Mobile’s Impact on the Consumer Path to Purchase

One in three ad dollars will go to digital advertising next year, meaning digital media spending will be almost equal to television spending. Digital strategies will help drive the U.S. advertising market to $172 billion in 2015, according to new research from Magna Global. This—in combination with mobile and social networking—will push digital to the forefront

One in three ad dollars will go to digital advertising next year, meaning digital media spending will be almost equal to television spending. Digital strategies will help drive the U.S. advertising market to $172 billion in 2015, according to new research from Magna Global. Additional research shows that digital advertising will overtake television advertising by 2017, due in large part to the growing popularity of online video, with sites like YouTube and Netflix. This—in combination with mobile and social networking—will push digital to the forefront.

A digital strategy is no longer a nice-to-have, but a must-have for retailers and brands. If you don’t believe that, then you need to take a hard look at the following data points:

  • Mobile devices lead to in-store purchases. 52 percent of U.S. shoppers have used a mobile device to research products while browsing in a store.
  • Tablets are the cornerstone of online shopping. Tablets are expected to bring in $76 billion in online sales, two times that of mobile devices.
  • Digital content and mobile devices go hand in hand. According to eMarketer, U.S. adults will spend 23 percent of their time consuming media on a mobile device this year.
  • Mobile advertising is at its tipping point. Ad spend is expected to hit $31.45 billion this year. By 2018, it will top $94 billion.

How Do You Get There From Here?
Effective digital strategies take a cross-channel approach that integrates the various mobile channels, such as SMS, app, Web and social.

Value comes behind the scenes, as brands can learn useful information from mobile interactions. For example, customers reveal their operating system when they download an app or open their Web browser. Smart marketers collate such data points into one centralized customer profile—an ideal asset to maximize personalization for mobile.

Companies just getting started with cross-channel mobile marketing should focus on small wins. True cross-channel takes time and iteration, so commit to integrating what makes sense in the short, medium and long terms instead of trying to do everything simultaneously. Below you will find some key areas to consider when building out a mobile strategy:

1. Tablets, Smartphones and Watches, Oh My!
It will be vital for brands to take different form factors into account as they roll out their mobile campaigns. Mobile campaigns can quickly be compromised if brands don’t think about the impact on visuals and the call to action across various screen sizes.

2. The Mobile Marketing Tipping Point
Mobile marketing is evolving as more than just a tactic and is being embraced as a core part of the marketing strategy. With the goals being relatively the same as traditional marketing, marketers will be able to attract, engage and retain new and existing customers. Marketers will be able to target their audiences through highly relevant content based on location, interests and interactions throughout the mobile lifecycle.

3. Deliver a Seamless Experience From Discovery to Purchase
Brands have to make a conscious effort to remove the silos across organizations to be successful at mobile marketing. The goal of marketers should be to collaborate across initiatives by taking in to account different screen sizes, channels, design and messages to deliver ONE consistent experience to consumers.

4. Connecting the Dots Across all of the Consumer Lifecycle
As digital becomes a more integral part of the marketing strategy it will be vitally important to understand how mobile campaigns are performing across the entire customer lifecycle—including mobile ads and messaging, QR Codes, mobile website, branded apps and social media. With these insights, marketers will be able to optimize their campaigns to better understand the triggers that lead consumers down the path-to-purchase.

People everywhere are becoming more reliant on mobile devices and mobile websites to provide them with instant access to product information, deals and the opportunity to purchase in an easy, straightforward manner. Brands have to make it easy for their customers to navigate mobile sites and quickly decide to purchase, regardless of what device they are on.

McKinsey Thinks Bland, Generic Loyalty Programs Are Killing Business – And They May Be Right!

A recent Forbes article by McKinsey, “Making Loyalty Pay: Six Lessons From the Innovators,” showed loyalty program participation has steadily increased during the past five years (a 10 percent annual rate of growth), with the average household now having almost 25 memberships. For all of that growing popularity, there are huge questions for marketers: Are the programs contributing to increased sales? And what is the impact of loyalty programs on enterprise profitability?

