003: Mobivity | Why Your Mobile App Needs to Be in the Top 5
Stephanie Cox (VP of Marketing at Lumavate): I'm Stephanie Cox and this is mobile matters. Today, I'm joined by Dave Galane at Mobivity. Dave is the SVP of product marketing at Mobivity, which is a restaurant marketing platform that is highly data-driven. Dave has extensive background in mobile with companies such as Motorola, Nokia, Salesforce, and Emarsys. In this episode Dave and I talk a lot about the importance and impact of having your mobile app be one of the top 5 used apps by your customers, how the restaurant industry might actually be Amazon proof, wouldn't that be great, and the importance of owning your customer data when third parties like Doordash, Uber Eats or big box stores are involved. And make sure you stick around till the end where I’ll give my recap and top takeaways so that you can not only think differently about mobile, but implement it effectively.
Welcome to the show Dave. Tell me a little bit about how you first got started in mobile?
Dave Galante (SVP of Product Marketing at Mobivity): Well, I started at Motorola in 1999. So, I was actually a software developer at Motorola infrastructure systems. So working on the first 3G infrastructure equipment. And then I also worked on handsets so, I actually worked on the Razor2 and some of the early Android devices at Motorola. So, it's been a long, long 17,18 year view of mobile and all the evolution has happened since then.
Stephanie Cox: So, speaking of that evolution, what do you think has been the biggest change that you've seen from the late 90s to now that's been driving mobile trends and just mobile behavior?
Dave Galante: Well, I think that the hardware has definitely gotten really interesting. I think when we first saw the first iPhone at Motorola with the touchscreen, really there was a lot of skepticism if that was going to take off. Definitely now, that was definitely the way to go. And really, the ability to create apps and build apps seamlessly with SDKs, that really accelerated the entire smartphone market. And recently, I think things like NFC being built into hardware make it easy for companies to extend the mobile experience besides just a camera or bluetooth. So, I think combining a lot of really interesting hardware advancements in the platform and then creating easy to use SDKs to access that, have really kind of made some interesting use cases come to life.
Stephanie Cox: I completely agree. Especially when you talk about NFC I know Android has been supporting NFC for what seems like since the beginning, right? A decade. And to have Apple finally put it in the new phone so it’s a part of the new operating system to me is a big one. But it will be even bigger once it goes all the way back to iPhone 7 or something like that.
Dave Galante: Yeah I mean, I remember being in the mobile commerce space with Alcatel-Lucent and a lot of the executives of PayPal and others, they coined “NFC” as “not for commerce” really just trying to say that NFC wasn’t going to be mainstream payment capable, and really kind of saying it was going to be more of a smaller use case kind of technology. But look at Apple Pay now. Between Samsung Pay, Google Wallet and Apple Pay, NFC is now a commerce driving technology.
Stephanie Cox: Definitely. And I always find it really fascinating how many people don’t realize NFC is what powering Apple Pay for example. And you mention it to them and they’re like “oh that thing where I can just tap my phone?”, and I’m like “exactly”.
Dave Galante: Yeah and you know when you’re in Europe, you’ve probably seen this before, every credit card is NFC enabled. You’ll see a lot of people who are visiting Indianapolis from Europe and they take their credit card and are just tapping it on the verifone point of sale system and nothing is happening.
Stephanie Cox: And they are confused why it’s not working.
Dave Galante: Exactly because for them it is a very seamless interaction. You know you just simply tap the credit card on the point of sale and it works. Hopefully we will get to the point where our population and culture will start using the device like that payment instrument.
Stephanie Cox: So, I know at Mobivity, you guys are focused on the restaurant industry. So can you talk to me a little bit about the brands really in that space that are doing mobile well and what they're doing?
