mobile e-channel experience: a multichannel perspective

Survey Results

Mobile E-Channel Experience:A Multichannel Perspective

Authors

Sailesh YellumahantiGaetano Pellegrino

Cisco Internet Business Solutions Group (IBSG)

Cisco IBSG Copyright © 2007 Cisco Systems, Inc. All rights reserved.

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Are Mobile Service Providers Behind the Curve in Their E-Channels?Having conquered their initial fears about the security of Internet commerce, consumers are embracing the convenience and selection that online shopping provides. It is an important channel for retailers and mobile service providers alike—not only for selling products, but also for informing, educating, and servicing customers.

The online channel, or “e-channel,” has been the focus of retailers and mobile service providers for reaching both tech-savvy customers who generate higher-than-average revenue per user and the youth segment. And, its scope is rapidly expanding; increas-ingly, the e-channel is becoming a mainstream method for selling and supporting mobile communications products and services. According to Forrester, online shopping is forecasted to reach US$323 billion in the United States (10 percent of all retail sales) by 2010, with almost half of all U.S. households shopping online—a 40 percent increase over 2005.1 In Western Europe, 38 percent of consumers purchased mobile phones online, a 23 percent increase from the previous year.2

The e-channel is an important touch point that contributes to the overall customer experience offered by mobile service providers. It has been noted that 20 to 50 percent of consumers research their purchases online prior to buying products in the store.3 Yet, while the online channel is increasingly used as an important tool for educating, retaining, and upselling valuable customers, sales of mobile services through e-channels are sluggish.

When buying mobile products from mobile service providers, consumers want an online shopping experience similar to that offered by the best online retailers. Mobile service providers can no longer compare themselves to others in the mobile industry; they need to examine other retail-focused industries to learn how they are profiting from their e-channels. According to the American Index of Customer Satisfaction, the mobile services industry ranked 40th out of 43 industries; mobile services were slightly ahead of the airline industry and below the insurance industry, whereas online retailers ranked fourth.4

What does the e-channel phenomenon mean to the world of mobile service providers along with retailers that sell mobile products and services? What can these mobile providers learn to grow their online sales, as well as in-store transactions? And, what actionable steps can they take to enhance the online experience?

Mobile E-Channel Experience: A Multichannel Perspective

Cisco IBSG Copyright © 2007 Cisco Systems, Inc. All rights reserved.2

Survey Results

1 “U.S. eCommerce: Five-Year Forecast and Data Overview,” Forrester, October 2006 2 eMarketer; data covers the United Kingdom, Germany, France, Spain, Italy, Denmark,

Norway, Sweden, Belgium, and the Netherlands, January 20073 “Net Gains,” Mobile magazine, January 20074 American Customer Satisfaction Index, 2006

Prepared by Cisco Internet Business Solutions Group

Cisco Systems, Inc., IBSG Copyright © 2007 Cisco Systems, Inc. All rights reserved.

To answer these questions, the Cisco® Internet Business Solutions Group (IBSG) assessed the e-channels of 27 major U.S., European, and Australian companies selling mobile products and services. The companies in the study include the top mobile service providers, pure-play mobile retailers, major online retailers, and leading big-box and discount retailers that sell mobile products and services online—collectively referred to as mobile providers. IBSG analyzed the entire purchasing cycle, including customer education, interaction, transaction, and product returns to compare the effectiveness of the front-end and back-end processes of these businesses. In parallel to the study, IBSG conducted an e-channel assessment of 27 additional retailers that sell online but whose main focus is not mobile products and services (referred to in this document as nonmobile retailers), extending the study’s total number of companies to 54. (A list of companies assessed in the study and definitions of the kinds of mobile providers and nonmobile retailers can be found in the appendix.)

From a consumer’s point of view, each Website was evaluated from an “outside-in” perspective to measure the buyer’s experience throughout the shopping lifecycle. The study reviewed 66 discrete attributes, such as searching for a product or service by a product feature and returning an online purchase to the store. These attributes were placed into five categories (in which each company was also ranked): ease of use, personalization, content, reliability of transactions, and the level of interaction possible between the consumer and the online retailer, and among online shoppers.

Mobile Service Providers Exceed Market PerceptionsContrary to conventional wisdom, IBSG found that mobile service providers offer a stronger experience through their e-channels as a whole compared to retailers offering mobile products/services, as shown in Figure 1.

