users were using its corporate website. The company developed a simplified mobile site, gearing the content and navigation to a consumer who is not spending as much time and doesn’t have the same screen format as a desktop user. Both sites are purpose-built to fulfill the needs of customers who are in the market for tires.
Three months after launch, the company’s mobile website usage peaked at 20% of total website visits and has stayed relatively flat since then. Unless the company were to make a huge shift in advertising dollars, it expects consumer usage of its mobile site to remain around 20% by the end of this year.
The tire company tracks the percentage of consumers who go on its websites and their “purchase intent” – that is, use a site feature that provides local retailers for a user. If a consumer goes on the website and doesn’t try to find a retail locator, for example, the company assumes that the consumer is less likely to buy its tires. It uses key performance indicators such as site satisfaction and purchase intent to determine where it should put its advertising dollars. If the traffic is more efficient on mobile than on the desktop device for any given time, it pushes more search advertising to mobile and less to the desktop.
Although the tire industry has trailed the pioneers of online retailing, very few online companies are selling tires online. “It’s a lot harder [to buy and sell tires over the Internet],” the marketing manager explains. “It’s a hardware thing. Somebody has to put those tires on your car.”
Data isn’t available on how many tires today are being sold online in the U.S. Very few tire companies sell online. Reports are that online sales for tire dealers are very small. The closest company is Tire Rack. Around for a long time, it was a catalogue company and has adapted the catalogue to the web.
Amazon sells tires online but it can’t tell a customer what tire will fit its vehicle. Even retail chains like Costco and Walmart don’t have the market share in tires that they do in other product lines. The tire company marketing manager attributes 80% of this to consumer confidence and 20% to inadequate technology. “No one has optimized the experience to drive a consumer through an online purchase for tires. They try to make it feel like books, and it doesn’t work.”
But he believes that younger tire buyers will ultimately find it unacceptable not to be able to purchase tires online. It just isn’t happening now. “The newer demographic expectations will be totally different,” he says. “I think we must be able to fulfill their purchase and their inventory desires online in the future. But now, it’s small – it goes back to there is no Expedia in this space and nobody is rushing to figure this out.”
As a manufacturer, the company has not been involved in the actual consumer selling process. It made the tires, sold them to retailers and let the retailer do all the work in getting the consumer into the store and making the right purchase. However, the web has changed the company’s views on what consumers expect of it. Tire manufacturers in the past produced marketing content largely for retailers; they now have to produce content for consumers as well as retailers, and the firm wants to continue writing that content.
“The ability to take a consumer all the way into a purchase is a huge open question that we have to answer, but we have to figure out how we play a role in the actual tire transaction,” he says. “When we figure that out, we will be hell-bent on trying to get consumers through our online experience. That would change everything for the industry.”
We compared our global industry sectors on the percentage of marketing, sales and service transactions with consumers using mobile devices out of total transactions:
- The percentage of total sales transactions (number, not revenue amount) that came through consumers’ mobile devices
- The percentage of marketing campaigns they designed just to be viewed on mobile devices out of total marketing campaigns
- The percentage of post-sale service interactions with consumers who inquired through mobile devices out of total service interactions
Three industries were at the top on all three measures: airlines, energy and telecommunications. (See Exhibits VII-4, 5 and 6.)
In consumer purchases, the airlines we polled estimated that 61% of consumer purchase transactions of flights are made through mobile devices, and that the number would reach 76% by 2015. Energy companies said half of all consumer purchases are made through mobile devices today, and that number would exceed 60% in three years. And telecommunications said 48% of consumer purchases were being made these days through mobile devices, and they predicted they would rise to 60% by 2015.
Industries on the low end were consumer products (14%), health care services (26%) and pharmaceuticals (26%). The low consumer products rate is no doubt a reflection of the fact that most consumers purchase their products through retailers – not direct through the consumer product manufacturer. In many regions of the world, government pays for healthcare services, as well as for pharmaceuticals. So perhaps lower mobile purchase-to-total purchase ratios should be expected in these sectors.
Exhibit VII-4: Q11+11a/Global Industries: Percent of Consumer Purchases
Made Through Digital Mobile Devices (2012 and Projected for 2015)
Who’s on top in marketing to consumers through mobile devices – at least, which industries are funneling more of their marketing campaigns through the little screens of smartphones and tablet devices? (The numbers here may bear little resemblance to data on the largest mobile advertisers. Our numbers only look at mobile marketing campaigns as a percent of total marketing campaigns.) (See Exhibit VII-5.)
The global industries with the highest proportion of mobile marketing campaigns to total marketing campaigns are (once again) airlines, telecommunications and energy companies. The ones with the lowest ratio are consumer products, industrial manufacturing, transportation services, and food and beverages.