Dave Galante: There are a couple of key things that restaurants want to do. So, in quick serve restaurants and fast casual the key thing is customer frequency. Getting customers to come back more often. Most restaurants create a model that says, we think our customer comes in once a month or once every two months. And marketing platforms are really driven to collapse that frequency into a shorter duration so that average customer comes in more often. And then the second part of that is, when they come in, they actually spend more money. So, actually increasing the average ticket. So, in the restaurant marketing space that is the name of the game, and if you can prove that then you really have a compelling reason to grow in the market. So, that's what Mobivity does at its core, is we track the result of outbound marketing through SMS with that point of sale data. And in general in restaurants, McDonald's has been really doing quite well with their kiosk deployments and their in-store experiences. And also their app connecting remote ordering to the kiosk. So, I think, just in this last press release for McDonald's, they doubled their downloads to 60 million downloads. Now, you and I both know, our listeners do too, is that typically to really hit it out of the park with mobile, you have to be one of those top five mobile apps that people use. So, McDonald's is competing with Starbucks, because Starbucks probably, between Starbucks and Dunkin, it's probably one of those top five apps. I just got my coffee over down the street and I ordered the coffee before I left the house, pulled up on a rainy November day and just grabbed that coffee and left. And so, for me, Starbucks is definitely one of those top five apps. For my wife, definitely Dunkin Donuts is one of those top five apps. McDonald's is trying to get into that top 5 app category with things like mobile pay and loyalty. Another company that we see doing quite well with mobile is Sonic. Sonic Drive-In is one of our customers, we run their text messaging program, both SMS and MMS. One of their biggest pushes right now is to basically order ahead across all their stores. So, they really think that and they're measuring the success of people ordering their meal and enjoying it at Sonic in their car, but starting to hold the transaction on a mobile device.
Stephanie Cox: Thinking about McDonald's, one of the things that surprised me a little bit, and I know you mentioned their recent press release, was a couple of months ago how open and honest their CEO was about how their mobile adoption was really struggling. So, do you think there was any, I mean typically we don't see that from CEOs talking about a marketing program or specifically mobile that's struggling. But do you think that had any impact on what they saw, really in like three to four months, which was a tremendous uptake and usage?
Dave Galante: Yeah, I mean I remember seeing that same article. A very transparent quote from Steven Easterbrook, saying that mobile wasn't working. It seems what they did is they went back and fixed a few things. I mean, first of all, advertising dollars go a long way. So, McDonald's advertising dollars and promotion of things like the app really move the needle. You just don't have those kinds of tools available to you with other brands. But they have both, in-foot or foot traffic awareness advantage. So, if you increase the point of presence advertising in the store promoting the app, you will see app downloads. If you start putting more advertising dollars towards promoting the app, you'll see app downloads increase as well. But, most importantly, I think the app experience really did change with the integration of a pick up and order ahead. It really gave it more utility. And it gives people a really good reason to go and download. They also incentivized the initial download and sign up with an offer and it was exclusive offers in the mobile app that you don't get other channels, like email. So, really, in terms of a mobile strategy, they really turned things around really quickly.
Stephanie Cox: What would be the one thing you would say you have to do in order to drive adoption?
Dave Galante: Definitely the opt-in offer. I mean we test up app offer dynamics across different restaurant brands. And for some restaurants, breakfast is a really high growth market. Going back to McDonald's, all-day breakfast really moved the needle with them, that really had an impact on their bottom line. So, that may have been one opt-in promotion that they used to get downloads to occur. So, opt-in offers are definitely important and I think also explaining to the customer what they are getting out of the app is really, really critical.
Stephanie Cox: Well, I think that's so key because a lot of times we're so excited to launch an app. We think it's the most important thing and consumers are going to love it. And we get out there and people don't love it, because we haven't given them a reason to. We're pushing content out or pushing functionality we want, but not making it something that they're compelled to use on a regular basis.
Dave Galante: Yeah. And I think to get in that top five home screen real estate. You've got to add value every single day. In the app world, too, there is this app apathy, and where you've got a lot of apps. and if you're on that second or third screen, it's like a graveyard. You guys did a great podcast on that a few days ago. It was fantastic and I totally agree. And I think push notifications, that's really a risky thing. You don't always get opt-in for push and if you don't also do a second or third marketing channel initiative like SMS and email, you're really at risk of losing that download and also the money you spent to get it. So, that's really the thing that most mobile marketers look at is what's the cost of acquisition? And for mobile apps, on average, it's about three to four dollars per download. So, unless you're able to convert that user into an active buyer, where they're actually making purchases through the app or getting some impression or value out of it, you could just be getting downloads for downloads but not really getting anything out of the install base.
