MOBILE FOR RETAILERS by Sarah Kuntsal, Associate Director, Strategy and Planning, icrossing

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1 THE CMO'S GUIDE TO MOBILE FOR RETAILERS by Sarah Kuntsal, Associate Director, Strategy and Planning, icrossing Still waiting for "the year of mobile?" It was And 2011 and In fact, with the current speed of mobile adoption in the U.S., the "year of mobile" is here to stay. It s time to retire that thinking and start looking at mobile as an essential part of building a connected brand. Mobile devices (feature phones, smartphones, and tablets) have become an everyday part of consumers lives. The recent introduction of low-cost smartphones and tablets has helped fuel the growth of mobile ownership. As of June 2013, 91% of the adult population in the U.S. owned a cell phone, and 61% of those cell owners were classified as smartphone owners 1. That means, for the first time, the majority of Americans (56%) own a smartphone. This boom in mobile technology has fundamentally changed the way consumers travel, shop, and interact with others. As a result, brands need to shift their approach to not only mobile but marketing and the overall customer experience as well. In this POV, we ll look at three main aspects of mobile and retail: the move towards mobile shopping, mobile couponing, and how mobile devices are affecting traditional retail experiences, and what brands need to do to stay current with consumers mobile trends and expectations. 1 PEW Internet Research, Smartphone Ownership June 2013.

2 WHY MOBILE? Mobile devices have drastically changed the way consumers interact with content. In 2012, desktop search volume declined for the first time, while the share of queries from smartphones and tablets reached roughly 20%. SEM activity on mobile devices was even more exciting: in 2012, U.S. marketers that ran search campaigns targeted to mobile devices saw clickthrough rates well above desktop averages and cost-per-click rates below desktop norms 2. The smaller screen and limited ad space means consumers can better focus on what they re seeing without many of the traditional distractions they find on desktop interactions. The main draw of both smartphones and tablets is their portability. And it s that portability that gives marketers the chance to deliver content (or features) to their consumers exactly when and where they need them. Not sure if you could buy that book cheaper on Amazon? There s an app for that. Wondering if that sound system would work with your TV? Scan a QR code and find out. Mobile is unique because it allows retailers to reach consumers when they are shopping in a store or thinking about a product on the go. Every part of the purchase funnel can be affected by mobile from researching products to placing an order. But mobile isn t just about utility consumers will be looking to engage with your brand on mobile in the same way they do elsewhere. The brands that succeed in mobile will be those who tie together what consumers love about the brand with what they love about mobile to create memorable experiences that, over time, lead to brand momentum. MOBILE SHOPPING With mobile, consumers no longer go shopping - they always are shopping 3. Mobile s always-on technology allows consumers to research and purchase a product at any time of day, in any location. It s no longer constrained to weekend trips to the mall or online shopping in front of a desktop. Now consumers can easily research a product on their way to work, save a coupon to their phone, or price-check an item in a store. Deal sites such as Gilt Groupe have helped push the boundaries of mobile shopping with their mobile properties. Gilt s sales start at 9am PST every morning a time when most of their consumers are at work or commuting. To ensure consumers can access a Gilt sale anytime and anywhere, Gilt Groupe has developed robust apps and sites for mobile devices that allow their consumers to find and purchase products exactly when they go on sale. The mobile properties allow the products to be the stars with photo-focused pages and easy browsing, and they feature mobile-friendly gestures and intuitive navigation to ensure the shopping process is quick and easy. They further ensure consumers don t miss out on sales with the addition of electronic sale alerts and mobile-only discounts. This focus on mobile has translated into big sales for Gilt: It now receives more than 50% of its daily visitors from mobile devices, and 40% of total revenue from mobile commerce 4. Gilt Mobile 2 emarketer, State of Mobile Search 2013: Key Trends in Mobile SEO and SEM. April Mobile Influence: The New Power of the Consumer by Chuck Martin. June Internet Retailer, Gilt Groupe will offer mobile-only deals all summer long. June

