Sunday, June 30, 2013

Alfidi Capital Goes to Mobile Commerce World 2013 in SF

I can't avoid these free expo passes to industry conferences.  Mobile Commerce World 2013 at the Palace Hotel beckoned to me from across the Interwebs.  I spent last week at the free executive roundtable sessions because, hey, let's face it, I'm an executive, so I qualify to attend.  Did I mention that those sessions were free with the expo pass?  They had free coffee and tea, so I couldn't lose.  I'll relate the proceedings but I must first introduce my readers to some mobile tech terms.

Geofencing is when a user draws a geographical boundary onto an interface.  Mobile commerce marketers use it to define areas where they can locate mobile users who are candidates for "push" media that convince them to spend money in stores.  The ubiquity of person-specific metadata makes geofencing a useful tool.

PCI is short for "payment card industry," the kind folks at Visa, Mastercard, American Express and elsewhere who have been tracking your purchases for decades.  PCI data enables marketers to mine your preferences and target ads just for you once you enter a geofenced area.  The PCI has its own Data Security Standard (DSS) that mobile commerce pros want to refine to prevent fraud losses.

A software development kit (SDK) is something that your mobile OS developers at Apple and Google throw out to the app development community so they can go to town on all of those cheap apps you love to download.

These SDKs in turn lead to application programming interfaces (APIs) that form the kernels driving the apps you use.  I'm not a programmer so don't ask me how they work.  All I know is that people who play Angry Birds on Muni instead of reading the days news benefit from APIs at some level.

Retailers use stock keeping units (SKUs) to track inventory shipped as it is sold.  SKUs provide deep data on item demand so retailers can forecast reorders and optimize the performance of their supply chains.

Omni-channel is the proliferation of customer contact methods through retail channels that now extend into mobile.  Email, texting, apps, push media, and landing pages are all in there.

Now that we've dispensed with academic formalities, I can get back to the pressing matter of searching for hot chicks at Mobile Commerce World.  There weren't very many, so I wasn't distracted while attending the executive roundtables.  The first roundtable was on mobile wallets and payments.  Needless to say, vendors like mobile commerce because it means more transactions get executed.  The "always on" presence means impulse buys are easier for items whose prices exceed the cash in your wallet, provided some geofenced push media shows up once you walk into a store.  Vendors like mobile because customers can pay for things without queuing at a Point of Sale (POS) terminal.  One hurdle is that high fees for mobile payments will price the tech out of smaller markets where vendors can't scale up to reduce costs.  Mobile pay data will be one more feed into Big Data to enable lead generation.  I'm thinking that the pain felt by small and medium size enterprises (SMEs) who can't scale is something that cries out for disruption if a mobile payment service has the right combo of speed, reliability, and connectivity.  Security in mobile payments is on everyone's minds but I'm waiting for the ultimate in authentication:  biometric validation.  It's infeasible right now but it's coming.  Biometric i.d. alone or in a two-factor technique will drastically cut fraud IMHO.

The one standout panelist I noticed from the executive roundtables was Ben Milne, CEO of Dwolla.  This guy really knew his stuff.  He was charismatic, had an encyclopedic knowledge of payment metrics, and offered very detailed insights into consumer behavior.  I learned from him that a system called NACHA facilitates automated check clearing as overnight settlement.  The fact that the Automated Clearing House (ACH) network is not instantaneous provides room for mobile to disrupt the $34T in annual check clearing volume.  Dwolla's name is cute; it suggests the words "dollar" and "wallet" to the casual listener.  Dwolla got tangled in DHS's investigation into bitcoin transfers but they quickly complied and distanced themselves from bitcoin transactions.  Pursuing a disruptive business model means navigating around regulatory roadblocks, just as e-payments navigate through cyberspace.