Stephanie Cox: So, I know we talked about the importance of order ahead in restaurants. What are some other initiatives that you're seeing restaurant brands really focus on right now?
Dave Galante: In terms of strategy for all the brands we talk to the restaurant business, order ahead and order customization is super important. That's both over the web and mobile. If you order from Papa John's you see in real time where your pizza is. It's being made, it's in the oven, it's out for delivery. And those kinds of gamifications are really engaging and people like that. And also the customization. So, the idea is that the mobile or the web experience has to give you the same customization features that it would have, if you were actually in-store. So, across the board all of our prospects, current customers have an initiative to basically check the box on order ahead. Another thing that is growing right now is third party delivery. So, the growth of UberEats and Grubhub and Postmates. It's a big driver for restaurants even though from the consumer, it is a bit more expensive, but people are willing to pay. They're willing to pay the extra fee to have the food delivered. Now, what I did see recently was a stat that more than half of consumers were ordering directly from their native restaurant app, compared to 36 percent on GrubHub and 31 percent through UberEats apps. I think personally, that Starbucks is skewing this number. If you took out Starbucks from that study, I think you'd see a lot more food ordering events coming from those apps like GrubHub and UberEats. But, the one thing that has actually been a bit strange and a bit of a red flag for a lot of brands with third party delivery is, there's a question about who owns the customer? So, if you use DoorDash for your order, DoorDash knows who you are, Stephanie Cox, they know where you live, they know how often you're ordering, They're sending that order to the restaurant. The restaurant doesn't really know you. So, there's really a need here to connect the consumer directly to the restaurant,when third party delivery is happening. And so, at Mobivity, we think this is an opportunity to really do good receipt advertising. So, the receipt is always going to be either stapled or physically put into the order. And that's really us, our platform for our brands to have calls to action, to link the customer directly back to the restaurant. Because right now, third party delivery programs don't share customer data with the restaurant themselves.
Dave Galante: Another thing that's really growing is loyalty. Every brand I talk to in the fast casual, QSR space says there are checkboxes for 2018, order ahead, third party delivery, and loyalty. And what's interesting is that loyalty differs quite a bit from restaurant to restaurant. Definitely like Starbucks has a great points program. You buy enough, you get star points and you can redeem those for free items. Dunkin has a great mobile experience where the more we spend or if you buy certain items you get bonus points. So, that's another thing, another trend that we're going to see probably right into 2019, is the increase of loyalty to get those higher app downloads.
Stephanie Cox: Do you think that a lot of brands in a restaurant space are almost playing catch up to a lot of the rest of consumer brands, in general that have been running loyalty programs for the last five to 10 years?
Dave Galante: I think so, but I think they are probably at an advantage because I think the loyalty we saw a lot in the brick and mortar space is going to Amazon. So in a way, the restaurant industry is in a really good spot right now because they're offering a product and a service that is Amazon-proof. For example, I was coming back from Phoenix last night and I was putting together a to do list for the weekend. I need light bulbs, I need extension cords, I need this, I need that. I also need some hiking equipment. I'm not going to go download the Dicks sporting goods app or REI and order camping equipment, and also download Home Depots app and order hardware. I'm going to Amazon. So, Amazon then can collect all those things and ship it to my house by this weekend. You can't do that with that with food. So, really there's a unique position to build a really good loyalty program because that is something that's not going to go away.
Stephanie Cox: So, talk to me a little bit about in the restaurant space right now, what are brands not doing that you think they should be doing?
Dave Galante: There's not a lot of concierge type of services. Like how was your meal, really? Or how was your experience? I think there's a missing gap here of having that ability to have a one to one conversation with either that franchisee that owns a restaurant, or even like the head of marketing for an entire brand. The restaurant industry is measuring success really by customer frequency and average ticket. But I think customer satisfaction is something that is really important, because there's competition in the market. Look at the burger space! There are tons of gourmet burger companies popping up everywhere. It’s interesting to know, is that customer actually having a good experience? I think that's one thing that we're not seeing right now, either in apps or in mobile messaging campaigns.