A recent Forbes article by McKinsey, “Making Loyalty Pay: Six Lessons From the Innovators,” showed loyalty program participation has steadily increased during the past five years (a 10 percent annual rate of growth), with the average household now having almost 25 memberships. For all of that growing popularity, there are huge questions for marketers: Are the programs contributing to increased sales? And what is the impact of loyalty programs on enterprise profitability?

Overall, companies with loyalty programs have grown at about the same rate as companies without them; but there is variance in performance value among industries. These programs produce positive sales increases for hotels, for example, but negative sales impact on car rental, airlines and food retail. And, companies with higher loyalty program spend had lower margins than companies in the same sector which do not spend on high-visibility loyalty programs.

McKinsey has noted that, “Despite relative underperformance in terms of revenue growth and profitability, over the past five years, market capitalization for companies that greatly emphasize loyalty programs has outpaced that of companies that don’t.” This, as they see it, may be indicative of hope among companies with programs that long-term customer value can be generated.

Within the McKinsey report, several strategies are offered for helping businesses overcome the negatives often associated with loyalty programs. Key among these are:

  • Integrate Loyalty Into the Full Experience
    Companies can link the loyalty program into the overall purchase and use experience. An example cited in the article is Starbucks, which has created its program to reflect the uniqueness of its café experience. Loyalty is built into the program by integrating payments and mobile technology, which appeals to its target audience.
  • Use the Data
    This may be the most important opportunity represented by loyalty programs. Data collected from the programs can offer competitive opportunities. Tesco, the largest supermarket chain on the planet, has been doing loyalty program member number-crunching for years through DunnHumby. Similarly, Caesars Entertainment has rich databases on its high-rolling program members. One retailer has combined its loyalty program with a 5 percent point-of-sale discount, building volume from its highest-value customers. In another well-documented example, a retailer has used its loyalty program data to identify future mothers before other chains, thus targeting offers to capture both their regular spend and new category purchases as buying habits evolve.
  • Build Partnerships
    As stated on so many occasions, organizations that build trust generate stronger, more bonded, customer behavior. This applies to loyalty programs as well, where there is ample opportunity to build cross-promotion for customers with non-competing products and services. In the U.K., Sainsbury, the major supermarket competitor of Tesco, has partnered with Nectar, a major loyalty coalition. Nectar has more members than Tesco, and participants can collect rewards across a large number of non-competing retailers. Through partnership, Sainsbury’s offers customers a broader and deeper value proposition; and Nectar also generates data from coalition partners, which it uses to better target promotions to customers.
  • Solve Customer and Industry Pain Points
    Numerous customer behavior studies have shown that people will gravitate to, and pay more for, better service. A perfect example of this is Amazon Prime, where additional payment gets customers faster delivery and digital tracking. This is good for Amazon (estimates are that members spend more than four times more with Amazon than non-members), its customers, and its suppliers, who also get access to Prime customers and the positive rub-off of affiliating with a trusted brand.
  • Maximize Difference Between Perceived Value and Real Cost
    Often, program elements can represent high perceived value without adding much in the way of bottom-line cost to the sponsor. The example cited is Starwood Hotels and Resorts where, through its Starwood Preferred Guest (SPG) program, there is a focus on personal leisure travel rewards for high-spending frequent guests.
  • Allocate Loyalty Reinvestment to the Most Valuable Customers
    Many companies have only recently come to the realization that some customers are more valuable than others; and, to be successful, loyalty programs need to target the higher revenue customers. In 2010, Southwest Airlines revamped its loyalty program to make rewards more proportional to ticket price; and this has better targeted the most profitable customers, as well as enabled the airline to adopt a loyalty behavior metric that is closely tied to actual revenue generation.

Loyalty programs continue to grow, but they are also tending to become more closely integrated with brand-building and multichannel customer experience optimization. But, there is also lots of commoditization and passivity were these programs are concerned—sort of the “If You Build It, They Will Come” syndrome at work. And, of course, there’s a mini contra movement among some retail chains, where they have removed established loyalty programs—or never initiated them in the first place—in favor of everyday low prices and more efficient performance.