Webinar New Mobile Business Models What mHealth Teaches Us

1. WebinarNew Mobile Business ModelsWhat mHealth Teaches Us Julie Ask, Vice President, Principal Analyst Co-Author, The Mobile Mind Shift May 2, 2014. Call in at 10:55 a.m. Eastern time

2. We are in the age of the customer

3. You must iterate to serve your customers well in their mobile moments Opt in Understand • Download an app. • Allow push notifications. • Opt in for messaging. Understandbetter Understandbetter Build trust Build more trust Customer Learn Serve Generate deeper insights Be more relevant Be more relevant Aggregate data from more sources

4. The mobile mind shift • The expectation that I can get what I want in my immediate context and moments of need

5. Agenda • What new data sources (mobile exhaust) are providing contextual information? • How is the combination of cloud and big data creating new engagement opportunities? • What are the most effective engagement tactics on mobile devices? • What new business models does mobile make possible?

6. What new data sources (mobile exhaust) are providing contextual information?

7. The next competitive advantage is data Social Work School Home Location Home Gym Body Heart rate Blood pressure Speed Steps

8. New data composes a long tail today but worth planning toward Behavior Conceptual Location Most commonly used and available today Amount of data Time Emerging Heart Skin Steps Chemical Ingestion Motion Data types

9. Location is more accurate and present TBD TBD Security Home School TBD TV GPS Bus Work Bathroom scale Thermostat Cellular Other Gym Friends Fitness wearables Lights Beacons Wi-Fi LOCATION Ball field Other Door lock Kitchen appliances INTELLIGENCE Store Car Connected devices in the home Smoke alarm

10. Contextual time is underutilized Event from email, booking, or calendar (or location) -2 days Grocery trip -2 sec. Leave home +2 sec. +20 min. +2 weeks +2 days +2 months +2 hours -20 min. -2 weeks Prescr. pick up Commute -2 hours -2 months Soccer game Air filter replace

11. Wearables are nascent but growing market Fitness Sleep

12. Entry by Apple could trigger growth Sketches of potential iWatch

13. Wearables also appear in true wearables Heapsylon Sensoria Fitness Socks Heapsylon Sensoria Fitness Bra Pixie ScientificSmart Diaper • Step counting, speed, calories, altitude and distance tracking, cadence • Socks infused with 100% textile sensors • Heart rate monitor • Embedded textile sensors • Eight months of battery life • QR code on diaper also analyzes baby’s urine, looking for signs of UTIs, dehydration. • 10 seconds to take phone out, scan, and put the phone back

14. Usage is still low for emerging devices

15. Healthcare leans toward disposable or limited time use SecuraTrac Proteus Google Contact Lens • Biosensor patch (size of a Band-Aid) incorporates MEMS sensors and SoC semiconductors. • Monitors heart rate, respiration, falls, stress levels, skin temperature, calories burned, body posture • Ingestible sensor made of edible ingredients taken alongside medications • Stomach fluids complete the power source. • External patch receives info from sensor. • Measures bodily glucose levels in tears • Camera, antenna, LED alert light • Can generate one reading per second

16. Attachments are economical for lower-volume measurements Withings Blood Pressure Monitor AliveCor CellScope • Records an ECG by converting electrical impulses from fingertips into ultrasound signals through device’s microphone • Converts phone into a connected digital otoscope • Used at home, in clinics, schools • App stores all past BP readings. • Uses Bluetooth connectivity

17. New sensors including chemical are still emerging Lapka Personal Environment Monitor Breathometer Parrot’s Flower Power • Measures dielectric permittivity • Two thermistors — one for soil and one for the air • Measures light at 510 nm • Ion measurement • Connects to phone to measure radiation, EMF, humidity, food contents • User blows into illuminated opening for BAC reading. • Provides info about local cab services

18. Our environments will have more intel Whirlpool 6th Sense Washer/Dryer Withings Smart Body Analyzer Nest Thermostat Nest Smoke Detector August Door Lock • Habit-forming: learns user’s temperature preferences over time • Users adjust home climate from their phone. • Alerts user to smoke with a voice notification • User waves hand in front of device to silence voice alarm. • Smartphone-operated door lock • User schedules lock to open when friend’s phone is near (NFC). • Activate specific options when not at home. • Measures weight, body composition, BMI, heart rate, air quality

19. Know which data is scarce and which is commoditized

20. How is the combination of cloud and big data creating new engagement models?

21. Effective engagement hinges on identifying mobile moments and their context Customer journey • What are customer’s motivations? • What does the customer need? • What is their context? Contextual opportunities Mobile moments of truth

22. Use data to generate insights and initiate action in mobile moments Source: July 16, 2013, “Use Analytics To Build Mobile Advantage” Forrester report

23. Data interpretation offers new insights Source: February 4, 2014, “mHealth Illustrates New Business Opportunities” Forrester report

24. Aggregating and crunching data from multiple sources will create new insights Data aggregation Insights Insights Data Data Data Data Insights Insights New products New services

25. What are the most effective engagement tactics on mobile devices?

26. Forrester found five core engagement mechanics to change behavior Offer rewards or incentives to motivate an individual to meet set goals. Inspire customers to take action through virtual competition. Coach or advise customers based on their context. Foster communities with common goals to inspire, educate, and support each other. Use gamification to help consumers raise their own expectations.

