Drive Revenue and Loyalty by Engaging Mobile and Social Consumers

Prepared by

Dr. Phil Hendrix, Director immr and GigaOm Pro analyst

April 2013

A whitepaper sponsored by

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Acknowledgements

This whitepaper is sponsored by Mize, Inc., developers of the smarter customer engagement platform.

I would like to thank Mize and its management team – Ashok Kartham, Bruce Burke and Eric Gullekson – in particular, for their support, input and direction. While the whitepaper greatly benefited from their feedback and suggestions, the opinions and views expressed are those of the author.

I would also like to acknowledge and thank thought leaders Doug Stephens (Retail Prophet) and Bill Hanifin (Hanifin Loyalty) for their input and feedback on immr loyalty and customer experience research.

Doug Stephens and I are also presenting a webinar based on the whitepaper (April 11, 2013). For more information, contact Dr. Hendrix or m-ize.

About Mize

m-ize simplifies the customer experience by transforming how companies engage today’s connected, mobile and social consumers. m-ize directly connects consumers with Brands enabling easier access to products, knowledge and services. Consumers make more confident decisions and get the best value through instant access to relevant product information, reviews, recommendations and support from social networks and Brands. Companies accelerate revenues and foster loyalty by engaging and enhancing experience at all customer touch points.

The m-ize platform enables a personalized user experience, flexible brand orchestration, actionable insights and seamless enterprise integration. m-ize delivers smarter customer engagement rapidly through a consumer-centric channel or a branded solution utilizing Smart Blox; a portfolio of configurable components. The m-ize global team of experts leverages the latest developments in web, mobile, social, cloud and analytic technologies to deliver innovative solutions to Consumers, Brands, Retailers and Service providers.

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Contents

Acknowledgements .......................................................................................................................................... 2

About Mize ....................................................................................................................................................... 2

Introduction ..................................................................................................................................................... 4

Why Should Businesses Focus on Engagement? ............................................................................................. 5

Key Moments of Truth across the Customer’s Journey ................................................................................... 6

Are Customers Happy with their Experience? ................................................................................................. 7

The Ever Connected Consumer ........................................................................................................................ 8

Combining Mobile and PEERSM Strategies to Engage Consumers ................................................................... 9

Mobile Boosts Customer Satisfaction and Engagement ................................................................................ 11

Building Engaging Mobile Solutions – Critical Success Factors ...................................................................... 12

Conclusions and Recommendations .............................................................................................................. 13

About the Author ........................................................................................................................................... 16

Related immr Reports/Whitepapers.............................................................................................................. 17

Other Resources ............................................................................................................................................. 17

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Introduction

Historically, marketers have viewed consumers in a narrow, almost one-dimensional sense – especially in

advertising, engaging the consumer often refers to attracting attention and getting the advertiser’s

message across. As discussed in the next section, such a narrow view does not serve consumers or

businesses well. A recent Marketing Science Institute report views engagement more broadly as a

“psychological state… resulting from a consumer’s interactions with a product over time.” The authors

also note that engagement includes intrinsic, utilitarian and social aspects and differs from satisfaction.

Starbucks founder and Chairman Howard Schultz observed, "To be successful in an enduring way… we

have to be relevant to customers when they are outside our four walls… and that applies to any consumer

brand, whether Starbucks or a product like Tide.” For brands and retailers, relevance implies “engaging”

customers throughout their journey, including both pre-purchase (browsing, shopping, buying, etc.) and

post-purchase activities (using products, getting service, sharing their experience with others, etc.)

Consistent with this expansive view, we define engaging customers as follows:

This whitepaper outlines how leading companies can use mobile solutions to engage consumers as they

experience products and services across seven key “moments of truth,” from browsing to shopping,

buying and using products. The strategies and solutions are most important for companies seeking to

leverage mobile apps and solutions to engage customers and gain competitive advantage. Executives

responsible for marketing, sales and service/support as well as customer experience and customer

loyalty should find the perspectives and insights especially relevant.

