Mobile Commerce and Social Media merging?

Increasingly, I’m seeing Web 3.0 (aka the “Next Big Thing”) as the collision of two mega-trends. Mobile commerce and social media are intertwining and are becoming indistinguishable. Or, at least, it’s hard at times to tell where mobile commerce ends and social media begins.

Facebook, for example, is the killer mobile application. As of April, there have been nearly 7 million downloads of the Facebook Mobile iPhone application representing more than 25% of the iPhone and iPod Touch market. Personally, I use Facebook more on my mobile phone than on my computer (despite the lame user interface).

Is Facebook on a mobile phone mobile commerce or social media?

Facebook Mobile is definitely social media and it’s definitely mobile. Facebook is hardly alone in not figuring out the commerce part in mobile.

Interestingly, the public sector seems to get it. Lately, I’ve spent a lot of time talking to Universities about mobile commerce. Universities understand that their alumni, fans, and of course, their students all use both mobile phones and social media. After all, Facebook started out as a student-only application.

All university outreach, from recruiting to fund raising to athletics, involves relationships. Social media and mobile commerce technology fit perfectly with university goals to build lifelong relationships.

Universities embracing social media on a mobile phone allows them a very intimate, always-there, reminder to the user of their relationship and how the university has affected their life. Social media also lets users share university info with classmates and friends.

Universities can monetize this through their annual fund raising and recruiting efforts. For example, users can challenge classmates in their social network to donate. Both Vanderbilt and the University of North Carolina Chapel Hill already have basic mobile sites.

Look for social media and mobile commerce to more directly support university advancement in the future.

Mobile Banking Requires a Long-Term Strategy. Canada is ready.

The call for strategic mobile banking is increasing and two recent articles are absolute must-reads.

First, Mobile Financial nicely sums up the challenges of mobile banking. Mobile Banking is not a simple add-on to an existing product. Mobile provides new ways to connect with your customer, strengthen loyalty, and deliver better services at a lower cost.

Mobile poses significant risks and technical challenges. Making a prudent decision on mobile banking requires three key “legs of a stool” a) deep collaboration between the business executives who know the long term goals for the organization, and b) the technology team who knows the intricacies of the current environment, and c) deep mobile expertise, which is often missing from most organizations.

Success requires all three legs of the stool and moving forward without all three almost certainly will result in failure (although some banks have set the bar extremely low so they can claim success, regardless). Mobile banking efforts now should be a base to build upon in the future. Doing it wrong now and having to start over puts you behind your competitors who did it right.

Secondly, Jose Colucci writes a manifesto (or offers a 12 step program) on why Canadian banks should offer mobile banking now. The Canadian market is ready. Canada is the land of the RIM and increasingly the iPhone. Canada has the technology, the infrastructure, the resources, and the demand for mobile banking to completely explode (in a good way) and be an example of success for the developed world.

I predict that when the first bank makes a bold move, the entire industry will follow. Canadian mobile banking will happen in a breathtaking, large rush.

In fact, in doing some Search Engine Optimization last week, I discovered one of the most searched terms related to mobile banking in Canada is “TD Mobile Banking.” Like most other Canadian banks, TD has a mobile web site that is keeping the proverbial light on for mobile. But like most WAP interfaces,  the TD site has some usability challenges which are almost certainly preventing widespread adoption.

And the point is that despite the usability challenges and lack of promotion, there is considerable demand for the product.

Canadian customers like Jose are clamoring for mobile banking.

C’mon CIBC, BMO, Desjardins, Laurentian, National, TD, and RBC. Let’s have it!

HSN iPhone mobile commerce application featuring shake2shop

Mobile Commerce is starting be, well… commerce. Home Shopping Network (HSN) announced their new iPhone application that among other things let’s you buy stuff.

So far much of the hype around mobile commerce and mobile advertising has brought back painful memories of the Dot-com days before the bust. Back then it seemed everyone built their business model on ad revenue and the glory of first mover advantage. Today’s conversations on mobile ad revenue and “stickier”, more loyal customers seems to be the same deja vu all over again.

