Tag Archives: mobility initiatives

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.

Who Will Win the War? Not Necessarily the Companies That Spend the Most

TCS Digital Mobile Consumer StudyThese 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
Technologies and Services to Respond to Digital Mobile Consumers
(in US$ Millions, Adjusted for Average Revenue/Company)

Exhibit IX-4: Q16/Global: What Companies Will Spend in 2012 and 2015 on Technologies and Services to Respond to Digital Mobile Consumers (in US$ Millions, Adjusted for Average Revenue/Company)


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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Why Spending Wisely But Opportunistically is the Best Path

Key findings:

  • 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.


TCS Digital Mobile Consumer StudyThe 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.

 

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