Another exec roundtable wanted to smooth the road to mobile adoption.  Plenty of roadblocks stand in the way of wider mobile adoption.  User difficulty at the front end and lack of connectivity to ERP Big Data at the back end stand out.  One panelist made the memorable observation that apps are like venture-funded behavioral psychology experiments, and the most successful ones will be immediately copied.  I've noticed that successful adoption once again comes down to integration into users' lifestyle experiences.  It's obvious (to me anyway) that these vendors are using Customer Development to improve the mobile user experience in ways that reduce friction from things like customer service calls.  I'm also impressed with the vendors' ability to recognize the portability of customer reward and loyalty programs (cashbacks, frequent flyer miles) into mobile.  Everyone loves freebies, especially me.  The vendors are also big on reducing friction by cutting the number of steps in a transaction and having prettier GUIs for late adopters.  I had to LOL at the possibility that the industry thinks late adopters are dullards; maybe they're just cheap.  One of the mobile payment sector's biggest metrics is basis points per transaction.  Saving basis points is everything and they know that basis points lost to fraud is the equivalent of cash flow denied to a merchant.  This is why multifactor authentication via biometrics, geolocation, PINs, and more is the future.

I should have skipped the panel that reviewed Telefonica's study on Millennials.  The survey data itself has good benchmarks for marketers.  The panel's interpretation of the data was just amateurish blather.  The all-Millennial panelists talked way too much about how they felt as Millennials and were obviously inexperienced in addressing a live audience.  They had little to say about whether their companies could effectively market to the Millennial segment or how their services crossed the chasm from Millennial early adopters to mass users like me.  Kids these days are so self-absorbed.  I'm middle-aged and I don't care.  Meh, get off my lawn.  One young panelist admitted surprise at the survey results that showed Millennials in the Middle East and Africa are concerned about terrorism.  I'm like, dude, how could you not understand that people who live in politically unstable regions have legitimate concerns about terrorism?!  Duuuude, come on.  Maybe for all their tech connectivity, American Millennials track video games, sports, and reality TV shows more than world affairs.  I've got the cure.  I say more social media companies and mobile payment platforms should hire military veterans who've actually been to those unstable regions.  There's a dose of reality upside the head for you kids.

The next roundtable I visited discussed some winning mobile commerce strategies.  Retailers have figured out that mobile allows customers to research products while on the go.  Their sales forces can access ERP data from the field and service technicians can access corporate data while on calls.  This has "liberated" data from IT, and presumably from other stovepipes.  The panel revealed that customers prefer basic product research over interactivity via mobile, so the inability of PC and tablet interactive media to translate to mobile isn't a source of friction.  Marketers are figuring out each segment's contact preferences and adjusting their approaches to fit different targets.  Mobile users are turned off by poorly coded apps and multiple steps, revealing an instant gratification experience that can make or break brands.  This panel advocated planning for mobile failure contingencies, like a customer care strategy if an app or loyalty program doesn't work.  They also advocated using good analytics and monitoring mobile channels for frequency of use, adoption, and frustration.  One panelist foresaw the future of retail as WiFi enabled stores so their installed POS tablets weren't the only method for closing a sale.  Mobile also turns traditional metrics like seasonality upside down.  The panelists also advise retailers to build mobile channels in light of device specifics.  Smartphones have different scrolls, calendars, and cookie acceptance standards.

Another roundtable focused on mobile interface with the larger enterprise.  The panel's observation that enterprises must adapt their entire infrastructure to mobile platforms is the mirror image of what I've learned at enterprise-level IT conferences.  Let me digress for a moment.  The enterprise purveyors pushing cloud adoption all recognize SaaS and IaaS as flexible tools in keeping architecture updated.  IMHO mobile adoption is the ultimate IaaS if enterprises can seamlessly fit their channels into the dominant mobile OS's.  Optimizing the customer experience for mobile goes hand-in-hand with total enterprise transformation.  One panelist seemed to be speaking from experience by endorsing a "mobile transformation team" with cross-functional reps and C-level reporting.  He also said it should work closely with a "retail store transformation team" and the IT people who manage Big Data.  I will assume that the retail store team will assess each store's ability to accommodate WiFi and the virtualization of the POS experience; that wasn't spelled out but I'll take it as implied.  I'm getting the clear impression that mobile B2B solutions will require supply chain transformations as well.  I can see third-party logistics (3PL) providers enabling the customization of shipping on the go.  They're not there yet because a lot of the logistics sector is still wrapped up in optimizing real-time tracking and other technologies that have been around for a decade.

