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.
On the surface, it might seem that the responsibility for determining how to respond to consumers who use mobile devices such as smartphones and tablet computers to do business should fall squarely on the IT function. For sure, consumers are going to want to check a company’s prices, whether a certain product is in inventory, and perhaps where its closest locations are. And pricing, inventory and location information are typically housed in corporate systems that the IT function manages.
However, in the majority of companies in all four regions of the world, business functions are taking the lead in mobile strategy. (See Exhibit II-2). In North America, about two-thirds of the respondents said non-IT functions were assuming leadership for mobile strategy with consumers. Of that 65%, the marketing function was dominant, cited by 29%, with sales (10%) and customer service (9%) far behind. Some 8% of North American companies had actually created a new unit that they dedicated to determining their strategy for addressing the digital mobile consumer.
One such company is Starbucks, the $11.7 billion operator of coffee houses in 60 countries. In 2009, the company launched a new internal unit called Digital Ventures to focus on new mobile device-enabled services for Starbucks customers. The unit has been instrumental in the company’s pioneering initiatives in digital payments. In the 14 months ending in May 2012, the company reported scanning 45 million payment transactions in its North America stores around the world.8
Importantly, however, in about one third of the companies (33%), the IT function had assumed responsibility for helping the organization figure out its mobile consumer strategy. All to say that the IT department doesn’t at all appear to be a silent partner in this endeavor.
In fact, when we compared the answers of survey respondents who said they were ahead or behind their competitors in responding to the digital mobile consumer, one of the biggest differences was the importance they attached to cross-functional collaboration. Companies that indicated they were ahead (a group we refer to as “the leaders”) gave an average rating of 4.17 (scale of 1-5) to the success factor of “getting departments that work with consumers to work together in a unified way.” They rated only two other factors as more important. In contrast, the “laggards” gave this an average rating of only 3.43, and it was fourth on their list of key success factors.
Exhibit II-2: Q6/Global: Which Department Takes the Lead in
Determining How the Firm Addresses the Digital Mobile Consumer?
In Europe, we found a similar pattern: In 62% of the companies, a business function was leading the way on mobile consumer strategy; the IT function led in 38% of the organizations. The business function that was more likely than others to steer the ship in this area again was marketing (20% said marketing led the way). Much smaller proportions of participants said sales (13%), service (10%) or a product/service business unit (8%) were driving mobile strategy. And another 8% of respondents said they established a separate department to determine how to respond to mobile consumers. In this region, IT was calling the shots in consumer mobile strategy in 35% of the companies.
In our Asia-Pacific countries of India and Japan, 51% of respondents said non-IT functions were leading the way – most often marketing (16%) and sales (12%). And in Latin America, 69% said consumer mobile strategy came from a non-IT function, with 26% of them coming from marketing and 19% from sales. Some 31% were from IT.
What that says is that customer-facing functions, more often than not, are driving the strategies of large companies in understanding how to respond to digital mobile consumers. Still, the IT group appears to be playing a highly influential role in every region that we surveyed.
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8 Chief Digital Officer for Starbucks on Technology, Change and Community, Forbes, May 24, 2012.
How do companies around the world compare in the degree to which they’ve responded to the digital mobile consumer? Are some regions ahead or behind the rest? What business functions are taking the lead in determining mobile strategy in each region? Are consumers conducting more mobile transactions in certain regions than in others? Are companies spending more on their mobile strategies in Western countries than in the East, or are Asia-Pacific companies investing the most?
To answer these and other questions, we surveyed companies in four regions of the world:
- North America (the US and Canada)
- Europe (the UK, France and Germany)
- Asia-Pacific (Japan and India)
- Latin America (Brazil, Argentina and Mexico)
Some 664 executives responded to our survey, of which 609 completed all 23 of questions. (See Exhibit II-1.)
Exhibit II-1: Surveys by Region of World
In this chapter of the report, we discuss these and other regional differences.
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Yet as a company that helps large organizations around the world capitalize on this trend, we believe the most interesting mobile adoption practices to watch are not of consumers themselves, although their habits are fascinating indeed. How the world’s large consumer companies deal with customers who use their mobile devices for such chores as shopping for airline seats, checking their bank accounts, purchasing and viewing movies, and getting service for household appliances – these organizational practices are starting to paint an intriguing picture.
It’s a picture that we decided to capture in the summer of 2012 through a major TCS study: how large organizations in North America, Europe, Asia-Pacific and Latin America have been revamping their strategies, products and processes to win the loyalty of consumers who use mobile devices to do business with them– the so-called “digital mobile consumer.” There are multiple studies on how consumers have taken to mobile devices over the last decade, and particularly in the five years since the first Apple iPhone hit the market. But we found very little in-depth research on how companies were coping with the phenomenon, and in some cases capitalizing on it.
To be sure, the press has been writing about this. In fact, the terms “mobile technology,” “mobile strategy” (or “enterprise mobile strategy”) and “chief mobility” or “chief digital” officer have taken center stage in the realms of both business and information technology. Once the preserve of technology publications, the terms now adorn the pages of publications read by CEOs and functional heads such as Fortune, Forbes, Wall Street Journal, Asian Business Daily, The Economist, the Financial Times, Asian Economic Review and Bloomberg BusinessWeek.
But we wanted to go broader and deeper in exploring the topic. This report is the result of our exploration. It is based on an in-depth quantitative survey of more than 600 large companies around the world, illuminating case studies on seven major firms, and anecdotes and statistics combed through an extensive literature search.
Our findings encompass a range of issues for large consumer companies:
- How corporations in North America, Europe, Asia-Pacific and Latin America compare in the way they’ve responded to the digital mobile consumer – that is, how they’ve altered products/services and processes (especially marketing, sales and customer service), and what they plan to do over the next three years.
- The digital mobile consumer initiatives in companies located in each of the four regions of the world that we explored.
- Analysis of what companies in 17 global industries are doing, from airlines to industrial manufacturing companies.
- In-depth case studies on four large companies and their consumer mobility initiatives: a global tire manufacturer, Owens Corning, Geisinger Health System and Qantas.
We also grouped analyzed our survey data into two groups: companies that said there were ahead or far ahead of competitors in winning the digital mobile consumer, and companies that said they were behind or far behind. The differences between these two groups in how they answered a number of questions was revealing.
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