3 Gilt s success in mobile can be tied to the following: 1. Simplicity: Gilt has created useful and usable mobile touchpoints that make mobile shopping easy. Simple design, beautiful imagery, quick load time, and one-click purchases make for an enjoyable mobile browsing experience and cut down on wasted time and clicks. 2. Successful (and frequent) mobile promotions: Gilt regularly offers features to mobile-only users. Android users received free shipping during the first week after the app launched. Mobile-only flash sales are run during the summer when consumers are away from their desktops. Gilt's Mobile Promotions 3. Constant Engagement: Consumers are busy, but daily alerts help remind them to return to the brand and browse the newest sale. And in a world where 22% of apps are opened only once, it s important to keep consumers interested 5. MOBILE COUPONING Mobile couponing has boomed in the last few years. emarketer expects mobile coupon users to grow to 53.2 million in 2014, up from just 12.3 million in Plus, users are 10 times more likely to use coupons on their smartphone, rather than coupons snipped from print publications 6. There are a variety of ways to distribute mobile specials to consumers, including: + Social and Location Tie-ins. A large number of brands, such as Walgreens and H&M, are working with location-based apps such as Facebook Places and Foursquare to help deliver coupons to consumers who check in to their brick-and-mortar locations. Coupons range from a simple dollar off discount to a loyalty coupon for consumers who repeatedly check in at a location. These coupons help reach consumers when they are in the moment of sale and help push them further down the purchase funnel. + Text or Coupons. Many brands, such as Payless and Crocs, allow consumers to text or a code to a specific address in order to receive a coupon in return. The lack of a location check-in means the prompt can be delivered in-store or in traditional print or digital marketing. QR codes can be used in a similar manner, although QR codes should only be placed in easy-to-scan locations like mailers (not billboards). + Dedicated Coupon Apps. For brands with a large quantity of coupons that change H&M's Foursquare Coupon frequently, such as Target or Wal-Mart, the creation of a mobile-optimized coupon site or app helps consumers organize and find the coupons relevant for them. Target s recently-released Cartwheel app allows consumers to sign in with their Facebook account and access a variety of coupons that can be saved for later, shared with 5 Yahoo Finance, App Downloads: A Deceptive Measure of Success. May Mad Mobile News, Mobile Coupon Redemption Growing in Popularity, Set to Double in March

4 friends, printed or redeemed on a mobile device. (To ensure all users can access Target coupons, they can also be found on the dedicated Target app, and on the mobile-optimized Target site.) Dedicated coupon apps allow brands to create ongoing relationships with users and continually push their latest coupon offerings. Mobile coupons are a great way for retail brands to create relationships with consumers and to drum up interest in their products. But brands need to thoughtfully create a mobile couponing strategy. Here are a few tips for marketers: + Beware of coupons that are difficult to redeem (for example, coupons that are only redeemable if someone is the mayor of a location). It s important to ensure that coupons are easy to obtain and easy to redeem for all your consumers. Target's Cartwheel App + Ensure that your consumers are familiar with whatever technology you choose to use. For example, if your consumers tend to skew older, or text coupons may be a better choice than coupon apps or QR codes. + Keep the entire process simple. Consumers are using a device with a small screen, and will be looking for quick and simple steps. Don't expect consumers to fill out 10 entry fields when applying for a coupon. If consumers must enter information to receive the coupon, ask for only one-to-three fields. You can always ask for additional data at a later time. MOBILE IN-STORE Mobile has made a splash in the retail world, allowing brands to engage with (and sell to) consumers 24-hours a day. Additionally, mobile couponing can add extra incentive to the purchase process. But how has mobile affected the traditional in-store shopping experience? The launches of price comparison apps, such as Amazon s Price Check app and ebay s Red Laser app, have caused a stir in the retail world. In 2010, 15% of shoppers checked prices on their mobile devices while they were in a store. In 2012 that number jumped to 50%; and of those consumers more than two-thirds who checked the price changed their buying decision because of it 7. Using a brick-and-mortar store to check out a product inperson and then purchasing that product online (otherwise known as showrooming ) is becoming a serious problem for retail brands. To further aggravate brick-and-mortar retailers, brands such as Amazon have offered a promotion to encourage the behavior. For instance, Amazon offered a 5% discount to consumers who scanned a product in a store and then purchased it on Amazon.com. Retail stores are fighting back against showrooming with a variety of tactics. Both Target and Best Buy ran seasonal promotions where they offered to match online prices instore. The promotions were so successful that both brands have made price matching online retailers a year-round policy, giving consumers the price benefits of online shopping with the immediate rewards of brick-and-mortar shopping 8. Amazon's Price Check App 7 McKinsey & Company, The Future of Brick & Mortar Retail in the Digital Era. September The New York Times, More Retailers at Risk of Amazon Showrooming. February

