Mobile Technology Usage and Value: The Perception of Madison Businesses

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1 Mobile Technology Usage and Value: The Perception of Madison Businesses Executive Summary Smartphone usage has increased significantly in the last decade, bringing with it an entirely new field of content creation and software development. There are now so many companies in this field (over a hundred app developers in Chicago alone) that it can be difficult to sort it all out especially while trying to figure out where the value is. To get the pulse of businesses in the Madison area, SOLOMO Technology conducted a survey of 130 local business owners and managers. We wanted to find out how the rapid growth in smartphone use had affected their businesses, what they are doing about it, and how they believe mobile can add value to businesses like theirs. Overall, the results are exciting. For instance, eighty percent of Madison area businesses believe that mobile apps should be at least somewhat important to businesses like theirs. At the same time, only a third use mobile apps to help run their businesses, and almost 4 don t use mobile marketing at all. Survey Setup & Background The survey was conducted by phone. We randomly sampled businesses in the area that were deemed categorically appropriate for the survey. This meant only surveying businesses that are B2C (those that get their revenue from consumers). Categories of businesses surveyed were Bars / Restaurants (31), Consumer Services (20), Entertainment & Hospitality (8), Health / Fitness / Beauty (11), Quick Service / Fast Food (10), and Retail Shopping (39). There were also 11 businesses surveyed that were uncategorized. Results from the uncategorized businesses are not included in categorical analysis. Survey Questions Nine questions were asked: 1. What percentage of your customers would you guess own a smartphone? (Up to what percent) 2. How often do customers use their smartphone while at your location? 3. Do you use mobile apps like Square, Evernote, or Dropbox as a part of running your business? 4. On a scale of 1-10, how important should mobile apps be to businesses like yours? 5. How do you think mobile apps can improve a business like yours? 6. In which of the following ways do you use mobile marketing to engage customers? 7. How has the increase in smartphone use affected your business, in general? 8. Before today, had you ever heard of a smart location? 9. Which of the following aspects of a smart location would benefit your business? Results Of the 584 businesses called, 130 surveys were conducted, for a total response rate of 22%. Perceived Ownership & Usage Smartphone Madison is known to have a high percentage of smartphone usage compared to the rest of the country. This reality is correctly reflected by the perception of area businesses (figure 1). The vast majority of Madison businesses also believe that usage of smartphones is a normal occurrence in their businesses (figure 2). When we combine these first two figures, we see that 68.4% of businesses believe that most people have a smartphone, and they use it at least some of the time.

2 Figure Figure 2 35% 3 25% 15% 5% What percentage of your customers would you guess own a smartphone? How often do customers use their smartphone while at your location? 5 or below Using Mobile Apps for Business There are several mobile applications that have been developed specifically to aid in productivity. We asked if businesses are currently using anything like Square, Dropbox, or Evernote, and found that just over a third do use these tools (figure 3), which is far below the national average. According to AT&T s 2013 Small Business Technology Poll (http://about.att.com/mediakit/2013techpoll), two thirds of small businesses believe they would not survive, or it would be a major challenge to survive, without wireless technologies. An astounding 85% reported using smartphones for their daily operations. This is the only measure by which Madison businesses are behind the curve which means there is an opportunity for mobile app developers to gain traction, and for local businesses to improve services while saving costs. Figure Importance of Mobile Apps Mobile apps are overwhelmingly perceived as being at least somewhat important to businesses. On a scale of 1-10, 8 of businesses responded 4 or higher, and 37% of businesses answered 8-10 (figure 4). Only 25 businesses responded 1-3 (figure 4). This result was further confirmed by the result of only 7 businesses stating that they don t believe mobile apps can improve their business in any way (figure 5). Figure 4 25% 15% 5% Do you use mobile apps like Square, Evernote, or Dropbox as a part of running your business? Yes No On a scale of 1-10, How important should mobile apps be to a businesses like yours?

