The Use of Smartphone Apps as a
Primary Service Channel
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Although still in their infancy, app-based services offer significant potential as a primary service channel. In fewer than four years, Smartphones and apps have become the hub of our personal, work and social lives, providing a means to do activities ranging from booking flights to moving money. Together, Smartphones and apps are a unique enabler for a service that is unrestricted by location, time or the availability of customer assistants.
App-based services add real value to customers while complementing traditional routes of communication and purchasing. Marcus Golby, Operations Director at Lifestyle Services Group explains: “By offering app-based services alongside traditional service channels, service providers empower their customers to choose a convenient channel. For customers who demand mobile accessibility, app-based services offer the ultimate solution.”
Crucially, there is now an imperative need to launch app-based services to keep ahead of competition. Technology is evolving at such a rate that Smartphones are expected to replace desktop PCs in a matter of three to five years[1] and significantly, internet giants such as Google are putting mobile software first because apps are seen to hold the key to growth.[2] Recent research figures also show that Smartphones are outselling both non-smart devices and PCs.[3][4]
Smartphone users are downloading a staggering 30 million apps every day[5] and since Apple’s App Store opened in 2008, more than 500,000 apps have been approved and more than 10 billion apps downloaded. Ryan Norton, Product Manager at 2ergo, an international mobile business and marketing solutions company, says: “Over the last three years, the thinking behind apps has changed dramatically. Companies are getting smarter, realising that apps are not just a passing fad or a simple branding exercise, but a key strategy for delivering service and meeting the needs of Smartphone users.
“The companies behind some of the best apps we see today recognise there is no point in developing an app for the sake of it - a good service app needs input from users and therefore research is critical. When designed and developed correctly, app-based services enable service providers to achieve a strong competitive advantage by providing a mechanism to increase purchasing propensity, market penetration and revenue, while improving customer satisfaction, loyalty and advocacy.”
Significantly, 50 per cent of UK Smartphone owners now shop via mobile web and apps – an increase of 30 per cent between June 2010 and March 2011. During the same period, the number of Smartphone owners who said they expected to browse or purchase more on their phones in the next 12 months also more than doubled.[6] Ryan says however: “In the same way that retailers had to build trust with their customers for online shopping, app-based service providers will need to build trust with app users. Although the leap from online shopping to app-based shopping is nowhere near as big as the leap from high-street shopping, users will still need to be educated to ensure they know how to use the app and feel confident in doing so.”
Responding to customer demand has been a key driver behind the launch and development of app-based services, but there have also been several other drivers. In the finance sector for example, developing app-based services allows organisations to demonstrate proactive co-operation with the FSA’s agendas/campaigns, such as Treating Customers Fairly (TCF). In particular, the FSA has several concerns relating to issues such as sales method, complexity, barriers in use and engagement. App-based services however help overcome these concerns.
Highly competitive and economically challenging environments are additionally creating greater pressure to reduce overheads and improve profit margins. With minimal servicing costs, app-based services are a viable way of improving service efficiency and profitability by reducing demand on more expensive customer service routes.
In May 2011 for example, Orange and Barclaycard officially launched the ‘Quick Tap’ app, which is the UK’s first contactless mobile phone payments service. The service, which is for single transactions under £15, uses a secure SIM-based approach to mobile payments. Barclaycard, Barclays debit or Orange credit card users can transfer funds of up to £100 simply and securely onto the app, and then use it to make payments at over 50,000 UK stores, such as McDonalds and Subway.
David Jones, Head of Product Innovation at Lifestyle Services Group says: “Service providers are increasingly turning to apps to raise the standard of customer service and meet the expectations of Smartphone users.
“Lifestyle Services Group’s client-branded Mobile Phone Insurance app is another example of a leading app-based service. The app is the first of its kind in the insurance sector and enables Lifestyle Services Group to configure the Mobile Phone Insurance app to each client’s functionality specifications. Fully functional, the Mobile Phone Insurance app enables users to:
- Register for and purchase mobile phone insurance
- Contact Lifestyle Services Group (call and email)
- Access important information about their product, including terms and conditions and frequently asked questions
- Update their details on the policy, such as change of address*
- Top-up cover levels*
- Register for and purchase other account benefits and features*
- Attach proof of purchase using the phone’s camera*
- Amend selected package benefits**
- Upgrade to other products**
- Monitor claim status**
- Receive and interact with marketing promotions/communications**
“The core aim with the Mobile Phone Insurance app is to provide a platform that redefines the way in which customers can communicate with brands and purchase mobile phone insurance and other added value products and services. The app allows insurance providers to respond to customers’ rapidly evolving demands for mobile convenience and accessibility while improving and complementing traditional routes of communication and purchasing. Moreover, Lifestyle Services Group can also link the Mobile Phone Insurance app to its My Data app, which backs up data such as contacts, music and photos.”
Ryan adds: “2ergo helps businesses around the world reach millions of mobile users. We know that to become a good service channel, an app needs to give users the information or service they want quickly, efficiently and without any hassle. The app must be simple to use. If the user can’t grasp it within seconds, it won’t be good enough so the interface must be intuitive.
“There are also hundreds of thousands of apps out there so the app must have a unique selling point to offer users something different. Ebay’s app reflects that if you develop an app that is simple to use and offers users unique value, it will have the potential to facilitate millions of pounds worth in transactions.”
“To succeed, a service app must be created for the user experience. A good service app must also create trust with customers. Again, this reflects how important it is to do research to identify users’ demands and expectations. We are increasingly seeing reliable brand names collaborating with trusted transactional brands to do this.”
However, Marcus points out, “While the best apps are full of promise, there are all too many examples of companies getting it wrong. In their haste of launching the next big app, understanding the needs of the customer and the importance of communication and engagement are overlooked and as a result, strategy goes by the wayside.
“There are too many apps out there that are simply a gateway to a traditional service channel, which defeats the objective. App users aren’t looking for the same service packed in a different box – but rather a new service channel that is genuinely quicker and easier. An app-based service should offer convenience, but also blend with the various traditional service channels so users can access a more functional service if they wish.”
Marcus concludes: “When developing an app, service providers must consider what unique benefits it will offer to ensure users keep coming back. Starting with basic functionality is great but technological capabilities are developing fast so there is no room for complacency. It is important to have a plan of continuous development and improvement to ensure the app continues to offer a service that’s valued and demanded. Smartphones are now at the centre of many customers’ lives so with the correct research, planning and development in place, app-based services hold real potential to become a primary, although not necessarily exclusive, service channel.”
[1] Beta News. 2011. Will the Smartphone Replace the PC in Three Years?
[2] Electric Pig. 2010. Google Boss: It’s Time to Put Phones before PCs.
[3] Phones 4u. 2011.
[4] IDC. 2011. Cited by The Telegraph: Smartphones Outsell PCs.
[5] Asymco. 2011. More than 60 Apps Have Been Downloaded for Every iOS Device Sold.
[6] Portaltech/eDigitalResearch. 2011. Cited by Internet Retailer: Half of UK Smartphone Owners Shop Via Mobile.
*Phase 2, Q2/3, 2011
**Phase 3, Q4, 2011