The Inevitability of a Mobile-Only Customer Experience

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EXECUTIVE SUMMARY Customers are becoming increasingly mobile, and, as a result, the customer journey is in need of an overhaul. In May 2014, mobile platforms accounted for 60% of total digital media time spent.1 Mobile spending is correspondingly increasing to match customer behavior, with mobile devices accounting for one in four of all online purchases in November 2014.2 Although companies understand the importance of mobile, it is Altimeter Group’s belief that brands both underestimate and underinvest in mobile’s promise. In our latest research into the evolving landscape of digital transformation and the digital customer experience, we learned that an understood and unified mobile strategy remains largely elusive to many executives and strategists. In this report, Altimeter Group focuses on how organizations can approach mobile design strategy through the lens of the evolving connected customer. By focusing on activities and outcomes with an understanding of consumer needs, objectives, and behaviors, companies are able to see past mobile as the latest “bright, shiny object.” Companies that invest in mobile-first programs will lead. Sophisticated companies are beginning to explore a mobile-only approach in addition to integrating cross-channel strategies with omni-channel experiences. By following the four steps to building customer-centric mobile strategies outlined in this report, leaders can evolve mobile beyond being “just” another digital screen or channel to achieve greater business results. This will radically enhance the customer experience by making it more intuitive and native. 1

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KEY FINDINGS 1 4 Mobile is treated as only part of CX, not a holistic experience. This leads to low budget and staff allocation, forcing unnecessary cross-channel and/or multiscreen experiences. To win among mobile- and digital-first customers, organizations must focus on learning more about the customer frustrations, expectations, and behaviors specific to mobile. 2 5 When companies focus too much on a medium’s technology, they lose sight of what the intended customer experience should be among consumers who see mobile as part of their lifestyle. Strategists must re-imagine the mobile-first customer journey as it could be, benchmarking against new opportunities vs. the current status quo. 3 6 Organizations that operate under a mobile-first agenda, driven from the C-suite and led by a passionate change agent, reap rewards in greater customer engagement, satisfaction, advocacy, and more. Once mobile becomes a part of a company’s DNA, it is no longer treated as a “bolt-on” to existing digital initiatives; it’s a natural first step in customer experience strategy development. 2

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` BRANDS THAT SEE MOBILE AS THE “SECOND SCREEN” RISK LOSING RELEVANCE WITH CONNECTED CUSTOMERS Mobile, once regarded as the second screen, is rapidly becoming the first screen for many connected customers. According to comScore, which uses the “time spent” metric to gauge online consumer retail activity, 56% of all time spent on U.S. online retail occurs on a mobile device.3 Yet only 16% of companies strongly agree they are completely prepared to meet customers’ mobile expectations.4 To keep up with and anticipate needs, brands must recognize that mobile is now integral to their customers’ lifestyle. A mobile-first approach is a way of business at Citi. In an interview with Andres Wolberg-Stok, Global Head of Emerging Platforms and Services, he revealed, “Citi approaches digital initiatives as ‘mobile first’ to improve their customers’ lives; then zooms out in strategy from there.” Mobile as the customer’s first screen is a reality, and companies must both adapt their current strategies and begin thinking proactively in order to maintain relevancy, competitiveness, and even survival. Too often companies are stuck playing catch-up to rising consumer expectations around mobile experiences. To paraphrase hockey great Wayne Gretzky, rather than predicting “where the puck is going to be,” they instead skate to where the puck lies now or, in some cases, where it was before. Citi’s Wolberg-Stok explains the need to shift perspective and digital investments toward mobile: “A few years ago, we thought that customers would just go to the desktop for the full menu of functions, not mobile, but increasingly that’s not holding true. Customer expectations have changed. They used to be more understanding if certain features weren’t part of your mobile app, but now they expect to do whatever they want, whenever and wherever they want to do it. ” Consumers are quickly learning to operate in a mobile-only world. One-third of shoppers use mobile exclusively, and more than half consider mobile the most important resource in the purchase decision process.5 Keeping up is just the beginning. What lies ahead isn’t just a mobile-ready customer experience. That becomes commodity. Businesses are required to invest in mobile-first and even mobile-only customer journeys. The idea of mobile-only design is a game-changer, and we believe it is becoming the new standard. 3

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“Customer expectations have changed. They used to be more understanding if certain features weren’t part of your mobile app, but now they expect to do whatever they want, whenever and wherever they want to do it.” -Andres Wolberg-Stok, Global Head Emerging Platforms and Services, Citi 4

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MISUNDERSTANDING OR UNDERESTIMATING MOBILE FRACTURES THE DIGITAL CUSTOMER EXPERIENCE Customer experience is defined as the sum of all customer engagements in each touchpoint and in each “moment of truth” throughout the customer lifecycle. The customer journey is a patchwork of traditional and digital touchpoints, some mobile-optimized. When consumers jump between channels and devices, it can easily lead to an inconsistent customer experience. Brands must rethink mobile’s role in the customer journey, particularly where and how it can become self-sustaining for a mobile-only consumer. “It’s a continual challenge to deliver comprehensive solutions while delighting customers by fulfilling core needs from their mobile experience.” Intuit strives to keep up with rising consumer expectations around mobile experience. Colette Crosby, Director of Marketing, told us, “Even when we’re doing really well with a web app, we have to remember that customers begin to expect that same range of capabilities from mobile native web as well. It’s a continual challenge to deliver comprehensive solutions while delighting customers by fulfilling core needs from their mobile experience.” On the brand side, different groups manage disparate touchpoints, each with its own -Colette Crosby processes, resources, and metrics. The Director of Marketing, result is a lack of integration and continuity Intuit in the customer journey, forcing customers Mobile is both part of the customer experience to multiscreen between devices and hop and also emerging as a self-contained channels to move along the journey. experiential platform. Yet many companies Sometimes, customers can do so effectively. continue to treat mobile either as just another Many times they cannot. This essentially introduces friction channel, a technology platform, or a portable version of into the customer experience when there’s no need for the web. Meanwhile, consumer expectations are evolving friction to exist. In reality, competitive alternatives are just a to demand dedicated mobile experiences that go beyond quick click away. Organizations must focus on architecting mobile-optimized websites, landing pages, content for mobile experiences that are both self-contained (beginning the smaller screen, or basic branded apps, all for the to end) and also complementary to the digital customer sake of being present. Such incomplete or subpar mobile journey at large. experiences negatively impact the mobile customer journey or, at the very least, frustrate users. 5