Now we have another great example of a company using their ecommerce expertise to find another way to connect with their consumers and convert eyeballs into revenue. Hallelujah.

Modern consumers use their phone when they’re bored. Look around. Almost everywhere you’ll find someone staring at their phone: in the breakroom, at the DMV, waiting for a plane, sitting on a bus, even standing in line at the checkout. There are lots of places without computers and that are not your retail store. All these other places are opportunities to connect with your customer and create new sales.

“This is another valuable tool for us to reach both existing and new customers with the compelling lifestyle content we offer via HSN TV as well as the broad array of quality products available at hsn.com,” says Brian Bradley, executive vice president/general manager of online and advanced services at HSN. HSN points out that this is possibly the first case of a Live Video “Third Screen”, referring to simultaneous live video on television, computers and now mobile phones.

However, the focus on booking sales in the mobile channel is arguably far more important to the overall mobile commerce industry.

Ecommerce companies are struggling with how best to adapt the web shopping cart metaphor to mobile commerce. Doing business on mobile phones adds additional difficulty because of the fragmentation of technologies (like SMS, browsers & applications) and devices (iPhone, Android, etc.). The successes and failures of the HSN application and others like it will be useful to the industry as a whole.

Industry best practices are still in the incubation stage. Organizations going it alone generally must figure out all the details using trial and error and often with very little objective data or mobile experience as a guide.

This challenge is why more organizations will seek help from outside experts like my firm Mobile Strategy Partners. At least for now, Mobile Commerce is more complicated than ecommerce was in the 1990s. As a veteran of ecommerce and now mobile commerce, I have seen the organizational struggles and the expensive mistakes that could have been prevented.

Mobile Commerce is evolving faster than ecommerce did. More and more organizations are looking for help in getting the product mix right earlier and get to ROI faster.

They’re doing it because if they don’t, their competitors will.

Nationwide Insurance Consumer iPhone Application

I think one of the key indicators that the web was all grown up was when insurance companies started relying heavily on web applications.

Insurance companies are increasingly relying on mobile applications by developing them for their agents and/or customers.

For example last year CIO magazine highlighted the mobile agent application AFLAC provides. Agents reported winning deals they might otherwise have lost because of the immediacy of mobile applications. AFLAC says they have a number more applications in the works.

Similarly, Nationwide has a consumer focused iPhone application that helps document accidents among other things. USAA provides insurance features like proof of insurance in it’s suite of financial applications. State Farm provides a somewhat stripped down WAP application for consumers.

Insurance is a competitive industry. As applications are successful, I’m sure we’ll see comparable applications pop up from other companies.

My money is on applications catering to the productivity of independent agents (producers).

Independent agents are where the money comes from. If they’re selling your policies, they didn’t sell a competitors.

Like everything else, it’s all about increasing revenue.

Like marketing, the look, feel, flow, and functionality of an any application is an intangible that organizations are tempted to skimp on when pressed for time, budget, or both. Similarly, a flawed user experience is likely to be as bad for business as a flawed (or absent) marketing plan. Also like marketing, user experience can be measured but the results sometimes are dismissed.

“The Mobile User Experience is Miserable” says Jakob Nielsen a respected Mobile User Experience expert in a July 2009 study, “It’s neither easy nor pleasant to use the Web on mobile devices. Observing user suffering during our sessions reminded us of the very first usability studies we did with traditional websites in 1994. It was that bad.”

Executives, Programmers, and project managers all tend to focus on reducing scope and getting the product out the door. Many of us wrap ourselves in constraints (read: excuses) as to why suggested user interface changes won’t work. The code technically works, we’re behind schedule, and we’re losing money. Ship it!

So, the fundamental question to executives is “Do you want mobile to make you money?”

If the answer is “yes”, then it requires discipline like any other business initiative. The fundamental business goals must be defined. The user experience must be well designed and well tested. The marketing plan must address the right demographics.

If we slap together a clone of the site designed for a PC, which isn’t anything like a phone, we almost guarantee failure. In fact, when Nielsen tested WAP sites in the same study, he found that tasks took users 38% longer in 2009 than in 2000! Phones are faster but perhaps we’re trying to do more and ultimately slowing ourselves down.