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Why Should Businesses Focus on Engagement?

Business practices – especially marketing – are often maligned and the object of searing critiques. In a

post on HBR’s (Harvard Business Review) blog that generated 600+ comments and stirred up considerable

protest, Bill Lee argues that “Marketing Is Dead.” Roland Rust, former editor of the Journal of Marketing,

and co-authors call for organizations to “reinvent” their marketing departments and replace their

traditional CMO with a CCO (chief customer officer). Indeed, businesses are in the midst of a sea change

that calls for new ways of engaging consumers, as shown in the table below.

In his just released book What’s the Future of Business? social business guru Brian Solis chose an apt and

timely subtitle – Changing the Way Businesses Create Experiences. He argues that “businesses need to

create experiences that mean something… and spark engagement between consumers.” In Moving from

Transaction to Engagement, leading analyst and consultant Ray Wang provides a compelling contrast of

the differences and discusses implications for companies. Perhaps the strongest argument comes from

Geoffrey Moore (of Crossing the Chasm fame), who asserts that “engagement will be – arguably, already is

– the next big thing.” In the following sections we outline how companies can use mobile and social

solutions to enable and engage consumers by improving their pre- and post-purchase experiences.

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Key Moments of Truth across the Customer’s Journey

As shown below, moments of truth exist across customers’ journey, before, during and after purchase.

For example, when viewing TV, reading a magazine or even driving down the highway consumers are

exposed to companies’ ads and commercials – are the ads relevant and timely; informative; useful? If

not, the ads are ignored or, worse, seen as intrusive. As consumers plan, shop and purchase products,

they rely on information provided by brands, retailers and increasingly third-parties to compare and

decide. Perhaps the ultimate moment-of-truth is when a customer “unboxes” a purchase – do the look, fit

and feel match expectations; is it easy to set up and use; does it work “out of the box?” etc. Expectations

can be even higher when customers need assistance or require service.

While the moments-of-truth shown above have always existed, a number of factors have raised

customers’ expectations of companies they do business with.

Raising the Bar at Moments-of-Truth

Economy Challenging economic conditions forcing consumers to scrutinize purchases

Transparency Internet provides real-time visibility into companies’ and brands’ performance

Pricing e-commerce expanding number of competitors, intensifying price competition

Quality Competitors from China and other lower-cost countries closing the quality gap

Social Media Experiences shared instantly via Facebook, Twitter, Pinterest, other social media

Mobile Mobile consumers expect seamless, immediate access and response

Data Amazon, others personalizing consumers’ experience with big data, algorithms

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Are Customers Happy with their Experience?

Customers’ experiences are measured in a number of ways, from interactions with brands on social media

to their satisfaction with products, service and other aspects. In a recent national survey by immr, smart

phone owners rated 20 experiences from across the customer journey on a 5-point scale, with “top 2”

ratings of “Very Happy” and “Satisfied.” On average, across all 20 aspects only 1 in 7 consumers (14%) are

“Very Happy” with their experience. The percentages rating their experience less than “Satisfactory”

range from 30% up to 60% (actually, 75% for “Ads shown to you on your mobile device(s)”).

Shown below are ratings for a subset of the experiences. Even for the most favorably rated experience –

“Keeping up with new products of interest” – only 13% are “Very Happy” and 4 out of 10 are less than

satisfied. On several aspects, including the least favorably rated experience – “Keeping track of warranty,

maintenance, and recalls on products you’ve purchased” – a majority of consumers are less than satisfied.

The study also compared experiences of consumers who use a mobile app for each specific experience

with those who do not use a mobile app. Significantly, compared to non-users, mobile app users are much

happier with their experience (on average, 41% of app users “very happy” vs. 24% among non-users).

