By Straight Talk Editors
Walmart: An Adaptable App That Changes with Customer Needs
Three years ago, Walmart launched a mobile app that fundamentally changed the way the company does business. The application looks like a typical e-commerce app on a user’s smartphone — most of the time.
But when a customer enters a Walmart store, the app morphs into something very different. Using the location of customers who activate the in-store feature, the app provides promotions, prices, and other information specific to the store where they are shopping — for example, the exact location of an item on the customer’s shopping list or the price of the item in that particular store.
At a time when some retail chains were blocking customers’ in-store Internet access — to prevent them from pricing and checking out a physical item and then purchasing it from an online competitor — Walmart’s Store Mode encouraged people to use their phones while roaming the aisles. Of course, the app also made it easy to order an item at Walmart.com if it was not available in the store.
Although in-store apps are now relatively common among large retailers, Walmart was the first chain to roll one out nationally.
What led to this new twist on the mobile app? And does Walmart’s approach to developing the app hold mobility lessons for other companies, whatever the industry?
“It sounds trite, but when we think about innovation, we truly do so with the customer in mind,” says Gibu Thomas, Senior Vice President of Mobile and Digital at Walmart. A mobile app, he says, provides “an opportunity to get the right information to the customer at the right time.”
Indeed, Thomas says, his team saw smartphones as having the potential to create a consistent connection with customers. The devices could close the gaps in a fragmented series of interactions that for the most part had been limited to a customer’s engagements with salespeople in the store and with Walmart’s website when a customer happened to be on a computer at home or work.
The problem with the smartphone, though, was the size of the screen, which would have to accommodate not only the features available on the large-screen desktop site but also additional in-store features.
As is often the case, what seemed at first like a constraint actually presented new possibilities. “We said to ourselves, ‘Wait a second. This actually isn’t a constraint. Or it’s one we can make an advantage, because this smartphone can provide us with context on where the customer is,’” Thomas explains. “Instead of providing on the screen a menu of all the features of the app, which the customer may or may not care about, we decided to offer a contextual experience that’s tailored to where the customer is.”
“The simplest way to figure out if a customer was in a store or not was ‘geo-fencing’ every one of our stores,” he says. “Because of the location capability of the device, we were able to trigger the knowledge that you’re in the store. And the app interface would automatically transform itself to display capabilities that only matter to you when you’re there.” The broader set of capabilities that customers wouldn’t care much about when they were in the store would still be available on the app; they just wouldn’t clutter up the screen.
This move was driven by an empathetic understanding of what kind of experience would work for customers. What does Thomas think might have resulted if he and his team, in developing the mobile app, had strayed from their focus on customer needs?
They might have tried to emulate the mobile apps of competitors, particularly pure-play e-commerce retailers like Amazon. But that would have been a distraction from Walmart’s strategy of capitalizing on the hybrid business opportunity that exists at “the intersection of digital and physical” — a strategy fully realized in the Store Mode app.
Or they might have tried to pursue the amazing marketing opportunity that connected customers represent by sending lots of messages. “But bombarding customers with messages in the hope that they will buy more isn’t going to work, because customers are smart and they have alternatives,” Thomas says.
They might even have tried to do right by the customer, offering the full array of capabilities that the smartphone enabled. “We could have said, ‘Whether the customer is in the store or not, we want to give him access to all of these capabilities. So let’s jam the screen with as many small buttons as possible.’ But customers would end up so confused and overwhelmed that they wouldn’t use the app. Or they’d see a capability on their screen — say, the Scan & Go feature, which allows them to scan their items with their phone as they shop and then breeze through checkout — wonder what it was, try it at home, and then say, ‘Why did you show me this if I’m not in a store?’”
This empathy for what a customer feels and experiences has resulted in a wildly successful app, one that offers not just convenience but engagement.
Walmart doesn’t give exact figures, but reports are that millions of people have downloaded the app. More than 50% of traffic to Walmart.com now comes from mobile devices. Nearly 85% of smartphone users — about half of Walmart customers in the U.S. and the U.K. own a smartphone — use their phone while shopping in a store. According to Walmart’s own internal research, customers with the app make up to two more shopping trips to Walmart stores and spend nearly 40% more each month – an indication that keeping the focus on customers — whether they be Walmart’s shoppers or the employee users of mobile devices in your organization — is key to the success of a mobility initiative.