Exhibit VII-5: Q12/Global Industries: Percent of 2012 and 2015 Marketing Campaigns
Designed Exclusively for Consumers’ Digital Mobile Devices
So which industries are consumers contacting most frequently after a purchase using mobile devices? The airlines, energy, telecommunications and government sectors (state, federal and local) report the highest percentage of service transactions (out of their total service transactions) coming from digital mobile consumers. (See Exhibit VII-6.) Airlines estimate that 56% of service transactions are with consumers who use mobile devices. They predict the percentage to reach 81% in three years. Energy and telecommunications are a distant second and third (42% and 41%), with government ranking fourth at 39% of service interactions coming through mobile devices.
Industries with the lowest mobile-initiated service interactions are consumer products, industrial manufacturing, and media and entertainment. All say that no more than 20% of their service interactions are coming from consumers using mobile devices.
Exhibit VII-6: Exhibit VII-6:Q13/Global Industries: Percent of Customer Service
Transactions (Post-Purchase) Conducted with Consumers Who Use
Digital Mobile Devices (2012 and 2015)
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Latin American organizations told us that a high proportion of their total interactions with consumers were happening via mobile devices today: 43% of all consumer purchases, 43% of marketing campaigns; and 42% of service transactions. (See Exhibit VI-4.)
Exhibit VI-4: Q11/Latin America: Measuring the
Impact of the Digital Consumer Across Industries
These companies envision that such consumer transactions will only increase over the next three years, estimating them to constitute 58-59% of marketing, sales and service transactions. Of course, this is only their guess. Nonetheless, it is a directional statement that suggests these companies are looking for ways to improve the ways they do business with consumers who use mobile devices.
When looking at the average percentages of purchase, marketing and service transactions through the mobile channel in the four Latin American industries we mentioned earlier, the retail sector emerges as the friendliest to date for mobile consumers. (See Exhibit VI-5.) The Latin American retailers surveyed said 59% of payment transactions were done through a mobile device. Banks estimated their number at 51% — both far above the average (43%) for all 90 companies (which included other industries besides the four we report on).
Exhibit VI-5: Q11/Latin America: % of Total Consumer
Purchases Through Mobile Devices (2012)
When asked to estimate the percentage of consumer payment transactions by 2015, all four industries believed it would grow considerably. Retailers expect more than three-quarters of mobile payment transactions to be done through mobile devices then (76%), and for banks the number was 68%. (See Exhibit VI-6.)
Exhibit VI-6: Q11a/Latin America: % of Total Consumer
Purchases Through Mobile Devices Expected by 2015
Retailers also are leading the way in the percentage of total marketing campaigns they’re designing for mobile devices. They estimate that they will design 62% of their marketing campaigns this year just for mobile devices – more than double the percentage of consumer product companies (26%). And retailers project that 81% of their marketing campaigns will be geared for mobile devices in three years. (See Exhibits VI-7 and VI-8.)
Exhibit VI-7: Q12/Latin America: % of Total Marketing Campaigns Designed
Exclusively to be Read by Consumers Using Digital Mobile Devices
Exhibit VI-8: Q12a/Latin America: % of Total Marketing Campaigns to be Designed Exclusively to be Read by Consumers Using Digital Mobile Devices by 2015
Retailers also are leading the way in responding to consumers who use mobile devices in their post-sale service interactions. Retailers said 63% of such service interactions are with consumers using mobile devices – far above the cross-industry average of 42% today. (See Exhibits VI-9 and VI-10.) All sectors see consumers making an increasing percentage of their post-sale service interactions through mobile devices by 2015.
Exhibit VI-9: Q13/Latin America: % of Total Customer Service
Transactions Conducted by Consumers Using Digital Mobile Devices (2012)
Exhibit VI-10: Q13a/Latin America: % of Total Customer Service Transactions Predicted to be Conducted by Consumers Using Digital Mobile Devices (by 2015)
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The North American industry spending the most on being able to respond to the digital mobile consumer is probably no surprise: the airline sector. The airlines we surveyed reported they would spend an average $57 million on technologies and services to deal with consumers who use mobile devices. No. 2 was government agencies – federal, state and local. Their average spending this year was estimated to be $43 million, followed by high tech companies (hardware and software), at an average $31 million per company. (See Exhibit III-12.)
On the bottom end were consumer products manufacturers (food, beverages and durable goods), which said they would spend $2 million this year, and industrial manufacturers ($3.2 million).
Exhibit III-12: Q16/North America: Average Spending Per Company in 2012 on
Technologies and Services for Responding to Digital Mobile Consumers ($ millions)
The airline companies we polled predicted spending a similar amount in three years ($63 million), which would lead all sectors. But high-tech companies predicted they would double their annual spending in this area, to $62 million. (See Exhibit III-13.)
