Originally published by McKinsey, December, 2012
Mobile is the hot new shopping device. But many retailers still think of it as just another communications tool or an element of a multichannel marketing campaign. Rather it's where people go to accomplish everyday tasks with more ease and choice than was possible in the pre-Internet world. By virtue of living in the pockets and purses of consumers, mobile has become the always-on concierge of the modern day retail environment. The difference between a mobile strategy that sells and one that stumbles is simply how well it serves customers.
I often hear marketers talk about mobile as yet another intricate new world to master, one of complexities and competitive vulnerabilities, but also almost dreamlike levels of opportunity. It's true: mobile devices and software are evolving rapidly. The rewards and risks are great. But the basic motivations of shopper behavior, and what it takes to attract customers, stays relatively consistent over time.
When a purchase is on the horizon, consumers subconsciously balance four key factors — trust, convenience, price and fun (TCPF) — to decide where to go. Some people will pay more to buy something that's convenient; others will buy from a less-than-reputable source if it means getting a good deal. It also varies with the person's current mindset. One day, convenience may be more important to me; another day I may have more free time and prefer to prioritize fun. Nevertheless, every transaction a business makes—online or offline—stems from hitting the right balance of these TCPF levers to service its particular consumers' interests. Retail sales excellence in the mobile age requires chief marketing and sales officers use mobile to bolster strategic elements of their specific TCPF equation, to more thoroughly live up to the universal and time-tested preferences of their consumers.
Here are some mobile TCPF implementations I believe every retailer must explore:
Trust comes from many different sources from clarity of pricing to ample product information. But it also stems from the “One Store, One Brand” principle: a consistent, online-and-offline brand message activated across various digital media and technology touch-points to provide improved service for users. Trust erodes when these touch points are out of sync. For example, if a brand touts itself as modern, friendly, and strong in customer service, and a user goes to its mobile site only to see a font that's too small to read, buttons too small to touch, inconsistent pricing, and unintelligible design, the brand's identity and reliability gets immediately, instinctively called into question by the user. If the brand sends too many SMS messages, so many that it burdens rather than services the user, this also creates a fissure in the “One Store, One Brand” promise and weakens the trust factor.
Convenience is a dominant driver of user behavior. It's one of the foremost promises of technology: to make things easier. Mobile computing is the epitome of this notion. Retailers should consider every mobile device to be a personal convenience kiosk. In-store, apps can be used to ease the decision making process and amplify the brand experience by providing product information like demos, users reviews, comparisons, and aisle location that wouldn't have been accessible otherwise. They can also allow shoppers to checkout without standing in line; purchase items not in stock; and leave the store with ample, helpful information about the product they just bought. If a sales person has a device, he or she can also use it to better service and inform the customers.
Pricing transparency is inescapable. With a mobile device, consumers can see what competitors—located down the block or in China—are charging for the same products you are while standing in your aisle. Concerns about this showrooming trend have reached deafening levels. But no one can win in the race to the bottom in pricing. Fortunately, I've found discerning shoppers, particularly those apt to become brand loyalists, will often pay a little more for trust, convenience, and a better overall experience—a bet some retailers are already making. Effective mobile apps should prioritize the TCPF value of convenience by allowing users to create their shopping lists through speech and by integrating couponing. Mobile's role in combating the threats associated with pricing transparency comes down to the creation of an excellent, brand-consistent mobile experience that provides a valuable service.
Fun can trump all other factors. Trust, convenience, and price are the rational levers; fun is the emotional appeal that draws people in over and over and inspires them to share their experience with friends. Research by Professors Leaf Van Boven and Thomas Gilovich shows that by 57 percent of people report that they derive more happiness from their experiences versus 34 percent who do so from their material purchases. Just as the retailers like Apple and Wet Seal maximize the instore shopping experience by letting shoppers play with iPads and use kiosks to create outfits, the best digital marketing initiatives maximize the shopping experience online and on the phone. Pizza Hut's original iPhone application incorporated fun into the shopping experience, letting users shake their device to add sauce to their order of wings. After being on the market for a year, it had been downloaded about 2 million times and had already generated $7 million in sales.
When it comes to mobile, it's not about barcode scanning tools, or mobile optimized emails or communicating more information in more ways. Mobile is a service provider. And the sooner retailers figure that out, the better.