Stephanie Cox: And I know we talked a lot about downloads already, but when you think about measuring success in mobile, what are those metrics that mobile marketers really need to think about?
Dave Galante: Yeah I mean I think downloads sometimes get the front line, front page, headline news. But as we both know, download really isn't a measure of success because monthly active users tell you how many times people are actually going back and using that app over and over again. You can drive downloads with good promotions and free products and good advertising, but app design and user engagement is measured by active users. So, I always think it's interesting that that metric is not included in a lot of press releases. But, if you're tracking your customers one on one, really ask them what is the active user rates. And also mobile-driven revenue. So, going back to what you said, if I had been wanting to build an app. One thing that we found out, and actually my experience at Emarsys was really accelerated, was we measured success of mobile applications by the revenue that came from purchases inside that context. So, if I'm spending again three or four dollars per download, am I actually getting revenue from that download through purchases? And then one third thing, going back to the customer experiences, how much of the growth of that app or that mobile experience, it could be messaging, SMS, not just mobile apps, is coming from customer referrals versus paid advertising. So, we know that people trust their friends and their friends opinions more than they do, let's say an ad on TV. But, if I don't have a really easy way of telling my friends about the great experience I had with a brand through mobile then I'm really missing out. And so, we've instituted, at Mobivity, a feature called refer a friend and we used this with Subway right now. Subways is one of our biggest clients in the SMS base. And we do all the weekly SMS offers for Subway subscribers. There is an option in that SMS program called refer a friend, and if you actually refer customers to the program, you actually get free stuff. You get a free offer, and we see a lot of growth in the database because of that kind of activity.
Stephanie Cox: There are so many brands that aren't taking advantage or actively promoting referrals. When I'm much more likely to try out, especially in a new restaurant, if someone else has told me they liked it.
Dave Galante: Exactly. So, reviews on Google, Yelp, they definitely are great about discovery, but they're not using the same behavior to have their customers go out and find other customers through their friends. I think that's one thing that we're seeing as a really good tactic to accelerate growth.
Stephanie Cox: So, I know we both are big believers that downloads are not the key metric, but why do you think marketers tend to attach onto it so much?
Dave Galante: This is a great question. My only explanation is that mobile download numbers are really easy to obtain. So, both Google Play and Apple App Store, they provide those metrics for you, and those are free and those are really available. To get the other, more granular details about how well your mobile program is going, whether it's SMS opt-in, opt-outs or push notification acceptance or even with the users. You've got to use a platform that's part of your mobile engagement strategy to figure out what that is. And I think a lot of people forget about this. But really, my red light goes off, or my warning light goes off, if I talk to someone and they don't have those details because it really should be something that you’re monitoring every single day.
Stephanie Cox: I completely agree. I know we've been talking a little bit about Starbucks and what they've done on mobile. So tell me a little bit more about why you think there's such a great mobile use case and story for their effort?
Dave Galante: Starbucks came back with a technology that people really thought was dead and that was QR codes. Essentially, they said, you know what, we're going to build our own payment platform, using something simple like a QR code. And I really just thought they've really broken the mold and said, we can do this right if we have a great experience. And they've been continuously innovating, whether it's payment and loyalty and customer feedback. They really are the brand and experience, to kind of match. So, I think they've got a great head start.
Stephanie Cox: Well, I love QR codes, so I'm glad you mentioned them. I know a lot of people thought they were dead and I would have been in the same boat, but I think we just started with QR codes in the 2010 time frame, when people just had smartphones and didn't even understand how to use their smartphone, and they were being asked to download an app to scan a QR code. It was too much. So now, I think what Starbucks has done, what Snap Codes, Spotify is using them. So many major brands are, it's really changing how people think about activation.
Dave Galante: So, every airline now has mobile boarding passes through QR codes. And also with iOS 11, you got a great feature there because the camera now has a built-in QR code scanner. So that solved a huge problem that we had, as marketers, to get the adoption of QR codes to accelerate.
Stephanie Cox: Preach. That's all I have to say. So, where do you think the future of mobile is headed?