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Rather than re-imagine the mobile experience to align with customer expectations, most companies: 1 Create campaigns with a mobile-first element and then push customers toward outdated or mismatched experiences once they’re beyond the initial engagement phase. 2 Design mobile landing pages without adapting the next steps of the connected customer journey. 3 Deploy mobile transaction or commerce engines that are not inherently mobile or gesture-based. 4 Develop apps that do not meet customer needs or wants. 5 Miss the ability to integrate mobile with real-world experiences, such as beacon technology in physical settings or loyalty programs. Businesses must first master the former in order to compete for the latter. Mobile should be treated as a separate device and screen from the desktop, capable of delivering a nextgeneration, mobile-native customer experience. 6

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COMPANIES MUST DESIGN MOBILE-FIRST AND MOBILE-ONLY CUSTOMER JOURNEYS TO PREVENT CHANNEL-HOPPING AND MULTI-SCREENING AND INCREASE CONVERSIONS The mobile journey is comprised of many touchpoints that span multiple screens. According to Pew Research Center, 58% of American adults own a smartphone; 32% own an e-reader; and 42% own a tablet.6 Of those who own multiple devices, 30% cite their tablet as being the most important device they own for Internet access, with laptops and smartphones at 29% and 22%, respectively.7 “Mobile” is a term that must be explicitly defined for a target audience and the strategy it informs. It’s not just a phone. Altimeter learned many organizations confuse the very differences between channel and platform strategies, thus dividing the potential for truly omni-channel strategies. 58% of American adults own a smart phone 42% Channel-hopping refers to a customer switching channels (e.g., desktop website, mobile website, smartphone app, iPad app, print magazine, etc.) when the preferred channel for engagement does not satisfy their needs. Multi-screening refers to a customer switching devices — screens — to continue or complete a task. Multi-screening takes two formats: 1. Simultaneous multi-screening (e.g., looking at a tablet while watching TV), and; 2. Sequential multi-screening (using a smartphone in an Uber, a laptop at home).8 While the two can overlap if a consumer switches both screens and channels, they aren’t one in the same and often occur under different circumstances and contexts. own a tablet 32% own an e-reader 7

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This leads to companies missing new and more engaging opportunities to deliver the unique, self-contained mobile experiences that customers desire. For example, a smartphone is capable of hosting a complete end-toend journey, starting with discovery through transaction and loyalty, as well as unlocking new online-to-offline opportunities, such as mobile payment systems. Instead of capitalizing on this mobile-only opportunity for engagement, mobile CX investments are currently made around the context of engagement (where and when it will be used), requiring users to focus on channels that allow specific functionality, such as a mobile site featuring responsive design, mobile commerce, or a management app such as mobile banking. When the user requires something outside of that specific scenario, they’re forced to multiscreen, making them either channel-hop within the device or abandon it altogether for a different (and often dated) screen or user experience. 90 % of consumers move between devices to accomplish a goal Thus, mobile designers unwittingly compel multi-screening when designing touchpoints along the customer journey rather than creating an entirely selfcontained mobile experience to foster desired outcomes and conversion. Some 90% of consumers move between devices to accomplish a goal, using an average of three different screen combinations each day.9 This represents a significant missed opportunity, especially when examining mobile conversion. Fifty-one percent of consumers abandon their mobile cart and close the app when they struggle with it, and, according to comScore, only 16% of mobile search-driven purchases occurred on the phone itself in 2014.10 These self-inflicted customer experience challenges are attributed to a misunderstanding of mobile customers and also what’s possible vs. what’s expected on new devices. Brands believe their customers hop from one channel to the next throughout their journey due to reasons outside of their control, e.g., reluctance to 8

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enter financial information in an app, low attention spans, or incomplete mobile website functionality. When brands blame outside factors rather than their own mobile experiences, the result is a misallocation of internal resources toward creating mirrored experiences at different touchpoints. As such, mobile is a “checkbox” at worst and an advanced experience for specific scenarios as part of an omni-channel strategy at best, not necessarily a native, holistic experience. prepare organizations for the onslaught of mobile technology advancement that also varies greatly by device. Cyril Lamblard, head of Business and Digital Marketing for Nespresso, told us the company treats mobile as a bridge between offline and online customer retail experiences to ensure consistency and relevance from discovery through conversion. “Our challenge is to make the mobile experience accessible to our customers in the simplest, most highly functional way while maintaining a premium brand experience.” Lamblard elaborates, “Our customers can start an order on-the-go and pick up their coffee in a nearby boutique offering a seamless experience. Facebook famously tackled Then, when in a physical the dilemma between boutique, they start to search on desktop/laptop and mobile their mobile for more product user experience, essentially information. Tomorrow, it should recreating the mobile platform be an optimized connector that to deliver a native, fully capable allows them to fast-track their experience that’s better suited in-store purchase experience, to smartphones and tablets. leveraging all recent innovations on Cyril Lamblard, Head of Business and Additionally, it designed an entirely mobile payments. Our challenge is to Digital Marketing, Nespresso new advertising platform to monetize make the mobile experience accessible the updated mobile experience. The to our customers in the simplest, most company is experimenting with decoupling highly functional way while maintaining a and creating new Facebook features as apps to premium brand experience.” improve the mobile customer experience (CX), which is largely independent of its desktop experience. Mobile is not only reshaping the customer journey, it is rebooting the entire experience in the process. How and when Investing in a customer-centric mobile CX that’s unique to customers transact with brands throughout the lifecycle is also each platform represents an untapped trove for engagement moving to the small screen — from research to purchase, to throughout the customer journey and lifecycle. Doing so will service and support, through loyalty and advocacy. 9

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BRANDS FALL PREY TO “MEDIUMISM,” PRIORITIZING SHINY OBJECTS OVER CUSTOMER NEEDS AND GOALS We discovered that many strategists responsible for mobile don’t always realize the opportunities or real-world challenges mobile presents as part of the consumer lifestyle. When focusing too much on the technology, they lose sight of what the intended customer experience should be. This lends to mobile falling into the trap of “mediumism,” or placing inordinate weight on the technology of any medium, rather than amplifying platform strengths and conveying empathetic value propositions to create desired experiences and outcomes.11 10

