Wow! I just chaired a meeting of mobile industry executives and even they are confused about the new emerging payments landscape. So, I can only imagine how you can be a “deer in the headlights” if you are a brand, hospitality company, retailer, or bank. This article provides you with a practical introductory business perspective to help executives make more informed business decisions on deploying new purchase, payment, and rewards methods. As I am actively seeking real life viewpoints and experiences, please contact me to discuss your situation or to provide me with your valuable insights.
Sometimes acting is less risky than not. Based on a day in the life of a typical consumer and how they “consume relationships” and use digital devices, it is higher financial and marketplace risk for your organization not to implement alternative engagement and purchase strategies.
Having said that, where do you start? How can you deploy within a manageable risk tolerance? What are your core business issues that drive decisioning strategies on what to deploy? Is it more loyalty? Spend per visit? Spend for year? New customer acquisition? Reducing your transaction costs? Your business issues relating to market share, top line revenue, gross margin, and marketing cost of acquisition and CRM should dictate your priorities on what type of alternative transaction, ordering, payment, and rewards systems you deploy.
First, let’s help you understand the landscape from a practical needs based perspective and then we will cover best practices and insider tips that should factor into your decision making.
We will set the stage by providing you with a mobile payment categorization that will help you start to compartmentalize you needs, perspective strategies, and providers; to that end we will cover the following topics:
- In-Store Purchase Flow and Actions
- Anywhere “Behavioral” Purchases vs. Payment Centric Transactions
- Banking vs. Wireless Carrier Payments and Billing
In-Store Purchase Flow (and Actions)
Mobile In-Store consumer purchase management is divided into three areas: POS, Self-Checkout, and In-the-Moment Engagement:
- POS: The buzz word here is “contactless POS terminals” which is basically enabling a consumer to tap their NFC-based phone or other mobile device that contains their credit/debit card information and perform a secure transaction. The dawn of cardless transactions.
- Self-Checkout: The ability to enable a mobile device to visually scan or snap an item and add that to a consumer’s shopping cart and then simply check-out on their phone. There are several methods and physical customer pathways that need to be implemented in order to ensure operational soundness, flow, and reduce fraud.
- In-The-Moment Engagement: Interacting with customers as they shop using various behavioral methods to motivate actions; techniques include guiding, tunneling, simplifying, and experiencing. It is the next generation “FSI” and co-op program. Do you realize you can also deploy throughout the store/shopping experience a “Tap & Engage” personalized concierge experience?
Anywhere Purchases (with In-Motion Commerce)
The new emerging art and science in this field is “in-motion” commerce. At its core, it is the ability to engage, transact, and reward consumers, within their daily lifestyle, based on their preferences and lifestyle behaviors. This approach integrates preferences, time of day, daily schedule, and other social and behavioral methods into how, where, and when consumers are engaged. This is a very different art and science than simply putting a physical credit card on a mobile device.
Anywhere “In-Motion” transactions is not well understood and often mismanaged. The market has already proven that simply taking a digital/web experience and building an “APP” on a smart phone does not, in itself, translate to meaningful ROI; or an experience a busy consumer chooses to do at the “moment of truth” within their commerce lifestyle. However, providing a PUSH/PULL experience, whereby (1) the customer can choose to sign up for a preferred method of in-the-moment engagement, so you can “ping” them based on mutually agreed upon circumstances throughout their week and during their “moments of decisioning” and (2) allowing them to initiate the engagement and commerce experience on their terms, is perceived as a better “commerce relationship” and one that is more in line with how people engage via social media.
Done well, evolving your strategy, from physical store to ecommerce and now to In-Motion Commerce, is the next fundamental frontier to revenue and margin generation that has significant implications regarding shopper analytics, virtual category management and inventory.
Banking-Merchant Financial “Rails” vs. Wireless Carrier “Pipes” and Payments
Do you need the “Rails” or the “Pipes” (or both) as part of your alternative purchase flow strategy? There exists very specific payment solutions whereby consumers’ can use their mobile device to pay for certain digital and service items and have it put on their carrier bill for payment or deduct immediately from their prepaid account. Traditionally, in the US, this was exclusively for digital items (such as ringtones, videos, and games). Now, there is a scramble to potentially add service oriented purchases such as train and other forms of transportation; and eventually may grow into vending and other “physical product” micro-payment purchases. If your company is involved in digital content, service oriented transactions, or micro payments then you should spend some time exploring this landscape.
