Spending Less On Mobile Often Yields The Same Results
Here's some good mobile news for your bean-counting bosses: Spending less on mobile, in most situations, will deliver roughly the same results as spending a lot more, according to a report released Tuesday (Sept. 11) by Forrester Research and the National Retail Federation (NRF).
Clearly, that's not always the case. Sometimes spending much more is highly beneficial but may not deliver immediately better mobile stats; for example, an infrastructure investment that will provide better uptime and faster performance for many years. That caveat caveated, the fact that Forrester found few, if any, performance gains from spending more money on mobile is deliciously counter-intuitive.
Spending more money is primarily being pushed by "a lot of vendors and venture capitalists" without an appreciation for how shoppers interact with mobile shopping and research, said Forrester Analyst Sucharita Mulpuru.
For many retailers, the existing E-Commerce infrastructure provides a terrific environment for relatively simple—and low-cost—mobile sites and mobile apps. Unless a higher end package will deliver truly useful—and differentiated—functionality, most shoppers won't care. And it certainly won't impact their purchase conversion.
It's important to remember that mobile sites and mobile apps—due to their very nature—are not especially good at closing the sale. They are wonderful at enabling the sale, but the payment and other final steps are more likely to be done on a desktop or tablet than on a smartphone. Pizza, though, may be an exception.
The Forrester report said the differences in mobile approach can be huge. "Most retailers report that the majority of their traffic comes through their Web browser, even when they have apps and promote them. As a result of this consumer behavior, retail executives are generally focusing their energies on mobile site optimization rather than on apps, which tend to be used less," the report said. "When they do spend on apps, retailers report having built them for less than $200,000, in contrast to the millions that marketers in industries like travel, insurance and telecoms report spending on their apps."
Other factors make simple and clean analysis of this trend almost impossible. On the one hand are the many different types of mobile functionality, such as helping users on the street (or at their offices or homes) mobile surf as opposed to in-store-only activities as opposed to mobile in the hands of associates for mobile checkout, mobile payment or e-receipts. But some mobile investments—network upgrades or Wi-Fi repeaters, for example—can support multiple types of mobile. The easiest number to track is direct purchases. But what about those additional sales closed by the tablet-equipped associate or by the customers who were messaged an instant in-context coupon (to be used at an in-store POS) or who only learned about the store's existence courtesy of a geofencing function?Because so few of the mobile-influenced sales easily show up on spreadsheets, it can be almost impossible to prove ROI. "It's so small and marginal that it won't move the needle," Mulpuru said.
So the question stands: Once an app or mobile site enables products to be found and compared, how much is each new level worth? And is there any realistic way to establish that it will bring in additional revenue to cover the higher cost? "We found the commerce numbers exactly the same for those spending a lot and (those spending) a little," Mulpuru said.
Then again, one of the clearest statistics in the report may be the best explanation for retailers moving cautiously when it comes to investing in mobile technologies. In answer to the question, "What are your company's greatest internal challenges to successfully deploying and managing smartphone and tablet device initiatives?" the top answer—from 60 percent of the organizations surveyed—was, "Business objectives for mobile initiatives are unclear." That blew away "lack of experience," "staying up to date on market/consumer needs" and other responses.
Any time a retail IT shop isn't sure what the business objectives are, that's a truly deadly sign. It means someone came up with a seductively attractive technology and wants to use it, rather than identifying a business problem and looking for a technology that will fix it. That's backward—but worse, it also means that business-side sponsors of the project have either fallen in love with a what's-it-good-for? technology, or they've been talked into backing the project by IT.
In the case of mobile, that means those business people will bail on their support as soon as it becomes clear that, with no specific problem to solve, there's no way to justify spending lots of money on the non-solution. And that's exactly the blind spending they shouldn't be doing.
On the other hand are those lightweight low-cost projects to dip a toe into mobile. They probably do have simple lightweight goals, even if they're nothing more than the mobile equivalent of a sale flyer or a guy wearing a sandwich board.
Maybe no one will be very impressed with a cheap, simple mobile project. But an expensive mobile project that doesn't deliver on any business goals will definitely impress your CFO and CEO. If nothing else, it will get you remembered.