Mobile fortifies customer loyalty

| Article

Mobile is effective in fortifying customer loyalty, according to research presented by McKinsey & Company. “This may seem counterintuitive given mobile’s role in creating greater transparency, but we see it as much a tool to be used for good, as for evil,” said Jennifer Schmidt, partner at McKinsey & Company.

Beauty is growing fast on social platforms such as YouTube where the category has expanded 50 percent year-over-year with more than 45 billion lifetime views from more than 200 brands. More than half of those views are on a mobile device—and that’s not just for teen videos, but categories such as men’s grooming and mature beauty.

But in the quest to deliver fun and excitement, there is also the risk of diluting loyalty, especially in the case of the fragmented beauty market. “For color cosmetics, 16 brands make up one-half of sales. In most consumer segments, it is far more concentrated, which is what we see in other indulgence categories, like chocolate [six brands] and beer [five brands], with only a handful of brands generating one-half of sales,” noted Schmidt. “Are we bound for a race to the bottom with an increasingly high cost to recruit new customers? Loyalty is a paradox we must figure out.”

Easy access to information via mobile increased the number of brands consumers consider, up more than 30 percent from an average of 1.6 to 2.1 in only a couple of years. More than half of consumers check prices on mobile phones and are influenced by what they discover on the web. And the conversation continues after the purchase on social media such as Twitter. One quarter of consumers sign up for loyalty programs on cellphones. Sixty percent of traffic to beauty retailers’ websites is via mobile devices, as much as double from just a few years ago.

Mobile has long been recognized for its use, but faulted for conversion. “Now we are seeing both,” said Schmidt, adding mobile commerce sales have tripled in the last few years. Brands that make the initial “consideration set” are two to three times more likely to be purchased, according to Sophie Marchessou, associate partner at McKinsey & Company. The next step is evaluating, and retailers should not fear the showrooming concept. Promising news is shoppers make more purchases on mobile in the beauty category than the other categories McKinsey surveyed.

Investing in mobile is a key ingredient in the marketing mix with some brands allocating as much of 25 percent of their budget to it. “Make the app a part of your loyalty solution, but get the basics right,” advised Marchessou. Among the “dos” are easy loads, frictionless checkouts, easy adds or deletes, and effortless navigation. “An app that just has shiny new features won’t stick,” she said.

This article was originally published on Women's Wear Daily