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MEDIUMISM LEADS TO MISINFORMED, REACTIVE INVESTMENTS IN CROSS-CHANNEL EXPERIENCES A common symptom of mobile mediumism is misinformed investment, often in either reactive mobile optimization efforts or pouring resources into tangential digital channels in an effort to create a consistent cross-channel experience. The problem lies in that, when companies build new initiatives upon legacy foundations, they’re already behind their customers’ needs. This prevents companies from embracing innovation and instead creates a form of incrementalism — investment in iterating on top of existing programs instead of pursuing innovative initiatives specific to new opportunities. Incrementalism carries notable risks in that dissatisfied customers may jump to a competitor who better understands mobile experiences. “We don’t let new technology use cases dictate what customer problems we’re solving for.” should remain considerations during the final stages of mobile strategizing, as they represent a means to an end, not the end in and of itself. Alternately, some companies we studied do approach mobile web and application design from a customer-first perspective. This has the potential to completely change the product, experience, and outcome. Solving for problems, needs, or opportunities can inspire innovation in mobile CX. Intuit, for example, understands the importance of putting customer needs Colette Crosby, Director and pain points first, combined with of Marketing, Intuit business priorities, before the latest mobile technologies. Colette Crosby, Director of Marketing, explains: “We don’t let new technology use cases dictate what customer problems The opportunity for true mobile engagement starts with the vision to see its potential beyond yet another we’re solving for.” Technology is an enabler, not technology platform. Elements of UX (user experience) the solution, and thus mobile is a facilitator design, including screen size, UI (user interface), usability, for desired engagement and transactions and responsive or adaptive design, are certainly based on changing needs, expectations, important in effectively designing and executing mobile and goals of mobile customers. strategies. Altimeter learned, though, that these elements are often given more weight than consumer experience and business goals. These technological implications 11

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The same is true at MasterCard, where mobile begins with strategy and ends with development. CMO Raja Rajamannar shared with Altimeter an empathetic approach to mobile: “First, our mobile strategy team identifies customer pain points. Only then do we move on to the next level of mobile development and conceptualizing in order to ensure we’re solving for the right problem.” This allows for opportunities to redesign the customer journey by formulating new mobile-centric touchpoints and outcomes. When businesses design for mobile screens and also the people who use them as their first screen, they improve customer experience in the process. It’s a symbiotic relationship, with both the customer and the brand as beneficiaries. “First, our mobile strategy team identifies customer pain points. Only then do we move on to the next level of mobile development and conceptualizing in order to ensure we’re solving for the right problem.” Raja Rajamannar, CMO, Mastercard Technology is most effective when it is invisible, allowing consumers to accomplish tasks without getting lost or hindered by old-school touchpoints. This is true at Starwood Hotels and Resorts Worldwide, a company that consistently focuses on being ahead of its customers who require immediate, real-time assistance from pre-checkin through checkout. It achieves this through an intent focus on customer data (via login and a popular loyalty program, Starwood Preferred Guest), rapid mobile development, and personalization of the mobile experience. Starwood’s mobile-first thinking led to the creation of SPG Keyless, a room entry system that allows guests to use the SPG app on their smartphones (in the future, Apple Watch) as a room key. This is another step Starwood is taking toward creating a mobile experience that is self-contained throughout the entire journey, not just one cog of the check-in experience.12 12

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A NEW GENERATION OF MOBILE DEVICES REPRESENTS THE NEW FRONTIER IN MOBILE CX While mobile is widely recognized among executives and strategists as an important channel, it’s how mobile behavior is assimilated and how insights are woven into digital strategies that demand immediate attention. Mobile devices are as capable as PCs, yet are regarded as a “smaller” version of the desktop experience with limited functionality, content, and navigation points. From a UX perspective, everything about mobile design is different. Smaller screens yield less real estate, and the pointand-click PC user interface isn’t how users interface with mobile devices. From swiping to spreading, pinching to tapping, users expect to navigate intuitively on each mobile device they use and be presented with a natural and intuitive journey that reflects their behavior and aspirations. The mobile journey is just starting to come into focus, and smartphones and tablets are only two of many screens driving transformation in the customer journey. Our research reveals strategists most often equate “mobile” to “smartphone” when crafting strategies, often without considering devices such as tablets and wearables or up-and-comers like the smartwatch. Twenty percent of American adults already own a wearable device,13 and tablets are projected to outpace sales of PCs in 2015.14 When businesses don’t consider differences in mobile device interaction, they’re left with a one-size-fits-all approach to mobile that doesn’t account for nuances of engagement, context, and intention that vary greatly from one platform to the next. Additionally, mobile commerce no longer means just the ability to transact on the mobile screen; it now also represents the ability for the device to become the payment. Mobile payment technology is advancing rapidly, including the recent launch of Apple Pay and its massive push toward mobile payments. eMarketer projects mobile transaction values will double from EOY 2013 to EOY 2014 to reach $3.5 billion and further accelerate through 2016 as “more users come on board and make increasingly larger mobile purchases.” This trend forces businesses to rethink commerce strategies at mobile, web, and real-world levels. Whole Foods, Walgreens, and Starbucks are each investing heavily in the mobile experience in-store to integrate information, shopping, payments, and loyalty programs. Nearly 15% of Starbucks customers already pay with their phones,15 and Walgreens reports mobile wallet payments have doubled since the launch of Apple Pay.16 13

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At the same time, in-store opportunities also arise as a result of the changing mobile landscape. New low-energy signals, such as Apple’s iBeacon and Samsung’s Proximity, are contributing to new in-store mobile connections that surprise and delight customers by marrying experiences to mobile lifestyles. More than half of the top 100 retailers are already strategizing around in-store beacons to improve the shopping experience,17 and ABI Research estimates that over the next five years the iBeacon hardware market will grow to approximately 60 million units.18 60M units growth over the next 5 years of iBeacon hardware maket In an interview with Old Navy’s Marketing, Mobile CEM Lead Jennifer Bordner, she shared that the retailer is currently Nearly experimenting with Beacon technology with a foundation in customer research to determine its potential for enhancing the shopping experience. “Our true north is looking toward how people interact with beacon of Starbucks customers technology as it stands now,” she elaborates. “What already pay with their makes the most natural sense to them in a retail phones, and Walgreens setting in relation to technology? We’re testing new reports mobile wallet technology to see what’s too much for our customers, payments have doubled what’s not enough, and if people even care about push since the launch of communication from beacons.” 15% Apple Pay A natural response to this developing mobile landscape from brands is that of being overwhelmed or confused. The multitude of form factors and channels indeed forces brands to design campaigns and build out touchpoints that extend or diversify current investments. 14

