How To Build A Better Mobile Commerce Service

Ask a hundred people for the definition of mobile commerce, and you’ll get a hundred answers. Just in this mobile commerce guide alone, you can see that each author has a particular emphasis or take on what a mobile commerce service is.

So for sake of clarity, here is my take. First, there are mobile financial services, which include mobile banking, payments and remittance. Banks typically offer mobile banking so their customers can access their finances on the move. Mobile payments enable the mobile device to act as a payment instrument for real-world goods and services and person-to-person payments. Finally, mobile remittance is a special case of a person-to-person payment with the payment crossing an international border.

Then, there are mobile customer relationship management (CRM) services, which include mobile marketing (communication), loyalty programs, vouchers and surveys. These services attract customers by encouraging them to make transactions by building loyalty and promoting additional transactions. CRM services draw consumers in, to and through the typical customer life cycle.

It is the joining of these two types of services that creates a complete mobile commerce service.

Mobile commerce

Which path do you take to develop a complete mCommerce service portfolio?

Financial institutions have most likely launched a mobile banking service today, and operators or independent service providers have launched some form of mobile payments or remittance service. Now that the service is launched, the next steps are to promote the service (communicate), and begin understanding how customers use the service (survey) and then promote repeat business (loyalty and/or vouchers).

Enterprises, such as retail, are approaching mCommerce from another direction. Most enterprises have dipped their toes into the mobile services water with simple marketing push services via SMS. By adding survey, they can start tracking behaviour and encouraging repeat business via loyalty. In the longer term, future purchases could even be completed in the mobile channel with mobile payments.

What Consumers Want
If you are looking to launch mCommerce services or extend the range of services you offer, which should you consider? Our 2010 consumer survey examined customer use and preferences of mobile commerce services. The stand-out statistic was the increase in mobile banking. For example, the percentage of Europeans conducting mobile banking more than doubled over the previous 18 months, from 11 per cent to 24 per cent. Among consumers who use mobile banking, the most-used services were checking their accounts (88 per cent) and receiving transaction updates (54 per cent).

Customer use of mobile banking varied a great deal by region. So while 24 per cent of Europeans had used mobile banking, this compared to just 14 per cent in the Americas and 47 per cent of respondents in the Asia-Pacific region.

Customers still have little appetite for paying for simple non-transactional alerts, but 35 per cent of mobile bankers would be willing to pay for more sophisticated services such as freezing a credit or debit card or suspected fraud updates.

Driving Adoption and Usage
When launching any service, it is very easy to focus exclusively on the service itself and ignore how the service must exist within a customer life cycle.


The standard customer life cycle model has four stages: awareness, purchase (use), post-purchase and retention. Launching a mobile commerce service addresses only one stage of the life cycle.

Launching a mobile commerce service is not enough in itself to create a successful service; the other three stages must also be addressed. One of the benefits of the mobile channel is that addressing these stages is possible within the mobile channel itself.

Awareness can be simple SMS short codes sent either as a call to action in a traditional advertisement or as a targeted mobile push advertisement to individual consumers.

The interactivity of the mobile channel can be used to capture instantaneous feedback from consumers. This can range from SMS-based questionnaires, mobile internet surveys or in-application metrics and feedback.

Finally, the mobile channel enables the creation of a range of retention services, from loyalty schemes to redeemable vouchers.

Banks’ New Frontier
Consumers are only willing to pay fees for a few mobile banking services, mainly services related to minimising risk or fraud. As those services would be used only occasionally, they don’t create a compelling business case for generating revenue from mobile banking services. In consumer banking, this fact has kept the banks’ return on investment (ROI) locked mainly to cost-saving–based models— where customers are deflected from existing service channels, such as a branch or phone, to the cheaper mobile channel.

However, mobile payments and remittance will enable banks to create services that consumers not only will pay to use, but will use on a regular basis. One-third of respondents were interested in using their mobile phones to pay for goods and services. Interest was highest in the Asia Pacific region, where 77 per cent of respondents either already paid for tickets or were interested in doing so.

Consumers also showed a clear willingness to pay for such convenience services. Paying for entertainment and utilities scored best. Again, Asia Pacific led the way, with 40 per cent of customers willing to pay a fee for the ability to pay for goods and services by mobile.

Mobile remittance varied by region. South Africans are considerably more prepared to pay for services than Europeans, with 55 per cent willing to pay for a shopping payment service (compared to 27 per cent of Europeans). South Africans are also much more interested in paying bills (62 per cent compared to 25 per cent of Europeans) and paying for tickets (46 per cent compared to 28 per cent of Europeans).

While 27 per cent of all respondents will send money overseas, huge national variances occur. 30-nine per cent of Indians would be prepared to pay for this service compared to 9 per cent of the British. Those consumers willing to pay a fee per transaction would pay, on average, £4.14.

With this kind of interest among consumers, we expect to see banks extending services and offering more mobile payment and remittance services to customers in the coming years.