Banks/financial services/insurance companies will also spend more than average ($33 million in 2015 vs. $24 million this year). The experiences of insurance companies such as Progressive help explain why. This year, the company launched an initiative to use mobile image capture technology (of vehicle ID numbers) to reduce the time it takes to provide auto insurance quotes to consumers’ mobile devices. The technology has helped the company reduce the time from 60 minutes in 2011 to less than 6 minutes today. In a separate initiative, called Snapshot, the company provides willing consumers with an electronic device that plugs into their car’s diagnostic port and tracks their driving (miles driven, number of times they hit the brakes, etc.). By tracking consumers’ vehicle usage, Progressive can provide some consumers with a lower rate (i.e., drivers who appear to be better risks than the company originally thought). The company told securities analysts that when it offers Snapshot across its U.S. markets, it would increase lifetime premium per annum by more than $100 million.11
Other industries that plan to spend more heavily include telecommunications ($30 million in 2015 vs. $25 million this year) and pharmaceuticals ($36 million in 2015 vs. $22 million in 2012).
Consumer products, industrial manufacturing, media-related and transportation companies predict much lower-than-average spending in 2015 – all spending less than $14 million per company. Industries with somewhat lower than average spending in 2015 are retail ($20 million), health care services ($19 million) and automotive manufacturing ($18 million).
Exhibit III-13: Q16a/North America: Projected Spending in 2015 Per Company on Technology and Services for Responding to Digital Mobile Consumer ($ millions)
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11 Progressive executives provided these details in a shareholder/analyst call on June 14, 2012, the transcript of which can be found here.
While the study explores numerous issues, we found six findings to be among the most noteworthy:
|1. Many businesses are making fundamental changes to their products/services and processes to win over the digital mobile consumer.
Nearly three times the number of “leaders” in our survey (82%) made the digital mobile consumer a unique market segment than did laggards (only 28%). And a much greater percentage of leaders (85%) developed a new product/service offering for the digital mobile consumer segment than did laggards (30%). (See link.)
|2. The average company in the four regions of the world will spend between $13 million and $22 million this year on technologies, business process changes, and other expenses to respond to digital mobile consumers.
Asia-Pacific companies are spending the most (an average $22 million, or $2.4 million per $1 billion in revenue) vs. $16 million (or $1.43 million per $1 billion in revenue) in North America, $20 million in Europe (or $1.59 million per $1 billion in revenue) and $13 million (or $1.63 million per billion dollars in revenue). (See link.)
|3. Marketing, sales and service functions are taking the lead in shaping their organization’s overall strategy for serving the digital mobile consumer – but the IT function is integrally involved.
For example, in 48% of North American companies and 43% of European companies, marketing, sales or service is leading the way, whereas IT is leading the effort in 35% of North American companies and 38% of European firms. Companies in our survey reporting the greatest success in winning the digital mobile consumer rated cross-functional collaboration much higher as a key success factor than the companies with the least success to date. (See link.)
|4. Companies with some of the best opportunities are in sectors that haven’t changed as much as others in responding to the digital mobile consumer (based on the TCS index).
We found this in our research on mobile initiatives at companies in media and entertainment, banking/financial services/insurance (State Farm and Progressive), industrial manufacturing (a global tire manufacturer), health care (Humana and Geisinger Health System), and retail (Starbucks). Companies whose products have greater overall importance (especially urgency) to consumers and whose consumers are more likely to be “in motion” when they research, buy and use those products are among those generating the highest customer and firm value from their mobility initiatives. (See link.)
|5. Designing mobile applications and websites just for tablet devices is becoming a new battleground.
Companies reporting the most success in winning the business of the digital mobile consumer said they designed an average 25% of their mobile apps for tablets; in contrast, in the companies with the least success, the percentage was 17%. Overall, 17% of all the mobile apps that North American organizations have developed to date are designed just for tablet devices (vs. those developed just for smartphones or to run on both tablets and smartphones). In Europe the number is 25%; in Asia-Pacific, 28%; and in Latin America, 27%. (See link.)
|6. Consumers in Asia-Pacific and Latin America conduct more business through mobile devices than consumers in Europe and North America.
Companies in Asia-Pacific and Latin America had a much higher percentage of mobile interactions with consumers than companies in North America and Europe. By percentage of mobile interactions, we mean out of each company’s total number of consumer marketing, sales and service interactions, what percentage were consumers conducting through a mobile device? The number was about 48% in Asia-Pacific, 42% in Latin America, and about 28% in Europe. North American companies finished last on this measure, with about 21% of their consumer interactions coming through mobile devices. (See link.)
In the pages that follow, we dive deep into these and many other issues that relate to the way large companies around the world are changing the way they operate to respond to the digital mobile consumer.