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Spending Less On Mobile Often Yields The Same Results

Written by Frank Hayes and Evan Schuman
September 12th, 2012

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?


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One Comment | Read Spending Less On Mobile Often Yields The Same Results

  1. Fabien Tiburce Says:

    As you wisely pointed out, the research comes with one significant caveat concerning infrastructure and overheads. Case in point: we recently had a prominent distributor pilot our mobile and cloud based software. Sales managers loved it and so did head office. Pricing for the software itself was a non-issue. However the project was put on hold. Why? They would have had to equip their sales managers, the very people responsible for visiting stores and placing orders (the heart-beat of the company’s cashflow), with smart phones which they deemed too expensive. Are you thinking what I am thinking? You mean they don’t *already* have smartphones? To me, this is borderline unbelievable in 2012. It’s easy for many of us to look out of our glass towers and assume that connectivity and smartphones are ubiquitous. Unfortunately, the reality on the ground is different, especially outside of metropolitan centers. The lesson here is that those who forgo those critical infrastructure investments today will struggle to remain competitive against leaner, faster and better equipped competitors tomorrow.

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