Figure 1. Relative Rankings of Mobile Providers Across All Capabilities

Source: Cisco IBSG, 2007

Survey Results

3

Ver

izon

Wire

less

Car

pho

ne W

areh

ouse

Bes

t Buy

*

Lets

Talk

.com

T-M

obile

US

A

Cin

gul

ar

Nex

tel

Tele

com

Ital

ia M

obile

T-M

oblie

Ger

man

y

Vod

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ly

Tels

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Am

azon

.com

*

Sp

rint

Vod

afon

e U

K

Rad

ioS

hack

3 Ita

ly

Telia

Son

era

Circ

uit C

ity*

Wire

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Virg

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obile

UK

Virg

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obile

US

A

Ora

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Pho

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Wal

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Mov

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70%

Note: *Indicates that these companies are also assessed in the non-mobile retail study

60%

50%

40%

30%

20%

Leaders Challengers Followers

Service ProviderMobile Retailer

Overall, IBSG discovered that seven out of the top 10 online retailers of mobile products and services were mobile service providers. These providers fall into three groups: leaders, challengers, and followers. Leaders, such as Verizon Wireless and Carphone Warehouse, offer a superior e-channel experience, getting most of the basics right. Challengers, such as Telstra and RadioShack, are those who can catch up with leaders by making modest changes to their e-channels. Followers offer basic functionality but require significant improvements.

Building a FoundationThe strong performance of mobile service providers is due primarily to excellence in foundational (basic) elements—consumer “must haves” that are non-negotiable, such as ease of use; limited personalization; related content; and secure, reliable transactions (see Figure 2).

Figure 2. Top-Ranking Mobile Providers in Foundational Elements


Survey Results

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• Excellent search features• Retail feel; promotions, best sellers

easily available

• Easiest site to use among mobile providers surveyed

• Nice layout, good visual display of features, simple to navigate

73%

75%

77%

76%

76%

75%

• Search by brand and form factor• Provides multiple carrier options in

first level of comparison shopping

• Interactive video demos of handsets• Excellent phone simulator• Intuitive and easy to use

• Clear, consistent, and simple design• Intuitive navigation between landing

page and entertainment sites• One of the easiest with which to

transact and make returns

Foundational

• Well-structured Website and GUI• Easy to find information and intuitive

Italy

Germany

A simple-to-use portal with search capabilities that enable users to navigate through a maze of products, service plans, networks, and offers, and then compare their choices, is a specific example of a foundational element. Of the mobile providers surveyed, 80 percent offer product content with appropriate levels of product characteristics for different kinds of consumers. A majority of these companies prominently display and clearly explain security and privacy assurances, which is important to increasing main-stream consumer penetration of online shopping. Fifty percent offer side-by-side com-parisons of features and prices, 40 percent offer pictorial representations of features, and 70 percent actively showcase wireless number portability information. Surprisingly, portal searches as well as context-appropriate (searching for specific information) self-help functionality were not a strength of mobile service providers and were offered by only 40 percent of those IBSG sampled.

IBSG found that mobile service providers generally offer a consistent Web experience across different landing pages and Web properties such as music, video, and entertain-ment sites. Speedy access to information such as new products, promotions, and top sellers, however, is not a strong point. While store locations are prominently placed by a majority of companies sampled, only 35 percent showcase services offered at stores.

The study reports mixed reviews when it comes to the transaction experience among consumers. The transactions process among mobile providers was reported to be easier compared to returns, with easy checkout and invoicing, for example. More than 60 percent of the mobile providers surveyed have Websites that require just three to five clicks to complete a purchase transaction. While the purchase experience was gen-erally positive, the returns process was challenging across the board among all mobile providers, with only 50 percent of mobile service providers offering an acceptable returns process. Common problems include handing off customer inquiries for return authorizations to multiple parties, being on hold too long with a customer service rep, and providers not notifying customers of their credit amounts.

European mobile providers specifically have a higher share of troubles with shipping and returns. Courier deliveries are not very flexible in parts of Europe and, moreover, customers have to contact couriers directly because the mobile provider supplies only the number of the transportation letter and is not able to track the package. In some European countries, the post office handles returns rather than the courier, which tends to slow down the returns process.