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INABILITY TO TRACK MOBILE ROI CRIPPLES THE BUSINESS CASE FOR CUSTOMER-CENTRIC MOBILE EXPERIENCES Without proof of mobile customer conversion, strategists struggle to rally internal support and funding. Proving results can be difficult when consumers channel-hop during a digital journey. Without associating customers with a unique ID via log-in, loyalty program, or a related identifier, change agents can’t prove mobile conversion, or that mobile is a contributor to conversion on another digital channel, later in the customer journey. This forced behavior gives businesses the false impression that customers prefer a multiscreen experience. Jeremy Lockhorn, VP of Emerging Media at global digital agency Razorfish, sees this problem as a major hurdle for many of its clients. “We refer to this as the ‘mobile gap.’ It’s difficult to see if mobile influenced a purchase that happened on another channel if there’s no log-in involved. They’re treated as different people in conversion metrics,” he told us. Despite the contribution to the bottom line, it’s not possible to prove mobile’s role in the transaction and make a case to increase mobile investment. Robyn Phelan, Senior Interactive Marketing Manager for the Palms Casino Resort, also works to provide mobile proof points. “Our biggest challenge is the need to see revenue and conversion going through in mobile, which we can’t attribute due to cross-platform channel-hopping and dropoffs. We can measure attribution somewhat with tracking mobile advertising’s contribution to conversion, which has helped to prove the value of mobile to leadership.” Thus the problem perpetuates, and mobile remains under-appreciated in both its capability today and also future potential. Our previous research on digital transformation found a similar Catch-22 as strategists try to make the case to prioritize investment in new digital fronts. Executives require results to approve funding, yet funding is required for processes and technologies to build the case. This is especially true if no other mobile-specific customer data exists within the organization. Strategists are forced to benchmark against lackluster efforts, citing metrics like CTR and time spent on mobile, not attribution to business goals. Director of Development Mitch Bayersdorfer elaborates on Intuit’s high-level approach to finding the “sweet spot” in demonstrating ROI: “It’s a Venn diagram of three elements around the art of what’s possible based on 1. Customer needs, 2. Business priorities, and 3. Device capabilities. We keep a laser focus on that intersection.” 15

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CUSTOMER EXPERIENCE NEEDS AN OWNER TO OPTIMIZE MULTIPLE JOURNEYS, CREATING ONE FLUID AND REMARKABLE EXPERIENCE The customer journey is often managed by different departments that do not always collaborate on how to integrate and optimize the experience. This is irrelevant to customers who don’t see departments; they see a brand and demand a consistent experience. The same disjointed inter-departmental relationships multiply in mobile CX, as mobile is only a small piece of the overall puzzle with even fewer resources than more proven digital counterparts. Although 63% of digitally focused companies include mobile within their digital centers of excellence,19 only 17% have a fully integrated mobile strategy in the overarching marketing engagement strategy.20 Companies struggle further when competing in a tug-of-war between “digital first” and “mobile first” philosophies. Both are important, as customers are becoming more digital and mobile every day. As such, mobile and digital strategies must be developed individually, while also coming together to deliver a unified digital customer experience. Mobile is most often positioned as a facet of digital marketing, itself part of a larger marketing division. The organizational structure supporting mobile strategy exists as a result of two factors: 1. An outdated, uninformed culture that views mobile as a channel, not a lifestyle 2. Limited resources, support, and headcount to empower mobile leaders to make decisions that align with customer consumption habits This buries mobile in slow-moving bureaucracy, unable to nimbly adapt to shifting customer expectations. When mobile is aligned with a single department, other groups must work in isolation and thus complicate or degrade the customer journey. Companies must establish collaborative relationships between each level of the digital hierarchy in order to adapt quickly to changes in mobile customer behavior. 16

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Yamaha’s Jeff Hawley, Director of Customer Experience, told us that the company’s CX group acts much like an internal agency to other departments to ensure the customer experience remains consistent with every new strategy and initiative. He states, “No one department can operate in a vacuum, mobile included, or CX falls quickly.” One way companies like Intuit overcome hurdles in mobile hierarchies is through establishing a “mobile working group” that moves beyond more common digital centers of excellence where mobile is only a part of the equation. Mobile work groups oversee all initiatives related to mobile to ensure a customer-centric focus is maintained. If a CX department exists within a company, it is also in lock-step with the mobile working group in order to maintain alignment. The CX department may also act as an advisor between siloes if no mobile working group or formal mobile department exists. shift and headcount is added. Once companies have fully embraced mobile as part of their customer’s lifestyle, they embrace it at their core. This is true at the most mobile mature companies we interviewed, including Zappos, where mobile has a dedicated team of at least 10 employees: analysts, researchers, quality assurance, and more. “Customer experience needs to be seamless regardless of point of entry. At Zappos, we approach mobile customer experience as just customer experience, not differentiating it, because mobile is simply who we are.” Kedar Deshpande, Often, a mobile working group also acts as Head of Mobile, Zappos a powerful internal lobbying organization to showcase mobile’s importance to leadership, as well as provide the manpower needed to consistently keep tabs on customer experiences and analyze related data. No company we interviewed has a central repository of mobile information, an area for growth in coming years to remain efficient and informed as roles This additional resource allocation allows mobile strategies to move beyond reactivity and into the realm of proactively architecting experiences for the future. Kedar Deshpande, head of Mobile at Zappos, explains this deep integration: “Customer experience needs to be seamless regardless of point of entry. At Zappos, we approach mobile customer experience as just customer experience, not differentiating it, because mobile is simply who we are.” Zappos’ dedicated CX and customer service teams also work closely with its mobile team to maintain cohesion in experience — a crucial component to boosting positive sentiment, as 82% of consumers say the number one factor that leads to a great customer experience is having their support issues resolved quickly.21 17

