[Report] The Inevitability of a Mobile-Only Customer Experience by Altimeter Group

1. PREVIEW COPY

2. PREVIEW COPY EXECUTIVE SUMMARY Customers are becoming increasingly mobile, and, as a result, the customer journey is in need of an overhaul. In May 2014, mobile platforms accounted for 60% of total digital media time spent.1 Mobile spending is correspondingly increasing to match customer behavior, with mobile devices accounting for one in four of all online purchases in November 2014.2 Although companies understand the importance of mobile, it is Altimeter Group’s belief that brands both underestimate and underinvest in mobile’s promise. In our latest research into the evolving landscape of digital transformation and the digital customer experience, we learned that an understood and unified mobile strategy remains largely elusive to many executives and strategists. In this report, Altimeter Group focuses on how organizations can approach mobile design strategy through the lens of the evolving connected customer. By focusing on activities and outcomes with an understanding of consumer needs, objectives, and behaviors, companies are able to see past mobile as the latest “bright, shiny object.” Companies that invest in mobile-first programs will lead. Sophisticated companies are beginning to explore a mobile-only approach in addition to integrating cross-channel strategies with omni-channel experiences. By following the four steps to building customer-centric mobile strategies outlined in this report, leaders can evolve mobile beyond being “just” another digital screen or channel to achieve greater business results. This will radically enhance the customer experience by making it more intuitive and native. 1

3. PREVIEW COPY KEY FINDINGS 1 2 3 Organizations that operate under a mobile-first agenda, driven from the C-suite and led by a passionate change agent, reap rewards in greater customer engagement, satisfaction, advocacy, and more. Mobile is treated as only part of CX, not a holistic experience. This leads to low budget and staff allocation, forcing unnecessary cross-channel and/or multiscreen experiences. When companies focus too much on a medium’s technology, they lose sight of what the intended customer experience should be among consumers who see mobile as part of their lifestyle. 4 5 6 Once mobile becomes a part of a company’s DNA, it is no longer treated as a “bolt-on” to existing digital initiatives; it’s a natural first step in customer experience strategy development. Strategists must re-imagine the mobile-first customer journey as it could be, benchmarking against new opportunities vs. the current status quo. To win among mobile- and digital-first customers, organizations must focus on learning more about the customer frustrations, expectations, and behaviors specific to mobile. 2

4. ` PREVIEW COPY BRANDS THAT SEE MOBILE AS THE “SECOND SCREEN” RISK LOSING RELEVANCE WITH CONNECTED CUSTOMERS Mobile, once regarded as the second screen, is rapidly becoming the first screen for many connected customers. According to comScore, which uses the “time spent” metric to gauge online consumer retail activity, 56% of all time spent on U.S. online retail occurs on a mobile device.3 Yet only 16% of companies strongly agree they are completely prepared to meet customers’ mobile expectations.4 To keep up with and anticipate needs, brands must recognize that mobile is now integral to their customers’ lifestyle. Citi’s Wolberg-Stok explains the need to shift perspective and digital investments toward mobile: “A few years ago, we thought that customers would just go to the desktop for the full menu of functions, not mobile, but increasingly that’s not holding true. Customer expectations have changed. They used to be more understanding if certain features weren’t part of your mobile app, but now they expect to do whatever they want, whenever and wherever they want to do it. ” Consumers are quickly learning to operate in a mobile-only world. One-third of shoppers use mobile exclusively, and more than half consider mobile the most important resource in the purchase decision process.5 A mobile-first approach is a way of business at Citi. In an interview with Andres Wolberg-Stok, Global Head of Emerging Platforms and Services, he revealed, “Citi approaches digital initiatives as ‘mobile first’ to improve their customers’ lives; then zooms out in strategy from there.” Mobile as the customer’s first screen is a reality, and companies must both adapt their current strategies and begin thinking proactively in order to maintain relevancy, competitiveness, and even survival. Keeping up is just the beginning. What lies ahead isn’t just a mobile-ready customer experience. That becomes commodity. Businesses are required to invest in mobile-first and even mobile-only customer journeys. The idea of mobile-only design is a game-changer, and we believe it is becoming the new standard. Too often companies are stuck playing catch-up to rising consumer expectations around mobile experiences. To paraphrase hockey great Wayne Gretzky, rather than predicting “where the puck is going to be,” they instead skate to where the puck lies now or, in some cases, where it was before. 3