Implications Across the board, customers’ experiences fall short of their expectations

Mobile apps significantly improve customers’ experience at key moments-of-truth

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The Ever Connected Consumer

As “always on,” hyper-connected and similar labels suggest, the rapid adoption of mobile is transforming

how consumers connect with one another and businesses large and small. Chronicled by Pew, Nielsen,

comScore and other research organizations, the rate at which mobile devices are being adopted and used

by consumers of all ages is nothing short of remarkable. The following statistics indicate the importance:

Having reached a majority in the U.S. earlier this year, the ranks of smart phone owners continue to grow as nearly 9 out of 10 mobile phones purchased are smart phones.

Equipped with GPS, cameras and other sensors, smart phones are becoming the “remote control for our lives,” replacing dedicated PNDs (personal navigation devices), conventional cameras and other devices.

Individuals of all ages are using smartphones to capture and share experiences on social media – Facebook is now the repository for more than 1 in 3 photos on the internet.

With ubiquitous Wi-fi and cellular connectivity, consumers are increasingly relying on smart phones to connect to the internet for content, search, e-mail and many other purposes.

Along with location, sensors and other technologies, the confluence of mobile and social is transforming

consumers’ experience. As consumers connect, communicate and interact via mobile and social, they also

generate powerful digital signals that smart businesses can use to personalize and engage with customers.

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Combining Mobile and PEERSM Strategies to Engage Consumers

Starbucks, Walmart and other leading companies are leveraging mobile apps and solutions to remove

frictions and improve customers’ experiences. While strategies are numerous and varied, most fall into

the following categories – Personalizing, Enabling, Enhancing and Rewarding, or PEER for short. The Table

below provides an explanation and example of each category, while additional examples are provided on

the next page and detailed more fully in a forthcoming immr whitepaper (see Raising the Bar).

At present, many of the mobile apps and solutions used by consumers are developed by mobile platforms

and solution providers (Google, Facebook, Paypal, etc.) and third-party application developers. However,

by failing to develop and deploy their own mobile PEER strategies, companies and their brands are

relinquishing control and face the very real risk of being disintermediated. Presented in the next section

are specific strategies that businesses can employ to engage customers.

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Engaging Customers with Mobile at Key Moments of Truth

Shown below are examples of mobile strategies for engaging customers by moment-of-truth. The right-

most column offers an assessment of potential based on immr research and experience – the actual

potential may vary, of course, by product category and customer segment.

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Mobile Boosts Customer Satisfaction and Engagement

Data from two recent studies provide evidence of the potential value of mobile. In a forthcoming report

(If Shopping is Broken, Can Mobile Fix It?), smart phone owners rated their experience with some 20 pre-

purchase (browsing, discovery) and post-purchase (using, service, etc.) activities. For each of the 20

activities, ratings for consumers who use a mobile app for the specific purpose – e.g., comparing prices;

finding products in local stores; etc. – were compared to ratings of those not using a mobile app. The

research reveals an important finding – compared to non-users, mobile app users are significantly happier

with their experience on each of the 20 activities examined.

Research by the Temkin Group quantifies the ROI of customer experience in general:

Customer experience is highly correlated to loyalty… Customer experience leaders have more than

a 16 percentage point advantage over customer experience laggards in consumers’ willingness to

buy more, their reluctance to switch business away, and their likelihood to recommend.

Taken together, these findings suggest that (i) mobile solutions can significantly improve customers’

experiences, and (ii) by effectively integrating mobile into their strategies, companies can earn customers’

loyalty and admiration, stand out from competitors and reap the financial benefits.

