Retailers: Don't Put All Your Eggs in the Mobile App Basket

Mobile apps may be all hype from a retail perspective. Luckily, there's an alternative to apps when it comes to mobile retail technology.

Right now, apps are the hottest thing in retail technology, and it's easy to understand why merchants are excited about the possibilities of mobile. The adoption rate of the mobile web is moving eight times faster than web adoption did back in the 1990s and early 2000s. There are hundreds of thousands of apps available, and more are being developed and added to the marketplace every day.

But if you scratch below the surface, there are signs that the hoopla surrounding mobile apps may be just that-hype, at least from a retail perspective. Although consumers have downloaded apps hundreds of millions of times and the average smartphone owner in the U.S. has more than 30 apps installed, they consistently use only around a half dozen apps per month. It generally takes about a week for the novelty to wear off, with consumers moving on to the next hot app.

Waning interest in a particular app might not be an insurmountable problem to developers who create entertainment and gaming apps. In fact, it can widen their customer base. But for retailers who develop apps to drive revenue, it's a major problem when their icon becomes invisible to customers who are swiping across the screen in search of the latest edition of Angry Birds.

Luckily, there's an alternative to apps when it comes to mobile retail technology, and it harnesses the power of location to drive sales: proximity marketing. Rather than requiring development of an expensive, custom-built retail app, a proximity marketing strategy leverages the technology already built into the device: Bluetooth and Wi-Fi. There are several advantages to using this strategy over an app-based approach:

  • It taps customers on the shoulder instead of asking them to find you. With an app-based marketing strategy, you're asking customers to go to the trouble of finding and downloading your app. Proximity marketing detects customer devices when they enter your store and sends an opt-in message asking if the user would like to view a coupon or offer. It's spontaneous rather than premeditated.
  • It takes advantage of proximity to generate a response rate of up to 72 percent. An IBM study found that up to 72 percent of customers will act on an offer if they are within sight of the point of sale. It's an astonishingly high response rate, but it makes sense if you think about: If you're visiting a store, you likely have purchasing a product in mind, and if you receive a money-saving offer, you're in position to immediately act on it.
  • It protects consumer privacy and uses trusted technology. Proximity marketing messages don't collect vital consumer data like names and phone numbers; instead, the technology accesses the device signature. Consumers can choose to view the message or opt out. Proximity marketing is less intrusive than marketing strategies that collect identifying information, and since it uses mature technologies that virtually everyone uses, consumers feel more comfortable receiving messages.
  • It generates valuable data: While proximity marketing protects consumer data, it also generates incredibly valuable insights for merchants, including data on response rates, offer effectiveness, consumer foot traffic patterns and much more. It functions in the physical store environment in much the same way ecommerce tracking data helps merchants analyze behavior and build more effective offers.

Apps are all the rage right now with merchants who are looking to cash in on the new opportunities mobile offers. Some retailers spend tens of thousands of dollars developing apps with a "me-too" strategy in mind, thinking they just have to have the latest thing to compete.

Savvy retailers should look beyond the hype and think about what they want to accomplish with their digital marketing strategy. A push marketing approach that leverages proximity can be amazingly effective, functioning as a digital store window. It's a proactive strategy that can drive sales higher for a much lower investment than putting all the digital eggs in the app basket.