Great Apps Pay Off​,​ Good Apps Are Not Enough Julie Ask, VP & Principal Analyst Study commissioned by IBM October 14, 2015

Agenda Why bother creating a great mobile app? What inhibits companies from mobile app greatness? What makes a great mobile app?

Mobile has shifted your customers’ expectations. Julie

The expectation that I can get what I want in my immediate context and moments of need.

21% 21% of customers are shifted

50% Will be shifted within the next few years

What has changed? Consumers expect: Convenience Immediacy “On sale now!” “Card stolen now!” Shipping notifications Product/pricing/inventory Simplicity Push notifications Curated content Task-oriented design flow Context Deals nearby Relevancy based on past behavior Time-sensitive notifications

Shifted expectations change how you engage with your customers. Airline Example Flight -2 weeks Book ticket Change reservation -2 days Change seat Request upgrade -2 hours Check in Check gate Departure time Lounge access +2 weeks +2 days +2 hours Ground transport Lost luggage Navigation Mileage points earned Customer service survey Mileage status Reward travel Upcoming reservations Arrival time Food order Movies Wi-Fi Duty Free Event

Create a great app that engages a customer in that mobile moment and reap the benefits.

What makes a good app? A Good App: A Great App: Works well Works extremely well Is quick Is noticeably quicker Is secure Enables connection Is easy and entertaining Is easy, entertaining and compelling Is relevant and contextual

Great apps outperform good apps. They: Create direct revenue Influence sales in other channels Lower costs Increase customer engagement and loyalty through improved customer experiences

Great apps outperform good apps on direct revenue GREAT apps generated 5x more sales and advertising revenue than good apps… $45,609,066 GREAT APPS $9,526,037 GOOD APPS Source: Q11, Q14 of Great Mobile App ENTERPRISE survey sorted by companies who self-rated their best performing mobile application as either “great” or “good”, conducted by Forrester Consulting for IBM, September, 2015

Great apps influence sales in other channels more By how much would you estimate the app influenced sales through other channels (Website or in-store)? Average increase 44.1% GREAT APPS Average increase 38.3% GOOD APPS Source: Q11 and Q16 of Great Mobile App ENTERPRISE survey, sorted by companies who self-rated their best performing mobile application as either “great” or “good”, conducted by Forrester Consulting for IBM, September, 2015

Great apps outperform good apps on cost savings Source: Q11, Q20-24 of Great Mobile App ENTERPRISE survey sorted by companies who self-rated their best performing mobile application as either “great” or “good”, conducted by Forrester Consulting for IBM, September, 2015

Great apps provide more indirect financial benefits than good apps Customer Engagement Customer Experience Customer Loyalty Return customers spend, on average, more than new customers. And have no acquisition cost. Increases in customer engagement and customer loyalty impact LIFETIME VALUE OF CUTOMERS and customer experience impacts INFLUENCE ON IN-STORE SALES. Return customers spend, on average, more than new customers. And have no acquisition cost. They will also tell their friends and family about the app and potentially make them more loyal customers too. Source: Q11, Q25, Q26, Q29 of Great Mobile App ENTERPRISE survey sorted by companies who self-rated their best performing mobile application as either “great” or “good”, conducted by Forrester Consulting for IBM, September, 2015

But companies are not aligned with their customers on what makes a great app.

Enterprises miss where consumers place their expectations Where enterprises incorrectly assume that consumers want these things Multiple Touch points Updates on products/services Remember who I am Specify type/frequency of communication Control information shared Control offers & content Where enterprises and consumers are aligned on app expectations Where consumers have high expectations and enterprises miss the mark Offer discounts & extra services Push notifications

Companies are under-resourced for the apps they have planned.

58% of enterprises spend <$2M on mobile app development Companies are spending relatively little on mobile apps … Please estimate your company's total annual spend on mobile application development in your local currency (including technology platform, internal resources and external vendors) 58% of enterprises spend <$2M on mobile app development Base: 200 US, Canadian, UK, & Indian decision-makers with responsibility for mobile app initiatives at companies of 500+ employees Source: A commissioned study conducted by Forrester Consulting on behalf of IBM, September 2015

… but have big ambitions How many mobile apps does your organization have/plan to build?

Organizations are not tracking and analyzing the right measures of app performance to understand the impact of their apps.

But enterprises who think their best app is “great” are starting to look at deeper measures How do you measure the business performance of an app? (select all that apply) by Please rate the quality of your company's highest-performing mobile app – Selected responses (financial) Base: 158 Mobile application professionals who rated their best performing mobile app as either “Good” or “Great” Source: “IBM GoodToGreatApps TLP Enterprise”, a commissioned study conducted by Forrester Consulting on behalf of IBM, September, 2015

Great apps lead to higher engagement, which amplifies the financial benefit of the app. Higher engagement means more return usage, increased spend of existing customers, increased lifetime value of the customer, and more sharing to friends and family, which leads to an increased app audience size. The increase in engaged app audience size is the compounding factor for really accelerating ROI.

Good to Great mobile apps enable consumers to engage more deeply How does GOOD or GREAT mobile application performance affect your interaction with or opinion of the maker/owner of the mobile app? Included More & Very likely; sorted by Very likely, top 5 responses Base: 1000 Consumers from US, Canada, UK, India who use mobile devices Source: “Good to Great Mobile Apps TLP Consumer Survey”, a commissioned study conducted by Forrester Consulting on behalf of IBM, September, 2015

To summarize, with great mobile apps: There is a major financial opportunity for enterprises who create great mobile apps Consumers expect that a great app will provide relevant, contextual content and offers that are tailored and pushed to them Organizations need to spend the time and money to create great apps Organizations are not yet measuring the things that will lead them to create great mobile apps

Most of you will start with your existing “good” apps Measure/ Get Data Analyze Offer Services Update Features Fix Bugs Differentiate Develop Insights Be a software company. Why? [Build out the arrows] You can’t serve your customers in 30B mobile moments a day without automation You can’t get the feedback you need to understand and then better serve your customers without data and insights from the constant feeds that connected products and apps offer You can’t roll out new features or functionality or fix bugs without being software. Slide 37 [trends section] - are you planning to bring "things" into the discussion? How connected products beyond the mobile device may become part of the customer journey/experience with brands.  

Key Recommendations Find out what your customers want. Align with that. Get qualitative feedback Use insights to improve your customers’ experience with your app Make measurement a religion. And then do it again. Invest well. Invest wisely. Invest long term. Be agile in your mobile development.

Questions?

Julie Ask +1 415.355.6002 jask@forrester.com @JulieAsk