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Building Engaging Mobile Solutions – Critical Success Factors

Developing mobile apps that successfully engage customers requires the capabilities shown below:

Critical Success Factors

Moments of Truth Intimately understand your Customers’ Journey and Key Moments of Truth

UX+UI Design Design compelling mobile User Experiences (UX) and User Interfaces (UI)

Social Integration Integrate and extract digital signals from social networks and social media

Personalization Learn and auto-adapt to customers, based on profile, context and behavior

Optimization Use machine learning (ML) + algorithms to optimize communications, offers

Security/Privacy Utilize opt-in, maintain transparency and enterprise-grade security

Analytics Capture and report data on users’ experience, behavior and feedback

System Integration Integrate mobile solutions with enterprise systems

For many organizations one of the most difficult challenges involves integrating what Geoffrey Moore calls

systems of engagement (mobile, social, etc.) with CRM and other enterprise systems of record. For

further discussion, see the immr report Building Custom Mobile Solutions for Enterprises.

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Conclusions and Recommendations

To summarize, the discussion above presents four main arguments:

“Moments of truth” represent key opportunities for brands and companies to engage customers and drive revenue and loyalty

Despite the importance, relatively few (less than 1 in 5) customers are happy with their experiences

Across the board, customers using mobile apps are much happier with their experience than their counterparts

To engage consumers, mobile solutions must be relevant, personalized, social, easy to use and, above all, enable, enhance and/or reward consumers’ experience.

Brands and retailers can pursue mobile engagement strategies in several different ways, ranging from the default of “do nothing” to leveraging PEER strategies across the consumer journey. While there are numerous variations, four key approaches to strategy are shown below:

Mobile Strategy Options

BYOA (Bring your own App)

While not really a strategy, the first option may be called BYOA – e.g., Bring Your Own App, whereby consumers are left to discover, download and use apps from app stores and independent developers and get content from third parties such as Google and Yahoo.

Mobile Website

A step up from BYOA, companies can employ a mobile web strategy, providing content and (potentially) services to consumers. In most cases the content and functionality are limited – for example, a hotel website may describe the property, provide directions and offer booking. However, for reviews, links to nearby attractions and other features customers would need to turn to a third-party solution such as TripAdvisor. Since “build it and they will come” won’t bring traffic, mobile web strategies must be supported by SEM (search engine marketing) and SEO (search engine optimization).

PEER – Focused

Focusing on a subset of moments of truth, companies can employ the PEER framework to personalize, enable, enhance and reward customers. For instance, a manufacturer might focus its efforts on enabling consumers who are shopping for and, once purchased, using its products, both important and likely to be high yield experiences; a service provider might focus on consumers for browsing and rewards.

PEER – Comprehensive

Extending the above, companies and brands can “take ownership” for each of the experiences across the customer journey, as the examples on p. 10 suggest. To pursue a comprehensive PEER strategy, a brand or retailer must work closely with partners and others in its value chain to insure that customers have seamless, friction-less and valued experiences.

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To build and deploy mobile solutions that deliver on PEER (focused or comprehensive), several models are

available.

Custom Develop – companies can develop their own solutions, using mobile development tools and deploying across a variety of platform (e.g., Android, iOS, etc.)

White label – for focused PEER strategies, companies can integrate apps from multiple independent developers into a “mobile suite” that has a consistent look and feel. Assembling white label apps into an integrated solution presents challenges, of course.

Platform – relying on the cloud, analytics and other tools, emerging platforms offer companies plug-and-play modules that can be combined to deliver on PEER across moments-of-truth. The m-ize platform, for example, currently offers modules that personalize and enable shopping and service/support, while a rewards module is under development. Each of the modules comes with personalization, optimization and social integration built-in.

The platform option combines the benefits of custom solutions (functionality, UX, etc.) and “off-the-shelf”

apps (low-cost, speed, etc.). Designed to scale and integrate securely with enterprise systems, platforms

can also mitigate IT and other hurdles that can make it difficult for brands and retailers to build and deploy

mobile engagement solutions.

Mobile PEER strategies, both focused and comprehensive, represent largely untapped opportunities for

brands and retailers. While Starbucks, Disney, Walmart and a handful of other pioneering companies are

making significant investments and experimenting aggressively, platforms such as m-ize allow other

companies to pursue and deploy mobile engagement solutions quickly, with less risk and at a much lower

cost. As brands and retailers adopt these platforms and demonstrate the benefits, both consumers and

the companies themselves stand to benefit.