5. PREVIEW COPY “Customer expectations have changed. They used to be more understanding if certain features weren’t part of your mobile app, but now they expect to do whatever they want, whenever and wherever they want to do it.” -Andres Wolberg-Stok, Global Head Emerging Platforms and Services, Citi 4

6. PREVIEW COPY MISUNDERSTANDING OR UNDERESTIMATING MOBILE FRACTURES THE DIGITAL CUSTOMER EXPERIENCE Customer experience is defined as the sum of all customer engagements in each touchpoint and in each “moment of truth” throughout the customer lifecycle. Intuit strives to keep up with rising consumer expectations around mobile experience. Colette Crosby, Director of Marketing, told us, “Even when we’re doing really well with a web app, we have to remember that customers begin to expect that same range of capabilities from mobile native web as well. It’s a continual challenge to deliver comprehensive solutions while delighting customers by fulfilling core needs from their mobile experience.” “It’s a continual challenge to deliver comprehensive solutions while delighting customers by fulfilling core needs from their mobile experience.” The customer journey is a patchwork of traditional and digital touchpoints, some mobile-optimized. When consumers jump between channels and devices, it can easily lead to an inconsistent customer experience. Brands must rethink mobile’s role in the customer journey, particularly where and how it can become self-sustaining for a mobile-only consumer. On the brand side, different groups manage disparate touchpoints, each with its own processes, resources, and metrics. The result is a lack of integration and continuity in the customer journey, forcing customers to multiscreen between devices and hop channels to move along the journey. Sometimes, customers can do so effectively. Many times they cannot. This essentially introduces friction into the customer experience when there’s no need for friction to exist. In reality, competitive alternatives are just a quick click away. Organizations must focus on architecting mobile experiences that are both self-contained (beginning to end) and also complementary to the digital customer journey at large. -Colette Crosby Director of Marketing, Intuit Mobile is both part of the customer experience and also emerging as a self-contained experiential platform. Yet many companies continue to treat mobile either as just another channel, a technology platform, or a portable version of the web. Meanwhile, consumer expectations are evolving to demand dedicated mobile experiences that go beyond mobile-optimized websites, landing pages, content for the smaller screen, or basic branded apps, all for the sake of being present. Such incomplete or subpar mobile experiences negatively impact the mobile customer journey or, at the very least, frustrate users. 5

7. PREVIEW COPY TO DOWNLOAD THIS REPORT IN FULL AT NO COST, PLEASE VISIT OUR WEBSITE AT http://pages.altimetergroup.com/mobile-only-customer-experience-report.html

8. PREVIEW COPY ACKNOWLEDGMENTS With thanks for support from: Jessica Groopman, Cheryl Knight, Shannon Latta, Charlene Li, Briana Schweizer, and Christine Tran. ALTIMETER GROUP ADVISORY SERVICES Altimeter is a research and consulting firm that helps companies understand and act on disruption. We give business leaders the insight and confidence to transform their companies in the face of disruption. In addition to publishing research, Altimeter Group analysts speak and provide strategy consulting on trends in digital transformation, social business, data disruption and content marketing strategy. Contact Leslie Candy at leslie@altimetergroup.com or 617-448-4769. ABOUT THE AUTHORS CO-AUTHOR: JAIMY SZYMANSKI, SENIOR RESEARCHER Jaimy Szymanski (@jaimy_marie) is a senior researcher with Altimeter Group, focusing on how organizations adapt core strategies to serve the new “connected customer.” She has developed multiple research artifacts on the topics of digital transformation, consumer mobile, customer experience design, and social business strategy. Jaimy also assists with advisory of Altimeter’s clients that are affected by emerging technologies. CO-AUTHOR: BRIAN SOLIS, PRINCIPAL ANALYST Brian Solis (@briansolis) is a principal analyst at Altimeter Group. He is also an award- winning author, prominent blogger, and keynote speaker. Solis works with enterprise organizations and technology vendors to research the state and direction of markets, competitors, and customer behavior. Through the use of proven frameworks and best practices, Solis analyzes trends, opportunities, capabilities, and areas for improvement to align new media initiatives with business priorities. EDITOR: REBECCA LIEB, ANALYST Rebecca Lieb (@lieblink) is an analyst at Altimeter Group covering content strategy, and digital advertising and media, encompassing brands, publishers, agencies and technology vendors. In addition to her background as a marketing executive, she was VP and editor- in-chief of the ClickZ Network for over seven years. For a portion of that time, she also ran Search Engine Watch. She’s written two books on digital marketing: The Truth About Search Engine Optimization (2009) and Content Marketing (2011).