Tag Archives: North America

North America: Key Success Factors in Winning Over the Digital Mobile Consumer: Creating Quality Apps and Getting Functions to Work Together

Numerous challenges confront companies that want to respond effectively and cost-efficiently to consumers who increasingly use mobile devices to transact business. Therefore, we wanted to know which elements in responding effectively and efficiently to the digital mobile consumer were considered the most important. We constructed a list of 14 factors that we had heard repeatedly in our interviews. On a scale of 1-5 (1=not at all important, 5= of highest importance), we asked survey respondents to grade these 14 success factors. To be sure, they aren’t the only factors. But they were enough to give us an understanding of what factors are more important than others.

What did we find? First, not one success factor stands much higher than all the others. (See Exhibit III-14.) The average scores were all between 3 and 4 on our scale of 1 to 5. However, the three highest-rated factors were these:

  • Developing mobile applications that are both useful and easy to use for consumers
  • Getting the business functions that “touch” consumers – especially marketing, sales and service – to work in a unified way on mobile initiatives
  • Making sure the company’s mobile apps or mobile-optimized web pages appear prominently in local search results. That is, when consumers enter a term into a search engine such as Google or Bing, does a company’s mobile app or mobile web pages appear near or at the top of search results?

Exhibit III-14: Q21/North America: Key Success Factors in
Winning Over Digital Mobile Consumers (Scale of Importance, 15)

 Exhibit III-14: Q21/North America: Key Success Factors in Winning Over Digital Mobile Consumers (Scale of Importance, 15)


 

Findings: North America
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North America: Annual Spending on Responding to the Digital Mobile Consumer: Airlines and Government in the Lead

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)

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)

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.

 

Findings: North America
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North American Companies Plan to Develop Mobile Apps to Run on Both Smartphones and Tablet Devices

We asked survey respondents about whether they had designed – or were planning to design over the next three years — mobile apps to run on smartphones, tablets, or both. Of course, the time it takes to develop apps exclusively for one type of device is greater than it is to develop one app that runs on all kinds of mobile devices. Their answers were revealing:

  • Nearly half (47%) say their mobile apps are designed just for smartphones or for tablets, but that it would change in the future.
  • They predict that by 2015, 61% of their mobile apps would be designed to run on both smartphones and tablets. (See Exhibit III-11.)

Exhibit III-11: Q15 and 15A/North America: Percent of
Mobile Apps Developed for Smartphones, Tablets or Both

Exhibit III-11: Q15 and 15A/North America: Percent of Mobile Apps Developed for Smartphones, Tablets or Both


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North America: Consumer Transactions Through Mobile Devices: Relatively Low But Predicted to Jump

Measured by the percent of total consumer interactions that are done through consumers’ mobile devices, North American companies that we polled reported the lowest level of activity of the four regions. On average, North American consumers conducted less than a quarter (24%) of their total purchase transactions through mobile devices with the companies we surveyed. (See Exhibit III-4.)

The companies reported conducting an even smaller number of their marketing transactions (that is, marketing campaigns designed exclusively for consumer mobile devices) – about 21%. And they estimated the percentage of customer service transactions by consumers using mobile devices to be 19% of all service transactions.


Exhibit III-4: Q11/North America: Measuring the
Impact of the Digital Consumer Across Industries

Exhibit III-4: Q11/North America: Measuring the Impact of the Digital Consumer Across Industries


Nonetheless, the North American companies predicted these percentages to increase sharply by 2015, with mobile-enabled purchase transactions rising to 38% of all consumer purchases; marketing campaigns for mobile devices constituting 37% of total campaigns; and post-sale service interactions through mobile devices comprising a third of total service interactions.

The experiences of State Farm Insurance Companies are instructive. The $63 billion (revenue) company launched its first mobile website long ago – in June 2006. Since then, the highly popular site lets consumers find an agent, call for a rate quote, an issue a claim, get help in the event of a car accident, and find a repair facility. “We want our customers to be able to interact with us in any way they choose, any time they choose,” Eli Winn, manager of enterprise Internet Solutions at the Bloomington, Ill., company, told a reporter.10

In looking at this data by North American industries, we see that sectors such as airlines and telecommunications are in the lead, reporting that they conduct the highest percentage of interactions with consumers who use mobile devices.

Exhibit III-5 shows this by consumer purchase transactions in 2012. Surprisingly, the automotive sector finished high on the list, although we imagine that respondents could have implied that “purchase” transactions included quotes.