3 Operations and Mobile Apps As explained in the introduction, Madison businesses are behind the curve when it comes to using mobile apps to run their business (comparing figure 2 to the AT&T study). They are not far behind when it comes to their intuition, however, as just over 6 of businesses stated that mobile apps could help with operational efficiency (figure 5). Finding out more detail about how mobile apps could improve business would be an interesting course of further study. What kinds of efficiencies could be had? How much could Madison consumers be saving if these businesses adopted more mobile technology to aid in running their businesses? 600 million access the site primarily through mobile devices. Figure In which of the following ways do you use mobile marketing to engage customers? Figure How do you think mobile apps can improve a business like yours? Impact of Smartphone Use on Businesses The perception of a neutral impact (figure 7) goes along with the story so far that, while businesses are aware of the value mobile apps can bring (figure 5), many are not taking action (figure 6). Whether as a new channel for communicating with their customers (figure 5) or a new means of streamlining their business operations (figure 3), smartphones have yet to realize their full potential for most small businesses in Madison. The State of Mobile Marketing Despite the favorable attitude toward mobile apps, there were 50 businesses (38.5%) who reported that they are currently doing nothing to engage users on mobile (figure 6). If we remove the responses to question 6 that don t have necessarily have a mobile application component (QR Codes, Text Messaging Campaigns, and Mobile Websites), this number moves up to 101 of the 130 surveyed, or 77.7%. Interestingly, almost 11% of businesses that responded to the question about how they use mobile marketing reported using Facebook. This was an unexpected result that shows how businesses are intuitively tapping their consumers. It turns out they are right to do so Out of Facebook s nearly one billion users, about Figure How has the increase in smartphone use affected your business, in general? Very Good Good Neutral Bad Very Bad Smart Location Technology The cutting edge of mobile technology connects smart devices with locations via what SOLOMO

4 Technology calls Smart Location Technology. A combination of hardware and software, smart location technology enables businesses and organizations to enable their locations with awareness of smart devices to deliver content and collect analytics about how a location is being used. When asked about whether they had heard of this concept, a surprisingly high (nearly 3) number of people answered yes (figure 8). At the same time, not a single business reported using Bluetooth Beacons for any mobile marketing or smartphone-related business activity (figure 6). This gap could tell us where some of that untapped potential exists. Several businesses did report having heard of ibeacon technology (Apple s incarnation of BLE-enabled smartphones). Figure Which of the following aspects of a smart location would benefit your business? Figure Before today, had you ever heard of a smart location? Yes When asked how they believe smart location technology can benefit businesses like theirs, answers were scattered (figure 9). This reflects the responses to other questions about specific activity in mobile technology (figures 5 and 6). Interesting to note is that while nearly two-thirds of businesses had never heard of smart location technology, only 12% were uninterested in the concept after hearing a summary of what it means. This is further evidence that, while there is a lack of complete understanding and willingness to take immediate action, there is no lack of interest in what smartphones have in store for businesses. No Comparative Results Two comparative analyses were run to look at how different cohorts of businesses responded to the survey. First, we compare businesses with a high level of perceived customer smartphone ownership (7-10) to those that perceive a low percentage of ownership ( - 69%). Next, we separated businesses based on their belief of how good or bad the rise in smartphones has been for their business (Very Bad, Bad, and Neutral vs. Good and Very Good). Interesting results will be discussed in detail, with uninteresting results reported in bulk at the end. High vs Low Smartphone Ownership Question 2: How often do customers use their smartphone while at your location? Businesses with smartphone owners also believe their customers use them frequently, and the opposite is true for those with a low volume of smartphone owners (figure 10). This tells us that where smartphone ownership is prevalent, smartphone usage is also perceived as high. A possible confound here is that businesses with high smartphone usage caused the owners to believe that most of their patrons owned smartphones.

5 The undeniable conclusion here is that smartphone ownership and usage go hand in hand. A surprising result is the number of businesses with low ownership who responded that their customers use them often. answer favorably about marketing reach, although this was the highest response overall as well. Figure 12 Figure % 3 25% 15% 5% How often do customers use their smartphones while at your location? How can apps improve businesses like yours? Question 3: How Important Should Mobile Apps Be to Businesses Like Yours? Businesses with high ownership had an average of 6.32, while low ownership averaged 4.96 a difference of Comparing this to the overall average is 6.07 shows us that a low rate of ownership has more of an impact. Figure How important should mobile apps be to businesses like yours? Average Question 5: How can apps improve businesses like yours? Improving operational efficiency showed the most difference amongst responses to this question. Interestingly, locations with low smartphone ownership were more likely to Question 6: In which of the following ways do you use mobile marketing to engage customers? Businesses that perceive their customers to have low smartphone usage were 8% more likely to not be using mobile marketing at all, yet they were 11% more likely to be using daily deals apps. This goes along with their increased belief that mobile apps can improves marketing. No one responded that they re using Bluetooth (BLE) Beacons, and only the high ownership cohort responded that they use text messaging to engage their customers (15%). Figure In which of the following ways do you use mobile marketing to engage customers?