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Copyright, citation and link

© Copyright immr 2013

Atlanta, GA 30328

U.S.A.

Produced in the United States of America

March 2013

All Rights Reserved

For more information, contact Dr. Phil Hendrix

Full citation:

Drive Revenue and Loyalty by Engaging Mobile and Social Consumers, Dr. Phil Hendrix, immr (whitepaper

sponsored by Mize, Inc.)

Abbreviated citation:

Drive Revenue and Loyalty by Engaging Mobile and Social Consumers, Dr. Phil Hendrix

Overview, Link to Download Report:

www.immr.org/engaging-mobile-and-social-consumers.html

http://info.m-ize.com/drive-revenue-and-loyalty-by-engaging-mobile-and-social-consumers

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About the Author

Dr. Phil Hendrix Dr. Phil Hendrix is the founder and director of immr, a research and advisory firm focused on market opportunities afforded by new technologies, and an analyst with GigaOm Pro. He specializes in helping organizations evaluate and capitalize on opportunities that are new-to-customers and new-to-market. Dr. Hendrix has extensive experience uncovering customer needs, identifying triggers and hurdles to

adoption, and developing strategies that unlock market opportunities, both B2C and B2B.

As an analyst, Phil focuses on mobile innovation and the implications for companies across industries. He is a regular contributor at leading industry conferences, including the World Summit Awards (Abu Dhabi), GigaOm’s Mobilize and Structure:Data, ad:tech, iMedia Summit, Mobile-loco, Social-Loco, Street Fight (hyperlocal), and others. His current work focuses on technology and its impacts on consumer behavior, especially shopping, M-commerce and mobile payment.

Recent reports have examined Mobile and Loyalty, Mobile and Shopping, PEER Strategies for Brands and Retailers, Digital Signals, Mobile App strategy and development, and other topics related to technology and new market opportunities.

As a consultant and advisor, Phil has led significant engagements with numerous startups (GeoIQ; m-ize.com; Company.com) and multiple business units of Fortune 100 clients in mobile and consumer electronics (AT&T, Verizon, Sprint, Sony Ericsson, HP, Barnes & Noble and others), financial services (American Express, MasterCard), transportation (Delta Airlines, UPS), insurance (Allstate, United Healthcare), healthcare (U.S. Oncology, Meridian Healthcare), and others.

Dr. Hendrix works closely with senior management and project teams on key issues, including market sizing, segmentation, positioning, and branding as well as innovation, user experience, and customer retention. Over the course of his career, Phil has helped clients conceive and successfully launch products, services and businesses in existing and new markets.

Before founding immr, Phil was a partner with DiamondCluster (strategy and technology consultancy), founder and head of IMS (Integrated Measurement Systems), and a principal with Mercer Management Consulting (now Oliver Wyman). He has held faculty positions at Emory University and the University of Michigan, where he taught courses in marketing, research, and buyer behavior for MBAs and executives. While at Michigan Dr. Hendrix also held a joint appointment as a research scientist in the Survey Research Center, Institute for Social Research.

Additional information on immr perspectives and reports prepared by Dr. Hendrix is available at immr and Slideshare, with additional information available at GigaOm Pro.

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Related immr Reports/Whitepapers

Raising the Bar - How Leading Companies are Using Mobile to Boost Loyalty

If Shopping is Broken, Can Mobile Fix It?

How SoLoMo is Empowering Consumers, Transforming Shopping and Disrupting Retailing and Advertising

How Consumers Are Using Local Search

Tuning into Consumers' Digital Signals

Other Resources

Retail Prophet – Doug Stephens’ blog

The Retail Revival, Doug Stephens, March 2013

Loyalty Truth – Bill Hanifin’s blog