Exhibit III-5: Q11/North America: Percent of Consumer
Purchases in 2012 Made Through Digital Mobile Devices

Exhibit III-5: Q11/North America: Percent of Consumer Purchases in 2012 Made Through Digital Mobile Devices


By 2015, our respondents in the airline and telecommunications industries foresee more than half of consumer purchases of their products/services to be conducted through mobile devices. The travel and media-related sectors also predict higher-than-average numbers here. (See Exhibit III-6.)

On the other end of the scale, the sectors predicting the lowest percentage of consumer purchase transactions through mobile devices are government, pharmaceuticals, transportation and consumer products manufacturing (food, beverages, etc.).


Exhibit III-6: Q11a/North America: Percent of Consumer Purchases
Expected by 2015 to be Made Through Digital Mobile Devices

Exhibit III-6: Q11a/North America: Percent of Consumer Purchases Expected by 2015 to be Made Through Digital Mobile Devices


What about the way that North American industries market their products and services? Which sectors are already designing and delivering a high percentage of marketing campaigns through mobile devices, and which sectors aren’t? And what about over the next three years?

Our data found that in 2012, telecommunications services, travel-related, airline companies and automotive manufacturers had the highest proportion of marketing campaigns designed for mobile devices (at least 27% of their total marketing campaigns). Those with the lowest percentage were pharmaceuticals, health care services, consumer products, and transportation. (See Exhibit III-7.)


Exhibit III-7: Q12/North America: Percent of Total 2012 Marketing Campaigns
Designed Exclusively for Consumers Using Digital Mobile Devices

Exhibit III-7: Q12/North America: Percent of Total 2012 Marketing Campaigns Designed Exclusively for Consumers Using Digital Mobile Devices


What about by 2015? Which North American industries will be focusing significantly in marketing through mobile devices? The two industries that expect the highest percentage of total purchases – telecommunications and airlines – also expect to have the highest percentage of marketing campaigns designed for mobile devices. (See Exhibit III-8.)

In fact, the airlines and telecommunications sectors expect to devote at least 50% of their total marketing campaigns for mobile devices in three years. Travel-related, automotive and retail also expect to have a higher percentage of their marketing campaigns designed for mobile devices than the overall average in North America.


Exhibit III-8: Q12a/North America: Percent of Total Marketing Campaigns in 2015
to be Designed Exclusively for Consumers Using Digital Mobile Devices

Exhibit III-8: Q12a/North America: Percent of Total Marketing Campaigns in 2015 to be Designed Exclusively for Consumers Using Digital Mobile Devices


The airlines and telecommunications sectors are also by far the two that are conducting the highest percentage of overall customer service transactions with consumers who use mobile devices. (See Exhibit III-9.) This year, the airlines we surveyed said an average 52% of their total customer service interactions would be done with consumers who use mobile devices. Telecommunications were next – although a distant No. 2 – with an average 35% of total customer service interactions conducted by consumers using mobile devices. Industries with the lowest proportion of customer service transactions conducted through mobile devices were pharmaceuticals, media and healthcare services.


Exhibit III-9: Q13/North America: Percent of 2012 Customer Service Transactions
(Post-Purchase) Conducted With Consumers Who Use Digital Mobile Devices

Exhibit III-9: Q13/North America: Percent of 2012 Customer Service Transactions (Post-Purchase) Conducted With Consumers Who Use Digital Mobile Devices


The predicted picture for 2015 looks quite similar for the four industries that reported the highest percentage of service transactions being mobile-initiated this year: airlines, telecommunications, automakers, and energy/utility companies. (See Exhibit III-10.) In fact, North American airlines predict consumers to initiate nearly three-quarters of their service interactions – 72.5% — through mobile devices in three years. Telecommunications predict about 53% of total service interactions. No other industry was close.

However, the banking sector predicts a doubling in the percentage of consumer service transactions through mobile devices by 2015 – from about 16% today to 33% in three years. Retailers, too, expect a spike here, from 17.5% to 32.7% of service interactions coming from mobile devices.


Exhibit III-10: Q13a/North America: Percent of Customer Service Transactions in
2015 Expected to be Conducted with Consumers Who Use Digital Mobile Devices

Exhibit III-10: Q13a/North America: Percent of Customer Service Transactions in 2015 Expected to be Conducted with Consumers Who Use Digital Mobile Devices


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10 Feb. 1, 2012 article in Mobile Marketer, “State Farm mobile site ranks top in experience,” by Lauren Johnson.

