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MMA Forum exec: Value must be added to apps

June 14, 2012

Coupons are delivered to Walgreens apps and can be redeemed in stores

NEW YORK – A Crone Consulting executive at the 2012 MMA Forum said that merchants who use value-driven applications will be successful at building a CRM-based strategy.

During the “How to Wield Influence and Control Your Destiny in the Mobile Payments Race” session, the Crone Consulting exec presented a look at how retailers are using mobile to build groups of enrolled users. Additionally, the session gave attendees real-world examples and predicted numbers for mobile payment solutions from retailers.

“Any merchant that figures out how to make it valuable for you to download their app will have the benefit of an enrolled base and those who enroll are the ones that control,” said Richard Crone, founder/CEO of Crone Consulting LLC.

“And those that have an enrolled base have a higher valuation because they are not doing traditional, old-school marketing – they are doing CRM-based preference based communications,” he said.

The track was sponsored by Chicago-based mobile marketing service platform Vibes Media.

Mobile payments
Marketers are in a race for enrollments across three areas: mobile banking apps, aggregator and mobile shopping apps and third-party intermediaries.

Consumers have a strong relationship with retailers, showing the opportunities available to create mobile commerce functions inside apps.

“Merchants view mobile as an opportunity to reinvogorate their preferred tenders,” Mr. Crone said.

“The merchants know that if they can just get a slight movement towards these preferred tenders, or what merchants call friendly tenders, they can save big time,” he said.

Starbucks has paved the way when it comes to mobile payments, with the company recently announcing that it has processed 42 million transactions over the past nine months. According to numbers crunched by Crone Consulting, this means that Starbucks has approximately five to six active million users and accounts for two percent of total sales.

The Starbucks commerce-enabled iPhone app

Mobile is not an island
Mobile is not one channel, it is more like 16 channels according to Mr. Crone, which includes everything from email, SMS, mobile apps and mobile Web.

The most important goal of a retailer is building a user base, which can easily be done via an app, per the exec. Therefore, successful mobile marketing is more about the users instead of impressions.

Additionally, research has shown that up to two-thirds of consumers would want their usage tracked if they could receive relevant ads.

Amazon has been successful in getting users tailored content with an app that lets users select specific categories that they want to receive.

Purina also uses profiled data to target users based on user preferences.

Mr. Crone also estimated that based on the number of users, Google Wallet could be making up to $316 a year per enrolled user in revenue based on CPMs and CPAs and from their own private label tender, which is a prepaid card. With PayPal’s tender-stirring, estimates could be closer to $490 a year per enrolled user.

“I can tell you that getting mobile right for Google is not a upside opportunity,” Mr. Crone said.

However, it is important to remember that mobile payments is not just about the payments – it is also about the data involved in understanding consumers’ buying habits.

For example, Mr. Crone said that 45 to 67 percent of all transactions are influenced by some kind of mobile influence. This includes activities such as in-store comparison shopping.

Sears, for instance, uses its app to let consumers can in-store bar codes to learn more about products and receive offers. Macy’s Backstage Pass is also a self-serve tool for in-store shoppers.

“Richard’s data greatly highlights the need for retailers to move quickly and start to experiment because if they aren’t experimenting then they are falling behind,” said Jack Philbin, president of Vibes Media, Chicago.

“The race has already started and if they want to compete they have to be in mobile,” he said.

Final Take
Lauren Johnson is editorial assistant on Mobile Commerce Daily, New York

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