6 Question 7: How has the increase in smartphone use affected your business, in general? Responses to this question were skewed in the direction one might expect. Businesses that believed they had more smartphone ownership also thought this was good for business, while those with low ownership thought it was bad for business. One could ask, How has smartphone use been bad for business, if so few of your customers own them? Because the survey asked about the business owners perceptions, this could point toward the attitude of the owner being negative toward smartphones in general. Figure How has the increase in smartphone use affected your business, in general? Question 9: Which of the following aspects of a smart location would benefit your business? Businesses were first introduced to the concept of a smart location, then asked this question. While they were equally new to the concept, they did answer differently when asked how they believed it could help. Interestingly, the cohorts were equally interested in traffic analytics. This bodes well for the value of understanding how many people are entering a business, especially considering how new the concept of a smart location is to businesses. In line with question 5, the businesses with high smartphone ownership answered more favorably to business automation (38% vs ). Low smartphone ownership businesses were only slightly more likely to reply that none of the solutions were interesting (16% vs 11%). Figure Which of the following aspects of a smart location would benefit your business? Predicting Perceived Importance Finding a question that indicates perceived importance would be interesting. We looked at the correlation coefficient between several of our questions and the question of perceived importance, and the findings were both interesting and perplexing. The following correlations are mostly below 0.4. In psychology, correlations above 0.3 are considered impressive. To put this in context, consider the following real-world correlations that sit near 0.4: GRE Scores and Grades in School (0.40), Work Experience and Job Performance (0.32), and Life Satisfaction and Leisure Activities (0.44). Results are compiled in Table 1. Percentage of Smartphone Owners The correlation coefficient between percentage of customers who own smartphones (question 1) and importance of mobile apps is surprisingly low (0.266). Finding out if there is a confounding variable, like the type of business, would be an interesting course of further analysis. Frequency of Usage To correlate frequency of use (question 2), we transformed the question s responses into a 1-5

7 scale. This correlation was much higher (0.368). The same confound could be at work here. Ownership and Usage When we multiplied the percent usage by the frequency of use, the resulting correlation was higher than either of the base results (0.405). This approaches a good level of predictability, and fits with the intuition that, if a lot of your customers own phones and use them often, mobile apps should be important. Use of Mobile Apps for Business Question 3 asks businesses if they use mobile apps like square to help run their business. While one would think this is a great predictor, it isn t (0.348). This could be a result of the low usage (only 1 in 3), and high overall belief in the value of mobile apps. Further study would be needed to fully understand what is driving this surprising result. Ways Mobile Apps Can Improve Business Question 5 was a multiple choice question about the ways in which mobile apps can improve a business. Counting the number of responses yields a 0-4 scale, where 0 means they don t believe they can improve business at all. The predictability of this was low (0.354). Ways Mobile Marketing Are Being Used Now Question 6 asked about the ways a business is using mobile marketing to engage customers. A count of responses yielded a 0-6 scale. The predictability of this measure was surprisingly lower than most (0.240). There were 50 businesses who don t use mobile marketing at all, which could have been the reason for this disparity. How Smartphone Usage Has Been for Business Question 7 asked about how the rise in smartphone usage has affected businesses. A count of responses yielded a 0-6 scale. The correlation for this measure was on the higher end compared to others (0.344). Interest in Smart Location Technology Question 9 presented different aspects of how a smart location could benefit a business. A count of responses yielded a 0-6 scale. The correlation for this measure was on the lower end compared to others (0.240). Table 1 Question Percentage of Smartphone Owners (Q1) Correlation Coefficient Frequency of Usage (Q2) Ownership and Usage (Q1 * Q2) Use of Mobile Apps for Business (Q3) Ways Mobile Apps Can Improve Business (Q5) Ways Mobile Marketing Are Being Used Now (Q6) How Smartphone Usage Has Been for Business (Q7) Interest in Smart Location Technology (Q9) Conclusions and Further Study Businesses are taking the low-risk route to address mobile technology by overwhelmingly opting to create a mobile website or do nothing at all (figure 6). This despite the fact most businesses have a high number of smartphone owners who are using them frequently, and that businesses believe this should be important to business (figures 1, 2 and 4, respectively). The gap between business perceptions that mobile is important and their current state of execution shows that the industry has been slow to adapt its message to these business owners, and to offer something of real value. Low usage of daily deals and in-app ads tells us that there is much left to be desired, while the high usage of mobile websites gives us insight into how that may be achieved. Reasons for the gap and further definition of mobile marketing are areas of further study that would lead to a better understanding of what expectations haven t been met or where there is a misunderstanding on part of the businesses.

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