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Emerging from the PackThe more sophisticated aspects of the e-channel that take users to a new level of experience, both in terms of convenience and satisfaction, are considered “emerging” capabilities and include functionality related to enhanced personalization, multichannel interaction, advanced content, and interaction with the site and with other shoppers. If foundational capabilities are essential elements a retailer needs to be viable in the online channel, then emerging capabilities represent the “extras” that are outside the standard online shopping experience.

The study found that mobile providers lag in this area. Specifically, mobile service providers fall behind their mobile retail counterparts. While the average performance score for the all mobile providers surveyed in foundational elements was 64 percent, the score for emerging capabilities was only 20 percent. Even the top performer in this category scored only 32 percent (see Figure 3).

Figure 3. Top-Ranking Mobile Providers in Emerging Capabilities


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Survey Results

• Multichannel capabilities: identifies if item is in stock

• Proactively provides info on stores closest to your zip code

• Excellent phone-tariff analyzer• “Mobile Talk” e-newsletter• Online community forum• New product availability alerts

27%

27%

27%

• Proactive suggestion of services as items are added to shopping cart and during tariff selection

• Easy-to-use bundles proactively made available

• Proactive suggestions of packages and services

• Search by user-defined parameters

30% • Coupon option during the buying process when eligible

• Suggested services: discount accessory packages and services

• User and third-party reviews

28%

32% • Price comparison options• User reviews• Recommendations

Emerging

Clearly, excellence in foundational elements alone is not enough to attract and retain online shoppers. Major trends in the changing world of online retail include offering functionality in the following areas:

Multichannel InteractionRemoving the barriers between a company’s Website and store is one of the biggest areas of importance when it comes to multichannel interaction. IBSG found that most mobile service providers do not take advantage of their online presence to increase in-store transactions. For example, customers should be able to research and order products and services online and pick up their orders at the store if they so wish. Interaction between Websites and stores is minimal to date and is run separately, with no collaboration. In fact, only one service provider among 27 companies surveyed offers in-store pickup of a postpaid online order. Among the mobile retailers surveyed, only two offer in-store pickup or return of a prepaid phone order generated online. In one instance, the call center of a leading mobile retailer’s online channel actively discouraged consumers from shopping at the store, noting price disparities between both channels.

IBSG did not find any options for starting a shopping order online and completing it at the store. For example, it would be ideal if a shopper could research a product online, add the information to a shopping basket, and then save the information online. From there, the shopper could go to the store to see the product in person and ask a store sales rep to retrieve the saved information so that the rep could advise the shopper more specifically about available options. This example may seem too idealistic, but is not impossible to achieve and is a prime example of how mobile providers can apply emerging technologies to blur the line between online and in-store channels.

Increasing InteractionThe need to interact with a company’s Website and the desire of customers to interact with one another are becoming essential parts of the e-channel experience. For instance, “click to chat,” which enables online shoppers to communicate directly with a customer service representative at the click of a button at various points in the shop-ping cycle, is the most popular mode of interaction offered. But, it is provided by only 30 percent of mobile providers in the United States and only 10 percent in Europe.

Web 2.0 and other innovative Web technologies will only encourage more social networking and interactivity, making it an expectation among younger consumers in particular. Mobile service providers are especially weak in enabling social networking around their sites. They have taken baby steps in developing communities around Web portals with options such as message boards, customer reviews, community sites, and “shopping with a friend.”

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Access to ContentMobile service providers are successful in offering content such as games, video, and audio in a seamless fashion, but they fall short when it comes to user-generated content. Unlike their nonmobile retail counterparts, mobile providers do not actively use video to sell or service their customers.

Intelligent ToolsSmart tools that guide customers through the shopping lifecycle, from research through transaction, are necessary for helping shoppers purchase increasingly complex prod-ucts and services online. While mobile leaders such as Carphone Warehouse offer tools for consumers to research and make the most appropriate phone or service selection, only 28 percent of the mobile providers offered any smart or intelligent tools.

Nonmobile Retailers Excel Beyond the Basics In aggregate, leading nonmobile retailers offer a superior experience, scoring 64 percent on average compared to 55 percent for the leading mobile providers, because they excel in the area of emerging technologies, as shown in Figure 4. (No mobile pro-vider is in the top 10 of the 54 companies assessed, which include mobile providers and nonmobile retailers. In general, however, mobile providers excel in foundational elements, taking seven out of the top 10 spots in the extended sample.)