Dave Galante: I'm really excited that RCS, which is rich communication services, is really taking SMS to the next level. A lot of the things that marketers want to do in the SMS channel with visual, you know images of the product, and video and conversational logic, all those things were really hard to do in the SMS context. And MMS gave us some of those capabilities, but the costs were really high and the whole hassle of trying to figure out how to get images to load on different phones, really ruined the whole experience. However, we're partnering very closely with Google to build out the next generation of messaging, which is called rich communication services. And what's really interesting about RCS, is that it's actually an experience that lives inside the native messaging app on your phone. So, for example, for Android the default SMS application that you have on every single Android device will now actually support RCS. And so, what we built for Subway is that order ahead experience, completely within the native messaging application. So that means, I could have a transactional or marketing message come into the phone, asking the consumer hey, we haven't seen you in a while and we have a great lunch special. And I could take that marketing message that comes in through the traditional SMS channel, move it to RCS, and then convert that to a purchase. If that consumer comes back and says, you know what I actually don't have lunch plans, from the messaging app they can go ahead and customize their order, find a Subway, and have it ordered right from their phone, without downloading anything.
Stephanie Cox: So, I love that you guys are all in on RCS. I think it really is a huge opportunity for mobile marketers to start taking it, really to get aware of now. Start thinking about how to implement it, especially if they're B2C. What do you think the biggest challenges are for a company when they think about RCS for the first time and trying to figure out how it fits in their overall mobile strategy?
Dave Galante: Well, I think it's just right now awareness. One of the things about being an innovator is you're talking about things that are not mainstream yet. They're growing. So, you have to be patient and you have to really explain, this is where the market's going and let's go on a journey together and go build this. So, for us, we're finding really innovative companies like Subway that have international reach. They have large aspirations to grow mobile and they want to be on that vision, of making the best of the future mobile experience.
Stephanie Cox: Well and that's why it's so important to start thinking about that stuff now, and testing it out, and figure out how it's going to work for your brand. So, two years from now and everyone's doing it, you're not playing catch up. I know Google is 100 percent behind RCS, so let's talk about the other big bhima, Apple. What do you think they're going to do with RCS? Do you see them fully adopting it as well?
Dave Galante: I think the Apple Business Chat is really interesting. It's already out there. So, for example, if you go in your iOS phone right now and you search for the contact Home Depot. By default, you're going to find Home Depot as a contact because it's a bot that is serviced by Apple business chat. And so that discoverability is something that is very interesting to marketers. Where essentially every brand is discoverable as a contact and that's what Apple Business Chat has done really well. We're hoping that those same RCS capabilities can be built into Apple business chat or actually through iMessage. That would really be the best thing for the consumer.
Stephanie Cox: I mean, no one can predict what they're going to do, but I just have a hard time thinking that they aren't going to go fully in on RCS. Really when you think about it from the consumer experience, it's what mobile should be. Right? It's what we're all going to expect.
Stephanie Cox: Dave has such an impressive background on mobile and a really great pulse on what marketers need to pay attention to in the mobile space. He brings up a bunch of great points, but one of the ones that I love was the idea that QR codes have made a major comeback. Just look at the big brands using them today Starbucks, Snapchat, Spotify, Disney and I can go on and on. QR codes may have gotten a bad rap initially, but they're definitely an activation point that marketers need to take a second look at today. Now, let's get to my favorite part of the show where we take the education apply to your business.
There are so many great insights in my conversation with dave that can really help transform how you think about mobile marketing books driving to my top three takeaways.