The next roundtable on assembling technology building blocks must have read this previous panel's minds.  They admitted that enabling omni-channel unification means IT departments need to adopt more flexible BYOD policies.  Nothing would be more off-putting for a customer in a store than a sales rep whose device can't interface with a customer's prior to a sale.  One panelist boldly asked the audience if they had a mobile plan in place for their business.  I can boldly answer YES because I've verified that my research website and two blogs all have display versions compatible with a mobile format.  DONE.  Score one for Alfidi Capital.  One panelist observed that CMOs will likely own the mobile initiative with the CIO in support.  My take is that the CMO will have to be a change champion for the entire culture and get the CIO's buy-in for new policies.

Oh BTW, those of you worried about privacy need to stop worrying because you have no privacy in a store.  You see, retailers' in-store surveillance video systems can track customer traffic patterns and eye contact. This goes way beyond loss prevention efforts in stores and organized crime in the supply chain (like trailer theft at a warehouse).  Retailers observe your real-time shopping behavior and use it to adjust their channels.   It is not a stretch to imagine retailers storing video indefinitely and linking your movements and facial expressions to your payment history.

I sat in the startup showcase pitches.  Several VCs and accelerators judged some mobile startups' business plan presentations.  I won't reveal the startups' identities or proprietary pitches but some obviously stood out.  The VCs liked seeing startups that had either detailed market segment data or some technology with a wow factor.  Not every pitch followed Guy Kawasaki's 10-20-30 rule but the ones that got the most VC respect (as I just noted) didn't have to adhere to that convention.  I'll boil down the pitching tips I picked up from this event.  Startups, take note.

- Have metrics on retail risk, broken down by target segment and/or channel.
- Gamefication incentivizes app use and generates data the app provider can sell to vendors.
- Provide clarity on whether a business model is B2B or B2C.
- Show transactions beyond just mobile payment by having loyalty programs, calendaring, rebates, etc.
- Good apps collect analytics that will feed several transaction methods.
- Don't show a video in a pitch unless it portrays your product in action.
- A good value proposition is positioning as SaaS/IaaS that interfaces with vendor's existing IT.  That saves time and money on a complete redesign just to capture data or improve the customer's front-end experience.
- Chat and instant messaging are underused channels for customer contact.  They may have untapped potential.

The final roundtable was about the hope and hype around augmented reality.  This technology allows users to create shareable content.  Marketers have tested it with product tie-ins to movie premieres and found that customers who share images of themselves in stores with character cut-outs are more likely to buy stuff.  I guess people really are that dumb.  These "augmented apps" show users interacting with products.  The rest of what I learned came fast and furious.  One very important discovery is that product life-cycle management can now be measured with data generated by apps.  Cross-referencing omni-channel app data reduces redundant advertising spending.  Virtualized stores don't have to be designed to precisely resemble brick and mortar stores because they should allow personalization.  Viewing physical objects via mobile allows users to get more content.  Image recognition via apps may replace barcode scanning.  IMHO we'll be seeing more of this augmented reality stuff.

I didn't spend much time on the expo floor except to see who was giving away free goodies.  Lunch was not free but those sandwiches looked overpriced.  I did score some free t-shirts but got no phone numbers of hot chicks; there just weren't that many of them present.  Hopefully I'll see more babes when I return next year.

Addendum:  I'd be remiss if I didn't mention the presence of the FIDO Alliance, Open Mobile Alliance, and Application Developers Alliance at Mobile Commerce World 2013.  Those organizations develop technical standards and best practices for the mobile app community.