Figure 4. Top-Ranking Nonmobile Retailers in Foundational and Emerging Capabilities


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Survey Results

66%

65%

64%

63%

59% Slick look and feel with multiple opportunities for user to provide feedback

Revolutionary multichannel integration with 24x24 program6 focused on user feedback

Pushing the edge of the envelope—an online “piazza” that encourages visitors to “linger longer”

5x5 multichannel program5; excellent user interaction and virtualization capabilities

Caters to customers with community forums, music, events, and multichannel integration

Emerging

73%

71% Tie between Scion and Cabela’s—easy with which to transact, particularly if you’re Gen Y and/or a hunting/ fishing aficionado

Strong focus on SMB with tools and foundational capabilities in place to serve that community

78%

75%

73% Amazon functionality incorporated into Target’s back end with additional store channel

Excellent performer from last year—still strong as an easy site with which to transact

Strong, basic transactional capabilities; easy to shop and make returns

Foundational

5 Sears 5x5 program enables shoppers to place an order online with a guarantee that the order will be available in a Sears store within five minutes. If your order isn’t ready in five minutes, you will receive a $5 coupon redeemable at any Sears store.

6 Circuit City 24x24 policy promises 24-minute turnaround for in-store pickup of an order placed online. If order isn’t ready in 24 minutes, customer receives $24 from Circuit City.

Removing the barriers between a company’s Website and store has been the focus of retail leaders. Circuit City and Sears have created seamless multichannel retailing by offering programs such as online shopping with in-store pickup minutes later, seven days a week. IBSG found that 30 percent of the nonmobile retailers surveyed provide online visibility into their stores’ inventory, with Lowe’s defining best-practice perfor-mance by offering inventory availability at multiple, nearby locations.

Many nonmobile retail leaders are addressing this phenomenon of social networking to increase the frequency of online visits, in-store transactions, and overall growth. Of those retailers surveyed, 48 percent allow shoppers to e-mail product information directly to a friend, 63 percent allow users to post and view product reviews, and 30 percent facilitate communication among users via online forums and message boards (Cabela’s, Dell, and Scion are active in this area).

Offering users seamless access to content is another area where nonmobile retailers excel; 86 percent of those surveyed use online video and audio to help sell or enrich the user’s experience, with many retailers providing instructional videos on how to use products/services. Sears, for instance, is taking video one step further, allowing users to post their own videos showing their products in “action” as part of certain Sears promo-tions. The leading online retailers also provide contextual search functions with user-relevant output displayed in an organized fashion.

Online configuration and virtual product design tools are just two examples of how nonmobile retail leaders are using intelligent programs to help users personalize their shopping experience (which IBSG has not seen among mobile providers). Sears offers online configuration tools that help users design their kitchens, dorms, and more with appliances and color palettes. Amazon.com, for instance, provides a truly personal online experience with features that include “my store,” which lets users customize their Web landing pages.

The E-Channel EvolutionA successful e-channel begins with mobile providers knowing who their customers are and engineering their e-channels to meet customers’ expectations. Mobile providers must establish a clear vision in line with market evolution, assess gaps, and translate their vision into an actionable roadmap. There is no one-size-fits-all approach, but there is a place to start.

Getting the basics right to retain and increase online customers is just the beginning. Foundational capabilities such as ease of use (which involves site design, navigation, and search capabilities) and transactions (such as purchasing, shipping, and returns) should be executed flawlessly. Customers expect their online transactions to be simple, reliable, and available at all times. When any of these capabilities falls short, the provider’s brand is jeopardized. While excellent strides in the basics are being made by mobile providers, further work to make incremental investments in this area will help elevate the e-channel experience.

Survey Results


Cisco Systems, Inc., IBSG Copyright © 2007 Cisco Systems, Inc. All rights reserved.�

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Survey Results



Focusing on emerging capabilities will help mobile providers alter the online experi-ence greatly. Blurring the line between online and in-store shopping, investing in tech-nologies that enhance two-way interaction, and implementing intelligent selling tools are some major capabilities that will only improve the e-channel experience. Customers do not differentiate between the online and offline channels of mobile providers; they see both as one company with the promise of one brand. With companies like Circuit City and Sears leading the way in multichannel interaction, customers will, in turn, expect a seamless shopping experience from mobile providers. While there are chal-lenges to both infrastructure and organization due to the multichannel framework, doing nothing is not an option.