First, if you're going to do a mobile app and you've to strive to make it one of the top five most used apps by your consumers. For most brands this is going to be difficult. I get it, especially when you look at the fact that Facebook or Google own 8 out of 10 most used apps overall. And the other thing we’re going to face is mobile app apathy. It's real and it's not going away. When Steve Jobs first introduced the App Store back in July of 2008 there were over 500 apps. Today there's over 2 million in the App Store and 3.8 million in Google Play and it is constantly growing. But app adoption is steadily decreasing. Now almost 50% of consumers don't download a single new app and a three-month period. Think about the last time you downloaded an app, it is probably longer ago than you think. But let's say we were able to convince someone to download an app, typically at a cost of $3 to $4 per acquisition of app downloads. You still have to make sure you're providing ongoing value if you want them to keep that app on their home screen and keep engaging with it. And if you don't, they're going to likely delete it or put it in a folder the three pages another home screen and forget they even have it. But all hope isn't lost take a look at what McDonald's has done with their mobile app. Earlier this year, the CEO of McDonald's publicly said their mobile app adoption rates are low. In fact, I'm pretty sure he said it during an investor call, which is a bold statement for any senior leader to make. But what’s most impressive is how they fixed it. They first identified areas for improvement in the user experience and make sure the technology was more reliable to consumers, but they also took it one step further and fixed the in-store issues with the fulfilling mobile orders. And what happened was they saw usage of the Android app for by 20% to 40% during summer months, and a double the pace of downloads and Q3.
Now it helps that they use advertising dollars to drive app downloads, but what really is most important is that they are providing value to their users. This is a similar story with the Starbucks app. People find value with what Starbucks provides, and that's why they're on board with giving the app the precious space on their home screen that all marketers covet. So if you have a mobile app, and let's be honest most of us do, and if you're not seeing the type of engagement and ROI you want, which also is applicable to most of us I believe, then it's time to do some research to find out how your current users are using the app. What don't they like about it? What do they wish they had, and also what would potential users want from your app? What would convince them to download it for the first time? Because if you're not making your app compelling it won't matter how many people you get to download it because few of them are going to stay.
Next, don't underestimate the power of referral program. They might even be more powerful than reviews given how consumers buy today. Think about it, are you more likely to trust a recommendation from a friend or a random review that you've read online like Yelp, Travelocity, etc. For me, I'm going to trust my friend. Now don't get me wrong, I'm still going to look at reviews if I can't get a personal recommendation, but the value I place on a recommendation or a referral is so much higher than any review I see or an ad. This is why it's so important to think about referral programs, and there's a couple different ways to think about it. The most traditional approach is a brand provides a special incentive to a current customer for referring another potential customer to try out their product or service. This is how brands like Stitch Fix, Tesla, Dropbox, Subway and others run the referral programs. In some cases these brands also offer special promotion to the referred person, so your friend also gets an offer with you. This approach is all about driving more sales, which completely makes sense given how we’re all focused on increasing the bottom line. But not everyone wants to be sold to your first experience with them. I want to challenge ourselves to think about referral programs at the top of the funnel too. For instance, how many mobile apps do you see making it easier for a user to share the off with one of their friends? I know I haven't seen many doing this and it would be something fairly easy to implement, especially if you're using a progressive web app. Think of it as an old school email version of “forward to a friend” that allows you to drive higher adoption of your mobile efforts without requiring a large investment advertising. If you're delivering relevant content that resonates with your users, then they're typically going to be happy to give it and share it with two others.
Now finally rich Communications service or RCS, it's coming we all need to get on board. I believe it’s what most mobile marketers thought MMS would be, but it's a thousand times better. Granted, there are some limitations today because it's only supported by Android and not Apple. And if your audience is primarily located in the US that's going to prevent you from including it as one of the major components of your mobile strategy. But don't forget, it's coming. It truly simplifies how brands engage with customers in one to one communications at scale using primary messaging apps that most consumers already use today, and want to use to interact with bands. I imagine a future where I can directly, from my messaging app, receive a promotion offer from a local restaurant, order my lunch, get real-time updates on delivery, and take a survey all within my native messaging app. It's really going to be a big game-changer for brands assuming Apple fully adopts it. And Apple if you're listening. We want it. We need it. Please. As a marketer, I'm really hoping Apple goes all-in on RCS and enables us to take another giant leap forward in providing an exceptional customer experience via mobile.
Now onto my mobile marketing challenge for the week. I want you to take 30 minutes, or better yet an hour if you got it, to learn more about RCS. While it's not a mainstream technology yet, it's something that you need to fully understand now and start testing out different use cases with RCS with your customers. This will help you determine how to make RCS best work for your brand so you're prepared to take advantage of this new technology once Apple finally gets on board and fully supports it
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