Société de transport de Montréal: Turning Mobility into Revenue
Public transit, so often ridiculed and scorned by harried passengers, may seem to be an unlikely source of digital innovation. But the Montreal transit system — Société de transport de Montréal, or STM — is leveraging mobile computing and the system’s vast customer base to generate significant new streams of revenue.
STM is the fourth largest public transportation system in North America, with 1.5 million daily riders, who account for more than 400 million trips per year on the city’s 250 bus lines and through its 68 subway stations. Fully 65% of the residents of this cosmopolitan, dual-language city are regular riders who have embraced the clean and efficient system as a preferred method of transportation.
To increase ridership and offset the 13% who abandon the system each year because they move away, change jobs, or die, STM focuses not only on improving service but also on enhancing the customer experience in innovative ways. As part of that effort, STM has offered mobile solutions to its customers for more than five years, starting with notifications of bus and subway delays on riders’ mobile devices.
But recently, STM decided to get serious about mobility and launched an ambitious loyalty program for its riders using mobile technology developed with SAP. Unveiled in late 2013, the Merci (Thank You) program is the first such rewards program offered by a public transit system, and it is already paying big dividends.
Merci is a mobile app that provides STM riders with not only a steady flow of information but also special offers from local retailers and event venues. The information is pumped out to iPhones, iPads, and Android devices in real time and is geo-located so that it is targeted at individuals on the basis of their current location.
“We send you things that are extremely relevant to you because we’ve asked you what you like,” says Pierre Bourbonniere, STM’s chief marketing officer. “We send you things that are relevant to you based on where you are located. If you are at the corner of Mount Royal and Ste. Catherine streets, we will send offers from the local shops, restaurants, bars, and events that are happening now, today.”
“This loyalty program doesn’t give points,” he adds. “It is based on instant gratification.”
The program also takes into account frequency of use, so the most loyal and high-usage customers are offered better deals, such as free tickets to an opera or ballet, while those who use the system less often might be offered a 50% discount.
STM views the Merci program as a major success, with more than 50% of Opus card holders signing up. The program has had a positive effect on their behavior. According to Bourbonniere, 24% of riders using Merci increased their use of public transit; 57% discovered new destinations by public transit, either shopping or event related; 43% are using public transit for new reasons, other than, say, getting to work or school; and 47% are taking a friend along.
But the Merci program has done more than strengthen customer loyalty. It has also proven to be a potent source of non-fare revenue for STM. Partners in the program provide the rewards at no charge to STM. Indeed, they pay an entry fee to be part of the program and additional fees for usage. Bourbonniere estimates that the program will generate $15 million in revenue for STM over its first three years and then blossom into an annual $50 million bonanza after that.
So what can we learn from the experiences of these companies (see also part 1 and part 2 of this series)? How can mobility – one of the quartet of concepts that comprise the “SMAC stack” (Social, Mobility, Analytics, Cloud) and a front-of-mind area of interest for CIOs – actually create value for companies?
A few themes emerge from these stories:
• Mobility has the potential to transform and streamline existing business practices, such as account management, sales, and marketing, leading not only to significant productivity gains but also increased revenue streams. In fact, mobility initiatives themselves can become lucrative sources of revenue.
• Mobility initiatives require forward momentum in order to bring the organization along.
• Coordinated pilot programs can help ensure the rapid and successful rollout of such initiatives.
• Corporate-wide mobility governance teams, overseen by IT but including business unit representatives, can smooth the path for enterprise mobility initiatives.
• Although BYOD is a much-cited element of enterprise mobility, CIOs needn’t officially sanction BYOD in order to implement successful mobility initiatives.
• Security remains perhaps the most significant challenge for CIOs seeking to embrace enterprise mobility.
Although there are no fool-proof prescriptions here, heeding the lessons these companies offer may make a difference for an organization trying to make enterprise mobility a reality.
Originally published in CIO Straight Talk, No. 5 (September 2014)