Friday, April 3, 2009

What Your Customers Aren't Telling You

If you can answer the following two questions about your customer, you could drastically change your store dynamic within the next few years. First, do you understand exactly how much they love using their cell phones? Second, do you know how willing many of them are to experiment with new technology, especially if it involves their cell phones?

The answers to those questions — your customers are hooked on their cell phones and love to find new uses for them — are reinforced by several recent news announcements regarding payment by cell phone. On March 30, for instance, Blaze Mobile and MasterCard Worldwide introduced the Blaze Mobile MasterCard PayPass mobile payment sticker. The small sticker can be attached to a cell phone to enable “Tap & Go” purchases at over 141,000 locations.

In the United States, the PayPass sticker represents little more than a transitional step toward a future of more advanced, widely accepted mobile payment opportunities using Near Field Communication (NFC) technology. NFC is a short-range wireless connectivity technology that allows contactless interaction between devices. (For more information about NFC, check out the NFC Forum’s site.) Japan, among other Asian and European countries, is already using NFC to enable cell phones to keep track of purchases, and to load phones with tickets, reward points, or electronic cash.

“Having a payment capability on the phone is a great way for consumers to see the benefit of having a payment capability in the phone,” noted Art Kranzley, chief emerging technology officer, MasterCard Worldwide, in a press release.

Not everyone loves Blaze Mobile’s sticker approach (click here for one dissenting opinion), and there are still substantial barriers to complete acceptance of cell phone payments in general. According to USA TODAY’s Edward Baig ("Buy gas, gadgets with a cellphone"), wireless carriers need to invest in the technology, retailer acceptance needs to grow, and merchants need to upgrade their infrastructure before mobile commerce can proliferate.

Arguing about this early step in the mobile commerce parade, however, misses the bigger picture. The technology may not be perfect yet, but the procession marches on. Within a few years, cell phone payment will likely be as common as cell phones themselves.

For example, Ticketmaster Entertainment Inc. and Tickets.com announced last week that they are launching services to let customers buy tickets directly from their mobile phones. As the Wall Street Journal notes, “The push for mobile ticketing comes as customers shift to smart phones, whose faster networks and larger screens come closer to the feel of ordering via computer.”

“Mobile can greatly aid traditional retailers, helping them better engage, support, and sell to their customers," Jim Levinger, VP of business development for mobile shopping application provider Store Xperience, told me in an e-mail. "But there are also big risks for retailers who don’t have a mobile strategy or offerings, because new information and shopping options are extending into their stores on customers' cell phones that retailers don’t control. They better learn how to engage their customers before someone else does.”

Mobile commerce continues its march toward a more universal retail reality. Now is the time to start analyzing how your retail operation can capitalize on the trend, so when cell phone payments become ubiquitous, you won’t be stuck on the sidewalk watching the parade go by.

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