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You bet your mobile app consumers are willing to pay with their smartphone

For almost 10 years, there has been a debate over mobile app versus mobile web. Which strategy is right for your business and will consumers really ever buy something with a mobile device? Some of these questions have been clearly answered with time, but some aspects of the debate continue.

The trend of mobile shopping began with the concept of "showrooming" where the mobile device was used as a companion for research to inform purchases that would be made either in-store or online from a traditional browser at a later time. More recently, consumers have demonstrated their willingness to actually purchase from mobile devices, evidenced by increases in mobile conversion rates over last year's holiday shopping season. There are a few success stories out there to support the mobile app strategy, where is it working and why? What's next for mobile shopping and payments?

The numbers speak for themselves

For restaurants like Starbucks and Chipotle, mobile app sales have been a significant driver of business success. Chipotle reported that a pickup in mobile ordering is driven largely by millennial and Generation Z and that 4 Million users per month contributed to growing Chipotle's digital sales - up 33% in the last quarter amounting to a half a billion dollars, or about 10% of all Chipotle's sales.  This success is before they've even added a rewards program into the app and their Chief Digital Officer (CDO), Curt Gardner shared, in an article with Fast Company, that they are very pleased with the results and still have a ways to go in their digital strategy.

Integrating a rewards program with mobile payments and the ability to "skip the line" has been a key driver to mobile success for Starbucks. Not only has it seen success with customers using the app to order ahead and pick up their mobile orders in a designated location, the Starbucks app is leading all other platforms in US proximity mobile payments (see chart below), just ahead of Apple Pay and more than double the number of consumers using Google Pay and Samsung Pay.

In reference to Starbucks' success in an article from eMarketer, forecasting analyst Cindy Liu said - "It has gained traction thanks to its ability to tie payments to its loyalty rewards program. For users of the app, the value of paying with their smartphone is clear and simple--you can save time and money at the register, all while racking up rewards and special offers."

Strategy to engage shoppers with apps

Starbucks isn't the only retailer launching a mobile app strategy. Other notable entrants that have a big opportunity with mobile app payments are Walmart, McDonald's, Dunkin' Donuts, and Target which have all launched mobile apps in the last few years with the intention of capturing data about their users, but they can also build in rewards and perks to boost customer loyalty, according to Liu via Fortune.

The draw for consumers to mobile app experiences doesn't stop at convenience and loyalty rewards. In addition to personalization capabilities to help you better find products you might be interested in based on your browsing behavior, retailers like Wayfair have launched rich interactive 3D augmented reality into their mobile shopping app. You can use the camera in your smartphone to virtually position furniture in your home to help you envision how it will fit and complement your space and decor. Other purveyors of home goods are investing in this type of experience evidenced by the release of IKEA and Amazon's AR apps that offer the same promise.

Image: Wayfair

User experience is critical for app engagement

As you develop your strategy to engage users on mobile, first it's important to determine if a mobile app is right for your business. The age old debate between mobile site and mobile web continues, but there are differentiating factors in architecture, ongoing support and most importantly, how consumers use them to help guide your strategy. Another factor these successful examples have in common is they all have a clear strategy and purpose for the app and have considered and shaped the experience around the benefits to the consumer. It's not enough to just have an app, the experience has to be fluid and convenient. 20% of downloaded apps are opened only once. Of the time consumers spend browsing apps, 77% is spent with their top 3. As important, research shows that users interact with mobile devices differently than they do desktop or laptop computers. We are using our mobile devices for lots of short interactions many times throughout the day. Therefore our tolerance for slowness or confusion in the experience is low and consumers are frustrated waiting for information to load. A key pillar to any CDOs strategy to engage users online has to consider the performance and the quality of the interactions.  

Although we don't have a crystal ball, we'll see how it shakes out over the next year, who might pull ahead and who might gain ground. But one thing is clear, if there is value and convenience for the consumer, mobile apps done right are a viable channel for transactions and can be a critical growth driver in your digital strategy.