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4 FOUR STEPS TO CREATING MOBILE-FIRST CUSTOMER EXPERIENCES To win among mobile- and digital-first customers, organizations must focus on learning more about customer frustrations, expectations, and behaviors specific to mobile. When done in parallel to other digital investments, mobile (in each of its forms) becomes an experience unto itself. Accordingly, strategists must apply those insights to architecting an ideal mobile state. Only then can customer-driven mobile strategy truly become part of a company’s DNA and produce results that include increased engagement, lead generation, sales, Net Promoter Score (NPS), customer retention, acquisition, loyalty, and more. We’ve identified four steps to create customer-centric mobile strategies (see Figure 1): 18

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Fig. 1: FOUR STEPS TO CREATING MOBILE-FIRST CUSTOMER EXPERIENCES 1: Map the Journey Study the mobile customer journey as it exists, including devices used, challenges, and opportunities. Delve into mobile customer data to define mobile personas that will inform strategies. 3: Measure and Optimize Define intended customer responses and outcomes at each step. Link back to business goals and KPIs to measure progress and optimize engagement. 2: Re-Imagine a Mobile Experience Design a mobile-optimized journey, by device, to win each moment of truth. Define a series of mobile experiences at each stage, aligning with customer personas and data. 4: Align Everything & Everyone Present customer findings, the mobile-first journey, and key business outcomes to the greater working team around mobile, digital, and CX. Run pilots to validate research and gain support. 19

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Step 1: Map the Mobile Customer Journey. Study the mobile customer journey as it exists today, including various devices used, challenges, and opportunities with each. Delve into data specific to your mobile customers to define “day-in-the-life” mobile personas that will inform customer-centric strategies. Mobile centricity requires information about customers and their mobile behaviors, and then uses that information for mutual gain. Nearly half of today’s marketers (43%) don’t know their customers’ mobile behaviors.22 Without a deep understanding of mobile customers, companies can’t effectively architect mobile experiences that contribute to creating loyal relationships or producing advocacy. Companies that make mobile a top priority, like Rent the Runway, begin the mobile strategy process with customer journey mapping, narrowing in on digital behaviors and channels. Sara Bial, Chief Product Officer, explains, “We begin with customer research on their mobile usage patterns and behaviors. That’s critical to designing a mobile experience that is optimized to their expectations.” It’s equally, if not more, important to know why customers are channelhopping in and out of mobile as it is to know when they are and where they’re going. Once brands truly understand the Digital Customer Experience (DCX) and mobile’s role within it, they can begin to design for the experience customers want rather than solely what technology permits. This creates an entire shift in who companies design for and what problems are solved. Our digital transformation research found many organizations skip this critical first step to understand mobile customers’ motivations, engagement patterns, and expectations: A mere 25% of companies have completely mapped the customer journey to better understand underperforming digital touchpoints. Zappos learns how its customers’ mobile behaviors and expectations outpace current organizational infrastructures. Zappos’ journey mapping department is dedicated to understanding every step of the customer experience, looking closely at customer behaviors on and 20

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between channels and screens before embarking on any new project. Using Altimeter’s Dynamic Customer Journey framework (see Figure 2), map the answers to the following questions to the corresponding point within the decision loop. Once completed, companies will have a full picture of where they’re connecting with mobile customers today, where they’re not, and what opportunities exist for future mobile engagement along the journey. Mobile Journey Questions: • What touchpoints do they frequent during formulation, pre-commerce, commerce, and post-commerce? How often, and for how long? Intuit found, through longitudinal research on mobile usage patterns, its customers spend a lot of time pre-commerce in choosing a financial app. Knowing this isn’t a spur-of-the-moment decision informs product and feature development, as well as marketing strategy. • How do they use each touchpoint during the purchase decision cycle (what action is completed at each step)? Orbitz uses focus groups and other hands-on research methods to observe how customers use its mobile site and application before building new products and features. The company conducts an annual Mobile Bookers Study to dive deeper into the general population’s mobile behavior within the travel industry. • What devices are used to take the customer from awareness through advocacy? The answer may surprise you. Although 75% of shoppers shop online, 30% of shoppers shop on a mobile device at least as much as a computer.23 21

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Fig. 2: ALTIMETER’S DYNAMIC CUSTOMER JOURNEY The stages of the Dynamic Customer Journey are familiar as they reflect similar methodologies in the traditional purchase funnel. Each step is unique in the contributing factors for how consumers discover, analyze, choose, and share.24 2 3 Evaluation PreCommerce Commerce Consideration Purchase Awareness 1 DIGITAL INFLUENCE LOOP 4 PostCommerce Formulation Advocacy Understanding the mobile customer lifestyle is another key element of journey mapping research. In addition to gathering demographic, psychographic, and social graphic data about mobile customers through surveying or qualitative research methods, we recommend Experience Loyalty strategists also pose the following questions in order to build relatable personas for use in strategic targeting. Customer persona research and modeling may be done in-house or in partnership with an experienced vendor, depending on resource allocation. 22

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The Top Mobile Persona Questions to Ask and Answer • What uniquely defines our mobile customers? MasterCard focuses on digital and mobile customers’ many “passion categories” (music, for example) to create experiences that are most meaningful at each touchpoint. • What is different about their customer journey? Yamaha discovered that by turning a high-priced electronic musical instrument, the Tenori-on, into an iPad app, they could reach more customers and tap into their mobile lifestyle needs in a manner that can ultimately result in higher sales. • What are their expectations, what do they value, and how do they define success? Citi sees three layers of customer expectations in its research: 1. Explicit requests (things they need), 2. Diffused needs they have trouble verbalizing (the experience isn’t as intuitive as another app they frequently use, for example), and 3. Unperceived or hidden needs (only discovered once Citi provides the solution, proactively). According to Wolberg-Stok, the third layer is “the apex of the value pyramid.” • How are they influenced, and by whom? How and whom do they in turn influence? Answer this question at each point along the journey. The answer may vary at different points in the purchase decision cycle. • How can you design for device or platform-specific journeys to minimalize channel-hopping or multiscreening? In our interviews, Nespresso’s Lamblard shared that the company regularly re-evaluates its mobile strategy to ensure alignment with evolving mobile customer experience. Its CX department manages all elements of the customer experience, starting with mobile, for new customers. They revisit customer personas and consistently storyboard and test new ideas for engagement to improve the multi-screen experience, ensuring it remains a fully functioning “boutique in their pocket — anytime, anywhere.” 23