Nielsen says, “almost every design decision must be made in the context of the [mobile internet] site being designed, and what works for [one] site may not work for another.” The complexity of phone capabilities, application features, differing contexts, user skill variations and multiplying platforms and technologies often requires professional help in each specialized discipline.

Doing it right means budgeting time and money properly. Cutting corners risks delaying projects even further, damage to your brand, and the expense of convincing customers to give you a second chance when you get your act together.

Look for upcoming announcements for my webcast addressing this and other mobile strategy issues.

• a) Need a mobile strategy now
• b) Lack key resources to develop a mobile strategy
• c) Must be very careful

Today, IDC Financial Insights released a report saying that as the recovery continues, banks will face increasing pressure to offer mobile services. Furthermore, banks need to proceed very carefully and “take a more strategic look at mobile banking rather than view it as simply an extension of online banking and bill payment.”

Similarly, a UK survey found that in 86% of organizations, IT groups were in charge of developing a mobile strategy. However, nearly half said they lacked necessary skills to develop a successful mobile strategy.

This is why I’m in business. I have seen this first hand in hundreds of organizations. Even if a successful mobile strategy was as simple as picking a product (which it definitely isn’t), the ever changing combination of technologies and vendors makes it extremely difficult alone to come up with a plan that is reasonably likely to succeed.

I have seen what hundreds of organizations have done with mobile. Most bankers faced with making a decision are stuck with what vendors tell them and the dribbles of vague information on the Internet.

I’m here to help increase the odds of success and make your mobile strategy more than just a product selection. Every organization has a different culture, faces different competition, and has different integration and security needs. Bankers need a strategy that helps them differentiate, continue serving their customers according to their existing culture, and supports the continual search for revenue opportunities.

I find that North American bankers are generally aware of the success of mobile banking in Sub-Saharan Africa, but they perceive the African experience so different from the U.S. or Canada, that the applicable lessons get lost. I think the same is mostly true for Latin America as well, despite some similarities in the challenges of serving their customers.

While there are differences between the geographies, I think there there are a number of universal truths reflected in Pienaar’s comments that are critical to the success of any mobile implementation.

Approach mobile banking as banking

“[W]e had a very big focus on marketing, advertising, and education,” Pienaar said. “We spend the same amount of money on marketing and advertising that we spend on technology and I would subscribe more than fifty percent of our success around the way we market and educate our customers.”

Many organizations look at mobile banking as a technology project. I’ve found many marketing executives in banks not yet doing mobile, completely defer all conversations to the technology team. While technology is a critical, enabling factor, business teams should be out front providing business goals for the technologists. Organizations need to find the right solution for their overall goals, then absorb it as an overall part of the business by connecting it to all the other customer touch points.

“I think that’s where so many launches I’ve seen have fallen flat.” Pienaar says, “People think once they’ve launched it that it will take off by itself but with any product that a bank puts out, you have to put education behind it.”

Make it easy

“[W]e also made it easy to register” Pienaar said. Making it easy takes lots of hard work and many packaged solutions lack flexibility to adapt to specific workflows or technologies.

Pienaar indicates that FNB provides enrollment from multiple channels such as branch, ATM, and Call Centers. “What’s amazing is that ninety percent of our registrations today actually happen inside our branches. When we started this service we thought we could really do a virtual branchless banking model but our customers actually want to talk to someone. They want to see how the service works and they want that personal education part. What’s amazing is that once they are on the service, they leave the branch and we see transactions in that environment drop dramatically from those customers.”

Few North American banks let users enroll anywhere other than online banking despite the obvious benefits. In my experience, this is because of the amount of work required to interface into all the various systems. It can and should happen in North American implementations, but it takes more time, money, and resources which all have been in short supply particularly in U.S. institutions.