Online customers have come to expect a two-way dialogue with retailers; leaders use their Web presence as a feedback mechanism where users can review products and provide an immediate response to their online experience. By soliciting customer opinions and being willing to respond, mobile providers can build a rapport that leads to greater brand loyalty. In addition, customers like to interact with others visiting a site and expect retailers to provide a conduit to facilitate that interaction. Companies such as Scion and Cabela’s, which are identified as “lifestyle brands,” actively encourage social networking among their customers. Spending time on their sites is the Web equivalent to hanging out with friends, complete with music, video, and ongoing conversation about common interests.

E-channels must be viewed as an integral part of the customer strategy and company brand, as it is a low-cost channel for acquisition, upselling, and service, as well as a major component of the customer experience. Mobile providers should actively encourage and create incentives for customers to use their Websites. Additionally, both the stores and e-channels should cross-promote and drive traffic to each other to maximize the value to both the customer and the mobile provider.

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AppendixMobile providers: companies that sell mobile products and services online, including mobile service providers, pure-play mobile retailers, major online retailers, and leading big-box and discount retailers.

Mobile service providers: companies that own mobile networks and sell mobility products and services, as well as mobile virtual network operators that offer mobility services without owning mobile networks.

AT&T

Movistar

Nextel

Orange

Sprint

TeliaSonera

Mobile retailers: third-party retailers that sell mobile products and services online, including pure-play mobile retailers, major online retailers, and leading big-box and discount retailers.

Amazon.com

Best Buy

Carphone Warehouse

Circuit City

Carrefour group

Nonmobile retailers: retailers that sell online, and whose focus is mostly on nonmobile services. They include general merchandisers, drugstores, department stores, and top e-tailers.

Amazon.com

Apple

Best Buy

Cabela’s

CDW

Circuit City

Costco

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Survey Results

Telstra

Tesco

3 Italy

Telecom Italia Mobile

T-Mobile Germany

T-Mobile USA

LetsTalk.com

Phones 4u

RadioShack

Wal-Mart

Wirefly

CVS

Dell

Federated

Gap

The Home Depot

HP

JCPenney

Lowe’s

Macy’s

Newegg

OfficeMax

QVC

Sears

Scion

SonyStyle

Staples

Target

Walgreens

Wal-Mart

Zappos.com

Verizon Wireless

Virgin Mobile UK

Virgin Mobile USA

Vodafone Italy

Vodafone UK

More InformationThe Cisco Internet Business Solutions Group (IBSG), the global strategic consulting arm of Cisco, helps Global Fortune 500 companies and public organizations transform the way they do business—first by designing innovative business processes, and then by integrating advanced technologies into visionary roadmaps that improve customer experience and revenue growth.

For further information about IBSG, visit http://www.cisco.com/go/ibsg

Americas HeadquartersCisco Systems, Inc.170 West Tasman DriveSan Jose, CA �5134-1706USAwww.cisco.comTel: 408 526-4000800 553-NETS (6387)Fax: 408 527-0883

Asia Pacific HeadquartersCisco Systems, Inc.168 Robinson Road#28-01 Capital TowerSingapore 068�12www.cisco.comTel: +65 6317 7777Fax: +65 6317 77��

Europe HeadquartersCisco Systems International BVHaarlerbergparkHaarlerbergweg 13-1�1101 CH AmsterdamThe Netherlandswww-europe.cisco.comTel: +31 0 800 020 07�1Fax: +31 0 20 357 1100

Cisco has more than 200 offices worldwide. Addresses, phone numbers, and fax numbers are listed on the Cisco Website at www.cisco.com/go/offices.

©2007 Cisco Systems, Inc. All rights reserved. Cisco, the Cisco logo, and Cisco Systems are registered trademarks of Cisco Systems, Inc. and/or its affiliates in the United States and certain other countries.

All other trademarks mentioned in this document or Website are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Cisco and any other company.

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Contact Information

To learn more about the Cisco IBSG Mobile E-Channel assessment, please contact:

Sailesh YellumahantiPrincipalInternet Business Solutions Group

Cisco 500 Northridge Road, Suite 700 Atlanta, GA 30350-3354 [email protected] Mobile: 770 335-3�2�

Gaetano PellegrinoPrincipalInternet Business Solutions Group

CiscoVia del Serafico, 20000141 Roma [email protected]: +3� 0 6516 45 71

mailto:[email protected]

mailto:[email protected]

mobile e-channel experience: a multichannel perspective

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