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Step 2: Re-Imagine the MobileFirst Customer Journey. Design a mobile-optimized journey, by device, to win in each moment of truth and prevent multiscreening while also investing in and complementing other channels. Define a series of intended mobile experiences at each stage of the customer journey, aligning each with customer personas and related data. Once strategists map a foundational picture of their mobile customers’ journey and create personas that accurately depict reallife mobile lifestyles, the next step is to architect the desired mobile state. Remember that all mobile devices and their related experiences are not created equally. Strategists must design for the channel (web, app, etc.) platform (smartphone, tablet, or other) and unique behaviors for each. Begin with a deep dive into the areas where customers already experience the brand on their devices, as these mobile moments are already familiar. From there, we found that companies broaden their purview to each touchpoint throughout the dynamic customer journey, answering the following sample questions to guide the mobile experience design process (see Figure 3). Once the mobile journey has been thoroughly architected, organizations move on to support each step with the customer data gathered in step one. Altimeter Group finds brands most often incorporate mobile customer data in two ways: known customers (via unique ID, like a loyalty program or other login) and unknown (those who are unidentifiable). For both categories, data such as mobile usage, engagement, time on app or mobile site, etc., are easily accessible data points that can be tied to each step of the ideal mobile experience. For known customers, brands are beginning to identify at what point during the purchase decision cycle customers use mobile, when they jump to another channel, and when/where they eventually convert to purchase. This information is key to support why each step of the ideal mobile experience is critical to keep customers on-channel and contained throughout brand engagement, especially when 63% of all tablet owners have purchased a product or service from their device, as have 39% of smartphone users.25 24

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Fig. 3: QUESTIONS TO GUIDE THE MOBILE EXPERIENCE ARCHITECTURE What makes customers choose your mobile experience over other options at each moment of truth? How can your mobile experience help your customers solve their most pressing problems as they traverse the journey loop? How can your company position itself as an expert resource on-device? How can you make the mobile purchase process unique to their mobile lifestyle? How can you provide the ability to access and provide feedback along the purchase decision journey? How can you increase positive sentiment and likelihood of advocacy? How will you combat the mobile, digital, and social interruptions along the mobile journey? How can you link online and offline behavior? How can you uniquely engage customers during each phase? How can you reward mobile customers simply for being mobile customers? How can you introduce new behaviors into the customer journey, facilitated by new device advancements? 25

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By looking deeper into customer insights, beyond current behaviors, and toward desired experiences, mobile strategies are quickly moved from misinformed to engaging when data analysis and predictive experience mapping take center stage. Old Navy conducts regular customer research to map the customer journey — online and off-, viewed holistically — and related personas. Jennifer Bordner tells us the company uses a variety of personal and group interview tactics and “shop-alongs” to determine what technology engagement segment customers belong to. She then uses this information to inform strategies around mobile couponing, push notifications and messaging, application development, content, mobile website optimization, and more. 26

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Step 3: Measure and Optimize. Define the intended customer response and desired outcomes at each step in the mobile customer journey, by screen. Link back to business goals and shorter term KPIs to measure progress and optimize engagement in each moment of truth. To further architect mobile experiences, strategists must consider what actions they desire customers to take at every step in the mobile journey and how they will measure results. Defining these actions and effectual returns from the onset creates the foundation for a technology development roadmap when handing off plans to IT designers and developers. When companies benchmark against opportunity, they find a mobile ROI that transcends popular metrics, such as click-through or app downloads, is possible. These types of soft metrics are a result of engagement, not engagement itself. At companies that focus on mobile CX at the core of strategy design, the most common business outcomes associated with mobile customer experience include customer acquisition, customer retention, and customer efficiency.26 Specific KPIs related to each step of the customer journey, as well as to the overall mobile CX engagement, are included in Figure 4. Brands must also consider the ROI of not investing in native mobile experiences on these important screens and channels, as manifested in the form of negative sentiment, loss of revenue, diminished customer lifetime value, et al. When defining desired business outcomes at each stage of the mobile experience, it’s critical to consider existing digital, marketing, and CX goals. Whenever possible, connect mobile initiatives to larger strategies that move the needle toward business impact. Doing so aids change agents in their quest for internal buy-in when they can prove mobile’s contributions and standalone impact in a larger digital strategy. 27

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Fig. 4: CUSTOMER-CENTRIC MOBILE STRATEGIES PRODUCE RESULTS Mobile CX/UX Optimization: Awareness: Positive sentiment (brand mentions) Page rank in mobile search Sales leads (and lower cost/lead) Customer satisfaction (CSAT) Site traffic – Direct and indirect Willingness to recommend or improved experiences (Net Promoter Score and Net Experience Score) Mobile optimized in app and in network visibility Customer acquisition (and lower cost/customer acquired) Self-service rate on-device Customer effort to complete a task Average resolution time of customer service issues Channel hopping and multi-screening Brand equity Share of Mobile Voice Engaging ads in mobile channels Pre-Commerce: Pages per site visit Mobile site or app shopping cart abandonment Device orientation changes Pinching/zooming use during interaction27 Foot traffic into brick-and-mortar locations Usage of app while in-store (research, reviews, etc.) Commerce: Conversion rate (purchase of product or service in-app, on mobile site, or in-store as a result of mobile usage) Number of items per order Order size (price point per item and total order) Adoption rate (idea or POV) Upsell and cross-sell rate Task Success Rate Loyalty/ Advocacy: Customer referrals Customer lifetime value or average revenue per user (ARPU) Average order value Frequency of visit (mobile site or app) Brand relevance Ease of use rating NPS App rating User feedback Customer churn rate Revenue by mobile channel Back-button usage Bounce rate 28