Currently the US wireless carriers are not yet ready to challenge the existing “banking-credit card financial rails” by accepting on their billing statements many product purchases as they will also have to deal with the returns, rebates, exchanges, credits, and other reconciliation and settlement issues that represent gigantic operational and financial risk management challenges.
TOP BEHAVORIAL SOCIAL AND MOBILE COMMERCE TIPS
Social Acceptance of Prepaid: With the global growth of prepaid phones and transportation tolls; many consumers are starting to view prepaid from a new perspective in terms of convenience, cost savings, rewards, and entitlements. Smart marketers are deploying solutions that play into this growing trend and lock in prepaid dollars to their enterprise while reducing overall transaction costs. This takes the concept of gift cards to a whole new level and adds social elements, such as friends and family, to prepaid strategies.
ACTION: Figure out how to integrate a more substantial and rewarding prepaid offering into your customer relationships and transactional solutions.
Just Ask Me Stupid: The new wisdom is to simply ask the person “in-the-moment” of their preferences and tasks they need accomplished and then offer up products and services that fit. The traditional marketing industry science of delivering offers based on “PHD level analytics” culled from past purchases and web activity is now becoming secondary. The reason is that up until only a couple of years ago, it was not practical or cost effective to simply ask the person “in-the-moment” and then immediately serve up a relevant offer. As a simple example; Nicole needs to buy a birthday present for her brother during this busy week and has allocated 30 minutes of her lunch on Wednesday; helping her with that will get you a transaction; just emailing the weekly “personalized” offer of women’s designer shoes is not a help to Nicole today.
ACTION: Create a CRM and Loyalty paradigm where you have more two-way mobile dialogues “in-the-moment” of decisioning; it is actually practical and in many respects less costly to offer this higher level of service. Remember, it is not about your app, it is about the day in the life of the customer.
Make Me Look Good: Why do people covet joining a “club” they cannot get into? Or having the most friends on facebook? A large part of the success of social media is due to the fact that most people have a basic need to be recognized and feel special; and that includes being a part of or associating with a certain “peer” group that elevates their own personal brand.
So, what is the commerce tip based on this well known human behavioral characteristic? It is to design a recognition approach that duals as a social catalyst, thereby creating free marketing. For example, a loyalty member, when purchasing an item online or mobile, automatically generates a special offer or invite to her friends; this approach enables the person to “brag or inform” of her purchase in a very subtle way while making her feel special that she is able to generate a special offer for her friends. This accomplishes several key behavioral triggers that engender loyalty and increase transactions while reducing your cost of marketing. Everyone wins!
ACTION: Enable a loyalty member, when purchasing, to choose from a few special offers and promotions that automatically are posted, tweeted, or sent (via email and text) to their selected list of social friends. Using this approach, it is socially acceptable to create a direct and clear connection between your customer’s social life and your commerce strategy. The program approach described actually is “social” and does not violate the trust of a person’s social lifestyle.
Reward Actions not just Transactions: This is one of my favorites and is emerging as a clear winner that takes analytics and “pattern matching” to a new level of importance. Traditionally, reward programs provide points or cash back based strictly on purchases. The new art and science of reward management is the establishment of rewards for actions not just transactions. Actions can be simple acts such as viewing a video, responding to a quick mobile survey, and signing up for product tips.
Why? Easy answer: you can develop fairly straightforward analysis that shows it is more likely for a person to make an immediate, spontaneous purchase if a person performs a certain action. For example, in order to sell (right now while a person is shopping) a $250 baby seat to new parents, you know that parents who watch a 30 second video of a busy Mom showing how easy it is to put her kids in the car (using your car seat), are 16% more likely to purchase at that moment rather than continue their research or be stuck in “analysis-paralysis”.
ACTION: Integrate “pattern matching” and other analytic approaches that correlate rewards to certain actions that motivate transactions. Done well, this can significantly shorten the sales cycle and stimulate better outcomes.
In summary, focus more on the mobile and social behavioral strategies to guide a consumer through the purchase flow, as opposed to a payment approach that simply transfers the physical act of payments from a card to a phone.