5 Furthermore, mobile devices can be easily used to enrich a consumer s in-store experience, even tying it to her online experience. Retail reward apps such as Shopkick reward consumers for visiting and shopping certain stores. Shopkick allows consumers to earn kicks for doing a variety of actions such as previewing products in the app, walking into a participating store, scanning an in-store barcode, or making purchases with connected credit cards. Kicks can be redeemed for gift cards or products from participating retailers. Brands such as Macy s, Crate & Barrel, Old Navy and Best Buy have all taken advantage of the Shopkick platform. Mobile also can act as a source of information for employees or consumers when they re in a retail store. Best Buy has added QR codes to all their product information cards. After scanning the codes, consumers can find additional information about the product, read updated reviews, and view videos on a mobile phone. Product information can then be saved for later or shared with friends. Home Depot has launched a similar initiative with QR codes in their stores. QR codes were placed on certain plants and plant products, allowing consumers to scan the codes and learn more about how to take care of their purchases. Employees were also given mobile devices that would allow them to scan a product to get more information, communicate with other store locations about product availability, and act as a mobile checkout counter while helping consumers in the store. Shopkick Best Buy QR Codes WHAT'S NEXT As consumers continue to rely more on their mobile devices, it s imperative that retailers be there to take advantage of mobile opportunities. Currently, many retailers are behind in their mobile efforts. Of the top 500 retailers, only 60% have a mobile consumer interface 9. As Christopher Mason, CEO and co-founder of Branding Brand, said at this year s SXSW, This means that for the first time, the relationship between the customer and the retailer is being shaped in a world where the customer is ahead of the retailer. In the near future, we ll see retailers trying to get back in front of their consumers with advanced mobile offerings such as mobile payment systems, NFC, and efforts that change how we look at the in-store process. Mobile Payments The move away from fixed-point, card-based transactions toward mobile payment options is starting to change the way consumers think about paying for goods. A variety of consumer-side options, including Square Wallet and Google Wallet, allow consumers to tie the credit cards they already have to a digital app that can be used at a variety of stores. Who needs to bring a wallet with them when everything is on their phone? Starbucks has led a similar initiative with their introduction of mobile payments via their Starbucks app (and most recently their acceptance of Square Wallet payments at 7,000 locations). Though they are still in the early phases of adoption, mobile payments are on the rise: emarketer estimates that in-store mobile payments quadrupled in 2012 to $640 million in transaction volume 10. Near Field Communications The introduction and growth of near field communications (NFC) also offers huge potential for the use of mobile in retail. NFC allows for mobile devices to interact with each other after coming within a certain distance. Information can be shared from the phone to another device such as a tablet or cash register, or from a device to a phone. The obvious first step is payment systems allowing 9 Publisher s Weekly, SXSW 2013: Mobile is the Future of Retail. March emarketer, Proximity Mobile Payments Set to Explode in US. October

6 OCTOBER 2013 consumers to pay for something with just a quick wave of their cell phone. But additional information, such as loyalty numbers, coupons, and discounts, could be shared as well. NFC also allows for information to be passed to a mobile device with a quick touch. This could simplify the QR process from a photo or scan to a simple touch. Though the potential of NFC is large, it is not standard in all phones, and many phones (specifically iphones) don t have NFC technology. Scan and Go There are other ways mobile can change the ways consumers shop and pay for products in store as well. For example, Wal-Mart has recently been testing a scan-and-go app, which allows consumers to scan products as they shop, download and apply any applicable coupons via the app, and pay for the products at self-checkout kiosks. An initial test in 70 stores that began in August 2012 was recently expanded to 200 stores and will soon include an Android app. More than half of the customers who tried the app used it more than once 11. Mobile s ability to free retailers up from the traditional checkout counter and setup of the brick-and-mortar store clears the path for breakthrough processes and new purchase paths. BEST PRACTICES FOR MOBILE AND RETAIL 1. Keep it simple Mobile devices offer a small screen with limited space. That means more pinching and zooming, smaller images and fonts, and a lower tolerance for problems or glitches. When launching new mobile efforts, be sure to test, then test again. Ensure that every step of the process is simple to complete, has clear instructions and obvious next steps. Think through who will be using your mobile programs, where they will be, and what is required for a successful interaction (Is there cellular service in your stores? Do they need Wi-Fi?). Finally, match your efforts to your consumers. If your consumer demographic is young and tech-savvy, Foursquare coupons may be a great idea; just remember, they won t work for everyone. 2. Keep it useful, or consumers will forget about it The majority of mobile apps and offers get ignored. It s important to consider what your consumers will be looking for, and how you can best deliver that to them through mobile. If your brand is known for coupons, a couponing effort is a no-brainer. If your consumers are constantly looking for ways to compare products, a comparison tool may be best. 3. Offer benefits and make them exclusive to mobile Why should consumers use your technology? Make sure there is a clear and concise reason for engagement. Whether it is discounts, the opportunity to get more information, or the ability to tie the offline and online experiences together, make sure the benefits are clearly communicated to your consumer. Mobile interactions are still new to many consumers, and they need to understand how or why they should interact with you on mobile. Add information on your mobile offerings to your website, include prompts in your marketing efforts, and announce new mobile efforts through your distribution sites (PR, news feed, social media sites, etc.). CONCLUSION Mobile is here to stay, and as consumer adoption rates continue to increase, so will the level of technology offered. The usage rates of smartphones and tablets are reaching record highs, and are putting advanced technology in the hands of consumers. However, it s important that retailers embrace mobile technology in ways that make sense for them and their consumers. There s no reason for every retail brand to employ QR codes in store or place mobile devices in their employees hands. Each audience is different, and it s important to understand their needs and level of technical savvy before embarking on a mobile effort. Embracing what your consumer loves about your brand, and learning how you can best translate that to mobile, will ensure a good match of useful content and fun technology to build a connected brand relationship. STAY CONNECTED Find out more at Call us toll-free at Connect with us in social spaces 11 Reuters, Walmart adds iphone scan-and-checkout feature to 12 more markets. March

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