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This becomes especially important at companies like Intuit with multiple brands under a corporate umbrella. Crosby explains, “Mobile is broken into separate departments by brand at Intuit, with different product teams creating unique experiences. We need alignment around adoption of best practices and common standards for performance analytics in order to stay coordinated. This makes our mobile working group all the more important to ensure alignment and proper reuse of services and components for speed and economy of scale.” 29

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Step 4: Create Alignment Through a Test-and-Learn Approach. Present customer findings, the newly minted mobile-first journey, and key business outcomes to the greater working team around mobile, digital, and CX. Run a test pilot of the roadmap to validate research and ideas and gain internal support. It’s important for mobile strategists to create internal alignment among departments that currently collaborate around, contribute to, or otherwise influence mobile strategy, particularly at companies that are not led by mobilefirst agendas. Doing so builds an internal groundswell in support of customercentric mobile experience design. If mobile contributes to the company as a whole, or to the success of a tangential department that already receives hefty funding, it deserves attention. For example, 70% of mobile browser searches lead to action within an hour, and 90% of smartphone shoppers use their devices to buy products in-store.28 Forming strategic alliances with other groups — like digital, marketing, advertising, search, or product development — can help prove mobile’s value in customer satisfaction. Mobile working groups and digital CoEs can be instrumental at this stage in providing the launch pad to get mobile noticed at the C-level. Once the greater mobile working team is in alignment, strategists move on to testing and re-testing their mobile-first strategies both internally and externally. At this stage, IT is pulled in to lead software and hardware development and coding needed to execute on the architected mobile experience. It should be noted that IT shouldn’t be out of the loop for Steps 1, 2, or 3. It’s important — especially at organizations undergoing more formal digital transformation efforts — for IT to have a seat at the table, sharing information that can better the mobile customer experience. Intuit fosters internal collaboration between IT and mobile via its CTO Dev Group, which spun out of its mobile development team. The CTO Dev Group is responsible for providing all infrastructures for application development, ensuring that findings and innovations in different brand groups are implemented in other departments. Once an initial pilot experience is built, Intuit’s mobile leaders then run a final series of checks and balances to ensure customer data, ideal mobile experience, and intended customer actions are in alignment with the technological implementation. 30

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CONCLUSION Mobile represents one of the greatest opportunities for customer experience innovation. Across all popular devices, as well as those set to disrupt the game, mobile is a diverse ecosystem that requires dedicated understanding and design. In the future, mobile, through the sum of its parts, will become the standard for hosting the customer journey. Investments today are grossly underfunded to meet this growth trend. Innovation, not only in technology but also CX, is as inevitable as it is promising. True mobile leaders use customer challenges and expectations to inspire — not hinder — their mobile strategies. Once change agents and executives embrace mobile as a core lifestyle of their consumers, it reaches the company’s DNA level and is no longer treated as a “bolt-on” to existing digital initiatives. It’s a natural first step in customer experience strategy development. When organizations evolve past treating mobile as a channel, funding and resource allocation challenges dissipate. Customer behavior and data represent secret weapons to create truly engaging opportunities for engagement on mobile devices that keep customers on their respective screens, rather than force unnecessary channel-hopping. Empathizing with customers by understanding the role mobile plays at the core of their lives, in the context of each moment and state of mind, sparks innovation, not iteration. This lends to developing experiences specific to the new first-screen that meet and exceed needs and expectations while positively impacting the bottom line — in digital and beyond. Innovation begins from within. And, it starts with recognizing that mobile and the ecosystem of devices that define it is both a means and an end to incredibly improved customer experiences. It takes vision to see what’s possible, courage to push against current norms, and resilience to bring together people and resources to break new ground. Consumers will reward your work accordingly. 31

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METHODOLOGY ECOSYSTEM INPUT Altimeter Group conducted qualitative research and analysis through a series of interviews with mobile leaders, digital strategists, and chief executives at organizations prioritizing mobile initiatives among digital efforts. From August through November 2014, we interviewed 23 industry stakeholders about their experiences in adapting mobile strategies to the new digital customer experience. This report includes input from market influencers who were interviewed by Altimeter Group during the course of this research. Not all interviewees are included in this list due to request for anonymity. Input into this document does not represent a complete endorsement of the report by the companies listed below. • Andres Wolberg-Stok, Global Head Emerging Platforms and Services, Citi • Jeff Hasen, Mobile Strategist and Chief Marketing Officer, Gotta Mobilize • Mitch Bayersdorfer, Director of Development, Intuit • Colette Crosby, Director of Marketing, Intuit • Raja Rajamannar, CMO, MasterCard • Cyril Lamblard, Head of eBusiness and Digital Marketing, Nespresso • Jennifer Bordner, Marketing, Mobile CEM, Old Navy • Megan Hughes, Director Mobile Products, Orbitz • Chris Brown, Chief Product Officer, Orbitz • Rik Walters, Director of Digital Media, Pacific Union • Robyn Phelan, Senior Interactive Marketing Manager, Palms Casino Resort • Jeremy Lockhorn, VP Emerging Media + Mobile Lead, Razorfish • Sara Bial, Chief Product Officer, Rent the Runway • Adam Brotman, Chief Digital Officer and EVP, Digital Ventures, Starbucks • Clay Cowan, Former VP Global Digital, Starwood Hotels & Resorts (now CMO of Gilt Group) • Jeff Hawley, Director Customer Experience, Yamaha Corporation • Kedar Deshpande, Head of Mobile, Zappos 32

