“These findings suggest that managers should avoid overextending into mobile channels and instead seek to maintain a balance across different online channels” is the conclusion of new research reported by Marketing Science Institute.
Two studies were conducted on mobile strategy in retailers and listed companies.
The first found that heavy focus on mobile leads to a reduction in transaction value and the number of order lines. However the transaction count may increase. Effectively customer are spending less but more frequently. Now if you’re a retailer who has to ship goods this becomes an issue as there will be frictional costs to every order (even if you charge for delivery).
Also, the second study of publicly traded companies found that stock returns were poorer when the company had a higher ratio of mobile orders to other online orders.
The paper concludes with the following advice for companies:
- Prominently display indications of seller quality, such as consumer reviews, to facilitate decision-making, especially for risky products
- Improve operating efficiency to strip out the frictional costs of low cost high volume orders
- Develop websites that do not demand much cognitive effort from consumers to navigate via mobile channels
A further thought from me was to ensure that you’re looking at customer lifetime value metrics and segmenting customers based on their channel usage. This may highlight customers who can be given incentives to place larger mobile orders.
Further tactical ideas around mobile channel strategy
I’d add the following suggestions to this research:
- Ensure app analytics are built into your app – too often individual level app analytics are forgotten. Find a good technology provider with an SDK, export function and decent reporting
- Make it easy to authenticate the user and identify them across channels – social sign-on can help at this point but ensure there’s a value exchange (e.g. is there a good reason to authenticate?)
- Use mobile app marketing channels – push messaging, in app pop-ups and interstitial messaging should all be targeted and personalised to the individual customer
- Consider gamification/behavioural economics – encourage the customer to do things that deliver the experience but also match your operational goals
- Don’t forget profit – revenue is vanity, profit sanity yada yada…
- Consider opt-in for other channels – can you get an email address from them to take the experience to other channels? Can you prompt for newsletter opt-in if they don’t have it?
- Develop digital small value goods that will sell well on mobile and don’t carry profit stripping costs
For more on channel strategy, take a look at Storm81’s list of every marketing strategy.
Get the full research on Mobile Channel Expansion Strategies
If you’re inclined to read academic marketing texts you can download the full research paper entitled The Dark Side of Mobile Channel Expansion Strategies from the Marketing Science Institute.