Furthermore, FNB decided to make their solution work on almost any phone regardless of carrier or technology. Many U.S. consumers have been been surprised and confused when told that their phone is not supported. While not mentioned in the interview, universal support almost always comes at the expense of usability and functionality. Organizations face a difficult challenge in deciding how best to balance accessibility and usability for their particular user base. For example, SMS provides near universal phone support but with serious security constraints and a command-line user experience that is often difficult for customers with the most money to use. Conversely native applications like iPhone applications can provide a stellar user experience but potentially only reach a small segment of the population.

Making it easy often means making tough decisions.

Make it profitable

FNB provides various payment capabilities which provide benefits to the bank and consumers. Pienaar calls out customer retention as a key benefit: “I think we’ve seen with customers that it’s such a powerful retention tool that people are preferring to use our cards to our competitors card because that SMS is there the moment you swipe your card.”

Bank of America recently announced they are reducing their reliance on branches partially due to the success of mobile banking and other electronic channels.  Banks profit whether they reduce branches and significant overhead costs or simply repurpose branches for more valuable services such as investment and business services.

Providing payment capabilities presumably provides additional revenue to FNB in addition to a deeper relationship to the customer and the merchant. “[W]e provide an interface to merchants that displays a unique dial string for a payment, customers dial it, put their mobile pin in, and the transaction is confirmed. It literally takes about three to four seconds and the beauty about it is that you don’t disclose anything personally to the merchant; not your card number, or your bank account details, or even your name.”

While a similar system in North America probably isn’t feasible, U.S. banks should consider the creative approach to find unique ways to create deeper ties with consumers and make each interaction more profitable.

Pienaar says, “Today we make sure when you leave our branches, you leave it with a piece of plastic in your hand that you can swipe; cell phone banking is quickly going in the same direction.”

As would be expected, everyone showed pictures of their children. However, I don’t recall a single person actually pulling a paper picture from their purse or wallet. Everyone showed pictures using their phone. Of course lots of people also took pictures using their phone.

As in high school, we all have ended up in different socio-economic levels. Some of us went to college, some of us didn’t. Some of us moved away, some of us stayed. I suspect there are wide variations in income. However, mobile phones are a key part of all our lives and contain some of the most precious information we have.

This is where the value of mobile lies. People have much more intimate relationships with their phones and phones are with people wherever they go. People can count on having their phone with them whenever they need something, and increasingly we can count on the phone to be aware of where the phone and its owner are at any given time.

Organizations that figure out how these new layers of context fit in with their product and their consumers’ lives will profit from mobile. Organizations that put out a mobile web site because it’s cheap and easy, very likely will not.

It’s not that mobile web sites don’t have value. They do. However, having a mobile web site is just the first step toward mobility, not the end-game. Mobile web sites ensure that, with a bit of work, almost anyone can reach your information when they really need it. In most cases, it doesn’t mean that it’s easy or something they enjoy doing over and over.

Organizations have to find ways for consumers to instantaneously connect their lives with your products when they whip out their phone on a whim. The benefits of this are numerous: better brand perception, better brand awareness, better word-of-mouth, more customer loyalty. In many cases, this connection can be a sales or advertising opportunity that increases revenue and/or adds customers.

Throwing together a small copy of your website that fits the dimensions of any phone is not a mobile strategy. It’s a part of your implementation.

Location aware applications are a no-brainer for the travel industry. Unfortunately, too many applications still require you to enter too much information into too many small fields. I’ve almost walked into light poles and triped on the sidewalk and ignored plenty of conversations trying to get travel information out of a mobile app. A few of these near misses are the reason I wrote FlightShaker. Travel applications can know where you are, so you shouldn’t have to enter that information.

Mobile web applications generally don’t have access to hardware like GPS and most commercial travel applications (from airlines,etc.) are still mobile web based. It’s subjective, but I think we’ve passed the inflection point where platform independence outweighs functionality. Too much innovation (and ultimately revenue) can come from using hardware like, GPS, Cameras and compasses.

Some innovation will come from the boutique application developer shops, but the big travel companies (and other Fortune 500 companies) are in a great position to revolutionize how we buy travel. Given the upheaval in the economy and the declining revenue in the industry, there’s no time to lose.