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ACKNOWLEDGMENTS With thanks for support from: Jessica Groopman, Cheryl Knight, Shannon Latta, Charlene Li, Briana Schweizer, and Christine Tran. ALTIMETER GROUP ADVISORY SERVICES Altimeter is a research and consulting firm that helps companies understand and act on disruption. We give business leaders the insight and confidence to transform their companies in the face of disruption. In addition to publishing research, Altimeter Group analysts speak and provide strategy consulting on trends in digital transformation, social business, data disruption and content marketing strategy. Contact Leslie Candy at leslie@altimetergroup.com or 617-448-4769. ABOUT THE AUTHORS CO-AUTHOR: JAIMY SZYMANSKI, SENIOR RESEARCHER Jaimy Szymanski (@jaimy_marie) is a senior researcher with Altimeter Group, focusing on how organizations adapt core strategies to serve the new “connected customer.” She has developed multiple research artifacts on the topics of digital transformation, consumer mobile, customer experience design, and social business strategy. Jaimy also assists with advisory of Altimeter’s clients that are affected by emerging technologies. CO-AUTHOR: BRIAN SOLIS, PRINCIPAL ANALYST Brian Solis (@briansolis) is a principal analyst at Altimeter Group. He is also an awardwinning author, prominent blogger, and keynote speaker. Solis works with enterprise organizations and technology vendors to research the state and direction of markets, competitors, and customer behavior. Through the use of proven frameworks and best practices, Solis analyzes trends, opportunities, capabilities, and areas for improvement to align new media initiatives with business priorities. EDITOR: REBECCA LIEB, ANALYST Rebecca Lieb (@lieblink) is an analyst at Altimeter Group covering content strategy, and digital advertising and media, encompassing brands, publishers, agencies and technology vendors. In addition to her background as a marketing executive, she was VP and editorin-chief of the ClickZ Network for over seven years. For a portion of that time, she also ran Search Engine Watch. She’s written two books on digital marketing: The Truth About Search Engine Optimization (2009) and Content Marketing (2011).

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ABOUT ALTIMETER GROUP Altimeter is a research and consulting firm that helps companies understand and act on disruption. We give business leaders the insig ht and confidence to transform their companies in the face of disruption. In addition to publishing research, Altimeter Group analysts speak and provide strategy consulting on trends in digital transformation, social business, data disruption, and content marketing strategy. Contact Leslie Candy at leslie@altimetergroup.com or 617-448-4769. OPEN RESEARCH This independent research report was 100% funded by Altimeter Group. This report is published under the principle of Open Research and is intended to advance the industry at no cost. This report is intended for you to read, utilize, and share with others; if you do so, please provide attribution to Altimeter Group. PERMISSIONS The Creative Commons License is Attribution-Noncommercial-Share Alike 3.0 United States at: http://creativecommons.org/licenses/by-nc-sa/3.0.Disclosure. DISCLOSURE Your trust is important to us, and as such, we believe in being open and transparent about our financial relationships. With their permission, we publish a list of our client base on our website. See our website to learn more: http://www.altimetergroup.com/disclosure. DISCLAIMER Although the information and data used in this report have been produced and processed from sources believed to be reliable, no warranty expressed or implied is made regarding the completeness, accuracy, adequacy, or use of the information. The authors and contributors of the information and data shall have no liability for errors or omissions contained herein or for interpretations thereof. Reference herein to any specific product or vendor by trade name, trademark, or otherwise does not constitute or imply its endorsement, recommendation, or favoring by the authors or contributors and shall not be used for advertising or product-endorsement purposes. The opinions expressed herein are subject to change without notice. 34

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ENDNOTES 1 Lipsman, Andrew. “Major Mobile Milestones in May: Apps Now Drive Half of All Time Spent on Digital.” ComScore, Inc. 25 June 2014. 2 “Thanksgiving Sets Historic Milestone as Mobile Drives More Than Half of All Shopping Traffic, Reports IBM Digital Analytics Benchmark.” IBM. 29 Nov. 2014. 3 Siwicki, Bill. “Exclusive: Mobile now the primary way consumers shop online.” Internet Retailer. 4 Sept. 2014. 4 “Getting in Sync with Mobile Customers.” CMO Council and SAS. Oct. 2014. 5 Sterling, Greg. “Study: More Than 30 Percent Of Consumers ‘Mobile Only.’” MarketingLand. 3 June 2014. 6 “Device Ownership Over Time.” PewResearch. Jan. 2014. 7 Davis, Ben. “How do we use the internet and mobile devices in 2014?” Econsultancy. 7 Aug. 2014. 8 “The New Multi-Screen World Study.” Google. Aug. 2012. 9 Serpa, Rachel. “Repaving The Customer Journey: Preparing For The Future Of Multichannel.” addz. 2014. Sterling, Greg. “Study: 78 Percent Of Local-Mobile Searches Result In Offline Purchases.” Search Engine Land. 9 April 2014. 10 11 Solis, Brian. “Rising Above Mediumalism: We Are All Creative.” LinkedIn. 3 July 2014. 12 Yahoo Travel. “Apple Watch is the new hotel room key.” New York Post. 12 Sept. 2014. Schooler, Laura. “Wearable Technology Future is Ripe for Growth – Most Notably among Millennials, Says PwC US.” PwC. 21 Oct. 2014. 13 Lunden, Ingrid. “Gartner: Device Shipments Break 2.4B Units In 2014, Tablets To Overtake PC Sales In 2015.” TechCrunch. 6 July 2014. 14 Heggestuen, John. “The Mobile Payment Industry Is About To Explode, With Apple Leading The Way.” Business Insider. 17 Nov. 2014. 15 Golson, Jordan. “Apple Pay rollouts continue, stores seeing growth in mobile transactions.” TechRepublic. 17 Nov. 2014. 16 17 “Beacons Land on Retailers’ Holiday Wish Lists.” eMarketer. 16 Sept. 2014. 18 “iBeacon Market to Break 60 Million by 2019.” ibeaconinsider. 11 July 2014. 19 Solis, Brian. “The 2014 State of Digital Transformation.” Altimeter Group. July 2014. 20 “Getting in Sync with Mobile Customers.” CMO Council and SAS. Oct. 2014. 21 “20 Important Customer Experience Statistics for 2014.” fonolo. 20 Feb. 2014. 22 Husson, Thomas. “Marketers: Now is the Time to Act on Mobile Opportunity.” Forrester. 1 Aug. 2013. 23 “Study: Retail Shoppers Abandoning Mobile Shopping Carts Due to Poor Customer Care.” Contact Solutions. 8 Oct. 2014. 24 Solis, Brian. “The Dim Light at the End of the Funnel.” BrianSolis.com. 16 April 2013. 25 Buchanan, Courtney. “19 mobile marketing stats that will blow your mind.” Responsys. 18 March 2014. 26 “Customer Experience (CX) Metrics and Key Performance Indicators.” Oracle. Sept. 2012. 27 Loller, Bill. “Five Metrics To Optimize Mobile Shopping Experience.” online-behavior. May 2012. 28 Buchanan, Courtney. “19 mobile marketing stats that will blow your mind.” Responsys. 18 March 2014. 35

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