Tuesday, 6 December 2011

Mobile CRM - Emerging Trends for the Retail Sector

By Faraz Ghani & Chad Chesworth

This is the first of two articles on emerging Mobile CRM trends in the retail sector. This article focuses on evaluating the trends and the second one will delve into the implications on these trends on retailers, consumers and future CRM initiatives.

Mobile technologies threaten to be just as disruptive as the web was in the 90s due to the fact that they free people from tethered systems and give them ubiquitous access. As mobile commerce undergoes rapid change, retailers are perpetually looking to connect with customers and prospects on newer channels to build awareness and relationships.

The exponential growth in the number of smartphones worldwide is a cue to retailers to familiarise themselves with mobile as a key medium for customer engagement. As a result of changes in the business environment and advances in technology CRM is going through an evolutionary phase with a great deal of innovation happening particularly with the introduction of new channels particularly within mobility. As consumer habits of interacting with retailers evolve with technology, retailers now more than ever before are having to understand and manage relationships with their customers. 

Emerging Mobile CRM Trends

1.       Near-field Communication (NFC)

NFC is a wireless technology that has gained a lot of interest in recent times due to its emerging use in mobile payments. Besides payments, NFC has other benefits for retailers potentially allowing them to build better relationships and strengthen customer loyalty.

NFC payment is being trialled in several countries with rollout plans soon

An example of NFC would be customers being uniquely identified through their mobile devices via sensors when entering stores, which could allow retailers to instantly send promotional communication or coupons to their mobile devices. More interestingly though, is the ability of retailers to track customers as they move between different isles in the store. This could allow retailers to send specific messages in specific areas of the store, but also allow them to view where exactly in the store their customers are going and in the pattern they are doing it.

Research suggests that two thirds of consumers do not decide on the brands they want to purchase until they are in store. The importance of this is that in-store NFC could potentially help retailers improve the most important elements that influence in-store decisions, which are: store displays, atmosphere, promotions, service and layout.
NFC is the strongest candidate in more than two decades to replace the antiquated plastic loyalty cards which requires customers to swipe them at POS to earn and redeem points as it is one of the biggest Downsides for new loyalty program entrants to make inroads since many customers already have substantial amount of loyalty points on their preferred programs and they may find it an inconvenience to carry additional cards. NFC customer identification would release customers from the need to carry loyalty cards and provide them a convenient mode of earning and burning their loyalty currency with retailer without worrying about carrying plastic cards.

Some of the obstacles to the adoption of NFC have been down to the costs to embed NFC devices in store-fronts and marketing collateral, consumer adoption and usage of smartphones and the cost of implementing the infrastructure to support the functions this technology facilitate. Most of these issues are being addressed with the trial and launch of NFC payment services. Some organisations like Air New Zealand citing the lack of NFC-enabled mobile devices have implemented NFC stickers embedded with chips to enable communication with NFC readers. These stickers can be placed on mobile phones and serve the dual function as permanent boarding passes and loyalty cards.

Air New Zealand has introduced NFC stickers as boarding passes for use with non-NFC mobile phones

2.       Location-based Services (LBS)

Location-based services (LBS) integrate a derived estimate of a mobile device’s location with other information to provide added value to the user. The most important attractions of LBS use is that it allows retailers to identify the customer’s location at a certain time, while also being able to be highly personal, accurate, low cost and easy to use. LBS embedded with mobile web or mobile apps serve as a powerful personalisation driver for managing end-to-end customer experience and pushing targeted communications.

This also highlights the potential of integrating social media and geo-location with mobile CRM. Through use of mobile check-ins on popular social networking sites such as Facebook and Foursquare, consumers can inform their friends/followers of their locations. This lets others see where the person is which may lead viewers to visit the same outlet. Geo location could act as a driver for retailers getting customers into stores where incentives may be given to customers who check in more often. “Specials” can also be offered by retailers to entice potential customers to shop at their store, when people search an area they are in for deals. The implications of the aforementioned are that it can give marketers who make use of such services the benefit of word of mouth (WOM), credibility and engagement.