 

Findings: North America
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North America: Degree of Product and Process Change: Moderate to Date but Expected to Increase

To get an overall sense of how much companies believe they’ve changed their products and processes to adapt to consumers who do business with them using mobile devices, we asked survey respondents in North America (as well as the other three regions) to rate the degree of change they’ve made in five years on a scale of 1 to 7 (1= no change at all, 4=moderate, 7= very high):

  • In marketing campaigns
  • In selling approaches
  • In post-sale customer service processes
  • In how they work with suppliers
  • In their core products and services

In addition, we asked respondents to gauge the degree of change on these five counts to date, as well as what they predict in three years (by 2015). The exhibit below (Exhibit III-1) presents these results.


Exhibit III-1: Q9+10/North America: Degree to Which Companies Have Made
and Will Make Changes to Respond to Digital Mobile Consumers
(Scale of 1-7, 1=none, 4=moderate, 7=very high)

Exhibit III-1: Q9+10/North America: Degree to Which Companies Have Made and Will Make Changes to Respond to Digital Mobile Consumers (Scale of 1-7, 1=none, 4=moderate, 7=very high)


To date, North American companies report changing their marketing campaigns the most (4.81 on the scale of 1-7), and changing their products/services the least (4.05). All these results are between 4 and 5 on our scale – essentially meaning that companies see their changes in products and processes as being “moderate.”

By the year 2015, they predict making bigger changes, yet still short of “high” degrees of change in four of the five areas, with each averaging between 5 and 6 on the scale that we provided. The exception was the way they work with suppliers, which received a 4.63 average rating.

We then averaged these five pieces of data for each industry we surveyed – that is, we gave each sector a composite score of product and process change by adding the values of each of the five factors and then dividing by five. In looking at this composite data by industry (see Exhibit III-2), we see certain sectors believing they have made far more substantial changes in products and processes than other sectors:

  • Industries reporting much greater than average (across industries) changes: Telecommunications services, airlines, health care services, travel/hospitality/leisure, and retail.
  • Industries reporting much lower than average changes: industrial manufacturers (the lowest), government and pharmaceuticals.

Exhibit III-2: Q9, 1-5/North America: Comparing Industries in Degree of Change in Products and Processes to Date to Respond to Digital Mobile Consumers
(Scale of 1-7, 1=none, 4=moderate, 7=very high)

Exhibit III-2: Q9, 1-5/North America: Comparing Industries in Degree of Change in Products and Processes to Date to Respond to Digital Mobile Consumers (Scale of 1-7, 1=none, 4=moderate, 7=very high)


However, the picture is expected to change little in three years. (See Exhibit III-3.) We asked the North American companies to predict the degree of change they would make to products and processes by 2015, all to win over the digital mobile consumer. Using our scale of 1-7, the five industries that predicted the greatest amount of change were telecommunications, health care services, retail, and travel/hospitality/leisure. The industries predicting the lowest degree of change were government and energy/utilities. Interestingly, industrial manufacturers predicted they would have to make far more substantial changes than they have done to date (with an average score of 5.04 for 2015 vs. 3.73 for 2012).


Exhibit III-3: Q10, 1-5/North America: Comparing Industries in Degree of Change in
Products and Processes Expected by 2015 to Respond to Digital Mobile Consumers
(Scale of 1-7, 1= no change, 7 = very high change) 

Exhibit III-3: Q10, 1-5/North America: Comparing Industries in Degree of Change in Products and Processes Expected by 2015 to Respond to Digital Mobile Consumers (Scale of 1-7, 1= no change, 7 = very high change)


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Findings: North America
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North America: Just Ramping Up for the Digital Mobile Consumer – Key Findings

In the previous section of the report, we compared and contrasted the research results in our four regions: North America, Europe, Asia-Pacific and Latin America. In this section of the report, we present the results in depth within each region.

We’ll start with the two regions in which we generated the largest number of surveys – North America and Europe. Then we’ll explore our Asia-Pacific and Latin America findings. For each region, we’ll begin the discussion with our key findings.

Key findings:

  • While most industries reported making some amount of changes to their product/service offerings and the processes by which they market, sell and service them, the industries reporting the greatest degree of change (on a 1-7 scale) were telecommunications, airlines, healthcare services, retail and travel/hospitality.
  • We found three success factors in responding effective to digital mobile consumers: developing mobile apps that were useful and easy for consumers to use; getting marketing, sales and service to collaborate; and optimizing the mobile sites or apps for local searches that consumers do on their mobile devices.

 

Findings: North America
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