27. Rewards and incentives: Nike FuelBand Nike+ app platform had 28M users in April 2014 — up from 18M in August 2013. What you’ve done What you’re missing

28. Virtual competition: Strava • Athletes compete to be the fastest rider or runner, for example, on a course to earn “King of the Hill.” • Members moved 1.4B kilometers in 2013. • Peak week included 1.6 million activity uploads.

29. Coaching: Omada Health (Prevent) Professional coaching • Those at risk of diabetes are put into a group of 12. • Combine mobile with in-home technology to collect feedback. • Active coaching and peer support within group of 12 • Among participants, 80% complete the program with 5% to 7% body weight loss. Peer support Source: February 4, 2014, “mHealth Illustrates New Business Opportunities” Forrester report

30. Support: MyFitnessPal • Users record what they eat along with exercise each day. • They invite friends to join for mutual support. • More than 40M downloads • Users have lost more than 100M pounds. • My friend group of 20 people lost 100+ pounds within four months. Score keeping = gamification Support from community

31. Communities: Fitocracy • Community members post updates and encouragement. • App allows members to post to personal fitness community. • Members post workouts and attract followings. • Users following at least 10 people are more likely to stay engaged.

32. Gamification: Basis Detailed sleep analysis Unlock “new habits” by conquering current goals.

33. In succession, these tactics create and serve customers in their mobile moments Source: February 4, 2014, “mHealth Illustrates New Business Opportunities” Forrester report

34. In succession, these tactics create and serve customers in their mobile moments (cont.) Source: February 4, 2014, “mHealth Illustrates New Business Opportunities” Forrester report

35. WIM for your business? Use both gamification and rewards to drive spending. Offer guidance to customers to generate new sales leads. Support your customers’ goal attainment to deepen your insights and drive sales. Leverage competition to drive engagement in-store or with brands.

36. What new business models does mobile make possible?

37. Mobile generates new business models Pay-as-you-go: base pricing on actual performance — not expectations or predictions (reward low-cost customers) Use dynamic pricing models to maximize profits Offer incentives to customers who are low-cost to serve Layer services onto products (= create new value) In-app purchases (= sell services) Stored value (prepaid purchases)

38. Performance-based pricing: Merck • Merck was faring poorly in the HGH market in Europe including the UK. • Released an injection device that could detect contact with skin, depth of needle, amount of liquid, real or fake cartridge, time stamp, etc. • Able to measure patient compliance through information collected with this closed feedback loop • Payors began to prioritize outcome over initial price of drug. • Payors may now reimburse patients based on compliance — not pharmacy pick-up.

39. Performance-based pricing: Progressive Progressive Snapshot eSurance • An OBD or onboard diagnostic gadget snaps into the car to collect data. • Days 1 to 30, Progressive looks at a customer’s driving habits: distance, force on brakes, frequency of trips late at night, etc. • Day 31: rate adjusted Source: Ellen Carney, “Usage-Based Insurance Onboarding: It’s All In The Packaging,” Ellen Carney’s Blog, April 23, 2014 (http://blogs.forrester.com/ellen_carney/14-04-23-usage_based_insurance_onboarding_its_all_in_the_packaging)

40. Location-based personal pricing Apple TV Price at Best Buy or Target? Amazon.com offered discounts to app users scanning in-store products in 12/11. Price at home

41. Dynamic pricing: Uber

42. Reward low-cost customers • Employees wear pedometers. • Points are earned primarily through logging steps (e.g., 100HM for 20,000 steps or more in a day) but also by entering weight, completing surveys, eating well, getting annual blood work, etc. • 12,000 health miles translated into $300 break in annual premium. (Cummins is self-insured.) • Separately, through a combination of engagement tactics, a program with FitLynxx kept 72% of participants in a weight loss program for one year.

43. New services: Use location to enhance products TBD TBD Security Home School TBD TV GPS Bus Work Cellular Other Gym Friends Fitness wearables Lights Beacons Wi-Fi LOCATION Locksopen if smoke alarm sounds and kids home alone? Ball field Other Kitchen appliances INTELLIGENCE Store Stove turns off if home is empty. Car Connected devices in the home

44. In-app purchases: Candy Crush/AliveCor • Addictive puzzle game that fits into a consumer’s short attention span • Players have free turns, but they must wait 30 minutes once those turns expire or buy more “turns” • 100M people play each day • Generated $1.5B in revenue in 2013 • Records ECG (heart monitor) • Baseline reading included in initial $199 • Subsequent readings (if abnormal and analysis requested) at $4.99 • Pilot in Australia: detected in a trial fibrillation in 15% of those tested • Reduced cost of Framingham Heart Study by 40%

45. Stored value: Telstra/Starbucks • Send alerts at 50%, 80%, and 100% usage • Price reload attractively at 50% • Sell > 10,000 updates = loads/week • Active users > 50% of base • 10M users of store value card tied to loyalty card • Reload within app through credit card • Balance alerts • 5M weekly transactions

46. Learn more about The Mobile Mind Shift (http://solutions.forrester.com/mobile) First two chapters available for free download today

47. Julie A. Ask +1 415.355.6002 jask@forrester.com Twitter: @JulieAsk