LBS will be increasingly prominent in the retail environment, another possible use being an alternative to traditional loyalty programs to identify customers and reward their repeat purchase. By ‘checking-in’, customers will identify themselves and receive a specific code for redemption at POS which would close the loop and provide purchase data on the individual. The ‘checking-in’ process will need to be incentivised through tangible and intangible rewards to give customers reasons to share their location.

LBS is commonly used with wayfinding and social check-in services

3.       Augmented Reality (AR)

In the literal sense, AR provides an enhanced view of a physical, real-world environment through use of computer-generated sensory input such as sound, video, graphics or GPS data. From a retail perspective, AR has the potential to deliver enhanced information about products and services to consumers. Although, AR has been extensively used in wayfinding and travel specific apps to date, it has the potential to deliver much more functionality in the form of enhanced sensory experience, product details and special offers on retail products and services. It can also deflect some customer service functions by allowing customers to retrieve information on products or placement details through their mobile devices.

Augmented Reality creates new dimensions to physical realities

4.       Social Media on Mobile & Social Media as Customer Service Channel

One in eleven people in the world are on Facebook and Twitter has over 100m users, which is an example of how social media has transformed the web into a platform of influence. Social networks have millions of people who are a rich source of insight and provide a wealth of opportunity for retailers to make use of in terms of understanding customers better, allowing them to build better relationships as a result. Some of the main processes of building customer intelligence through social media are:
·    Online Media Analysis:  Involves identifying what and where customers are talking about a company and who the most influential sources are
·    Reputation Tracking: Analyses what consumers and bloggers are saying about the company and what the threat of the comments are
·    Customer Feedback Management: Views of customers in the social spectrum and how they compare with the rest of the customer feedback channels that the company has to see if the views/attitudes match.

The Internet’s power, scope and interactivity provide retailers with the opportunity and potential to transform their relationships with customers through new channels and in doing so strengthen their competitive advantage. Twitter and Facebook offer unparallelled opportunities for retailers to react to customers sounding off in public which can be quite damaging to a brand if not handled properly, so the importance of reacting to these unsatisfied customers can’t be stressed enough. This offers retailers the opportunity to adequately respond and satisfy customers which would likely lead to more satisfied customers and positive visibility on social channels.

Overall, social media is gaining increasing importance as a customer service channel alongside traditional channels and its use on mobile devices is exploding. There is a whole new generation of consumers that wants to be engaged on social media on their mobile devices and servicing them will put greater emphasis on ‘first call resolution’ from a social context since a disgruntled customer can potential cause a lot of harm. The right people, training, processes and technology will be required to deliver the right experience.

5.       Next Generation Mobile Apps

Mobile Apps have gained ever increasing prominence due to the upsurge in smartphone usage over the years. Some retailers like ebay and Best Buy have taken the lead and even have apps for specific customer segments like ebay’s Daily Deal app for deal lovers and Best Buy’s Gaming App for gaming enthusiasts. From a CRM context, mobile apps provide immense promise of engagement with consumers especially when integrated with other initiatives like loyalty, coupons, LBS, AR and Social.

Some of the challenges concerning deployment of mobile apps include selection of the most optimum app platforms based on smartphone OS of consumers and the use of native apps versus mobile apps. Other challenges stem from the actual utility of the app and the user experience. For a mobile app to deliver the desired results, retailers need to understand their demographics and also need to fit the app within the overall digital strategy of the business. Multifunctional mobile apps that deliver superior user experience usually require alignment between multiple departments within the business to deliver the required functionality highlighting the need for cross-function coordination, change and skill realignment within the business.

Looking ahead, mobile apps will become increasingly popular and retailers will introduce apps to cater to various customer segments with more and more apps incorporating technologies like NFC, AR, LBS and so forth to deliver improved functionality. Different apps from the same retailer will perform different sets of functions and consumers would select the apps that meet their needs best as opposed to the 'one size fits all' app. Mobile apps will also increasingly embed initiatives such as NFC, LBS, AR, loyalty programs, coupons, social media and barcode scanning to provide more meaningful interaction.

US retailer Stop & Shop has deployed Scan It! its multifunctional mobile app that integrates barcode scanning, couponing, loyalty program and self checkout. Apps incorporating multiple features are increasingly becoming common in the retail landscape
In our forthcoming post, we will be exploring the major implication of these trends on retail CRM and how they will help in reshaping the customer experience.

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