By Jon Squire, CEO CardFree
This year, more than 64 million mobile consumers are expected to use their mobile devices to pay for mass transit, fast food and digital goods. It's no surprise then that 64 percent of merchants have reported being in the midst of trial or planning for mobile payments. Merchants embarking on mobile payments initiatives should consider the following list of questions both internally and when vetting mobile vendors.
1. What do you mean by mobile payments? And is there a way to tie it in to other programs?
Payments, whether mobile or not, are part of the total customer engagement chain and should be considered in the context of different customer programs and use cases.
How is your organization thinking about mobile payments? If you have a popular value or gift card program then you may want to start there as we did when launching Starbucks Card Mobile. In addition to providing customers with a convenient way to check balances and reload, it can increase line speed and saves fees on the backend.
If you have a loyalty or rewards program, ideally, those should be integrated into the mobile experience. The same also goes with any customer preferences or data that can be leveraged to create a better user experience.
2. Sure, mobile is cool but what's the business case?
Some businesses might look at mobile as a straight cost without expecting hard returns but mobile programs can and should be considered revenue generators.
Our experience with different mobile commerce deployments has shown that designed correctly, mobile can drive tender preference, increase offer redemption and loyalty club participation thereby increasing total customer value.
In fact, our ROI model for QSRs shows that mobile can reap returns between 8 and 10 times the cost of mobile in the first year alone.
3. How will it work with my existing systems like my POS terminals? Do I need new equipment and will it create operational issues?
Many mobile payments vendors require new hardware and new processes, which means increased costs, training and the potential for some operational hiccups. Ideally, mobile vendors should be able to work with your existing systems, filling your gaps where necessary.
Integrating mobile into your existing POS systems not only makes it easier to implement, it can give you new insight on customers. The typical QSR very likely has no information on their most loyal customers. However, if they become mobile program users, merchants can have visibility into transaction data, order preferences and begin segmenting for smarter marketing.
4. Am I only creating a larger headache for my customer service team?
Related to the last question is the issue of how mobile will affect customer service teams and how to prepare for it. This issue is greatly reduced by not introducing new hardware components and integrating mobile solutions into your existing processes. Mobile vendors should work within merchant processes and not expect merchants to jump over operational hurdles.
The other way to minimize customer service issues is smart front-end design, which cannot be over-emphasized. If you create an easy-to-use, intuitive experience, consumers won't need customer service. Though Starbucks was well prepared for service questions on Starbucks Card Mobile, the queries were virtually non-existent due to smart design.
As a next line of defense, create comprehensive FAQs and troubleshooting. Mobile consumers often prefer not to call 1-800 numbers anyway and would rather have quick access to the info they need. Give it to them.
5. Why shouldn't I just hire a handful of college grads to code this internally?
As tempting as it may be to hire cheap labor that promises quick development, a well-designed mobile commerce solution takes thought and experience to implement well. In addition to generating incremental revenue, mobile can add operational efficiencies and cost savings. However, poor implementation can have the opposite effect and damage your brand and create unwelcome internal headaches.
That being said, mobile vendors should be able to work with internal IT departments and leverage existing skill sets and infrastructure. They should also be able to give you clear examples of how they've developed mobile applications that gained adoption and met business objectives.
Sell me the money: Unlocking the value in the mobile payments ecosystem", Deloitte.com 2011
CARDFREE internal ROI model