Editor’s note: Phil Carter is an associate at Trinity Ventures, where he focuses on early-stage consumer technology investments particularly in mobile-enabled marketplaces and services.
A few customer groups are driving a disproportionate share of growth in smartphone use and mobile transactions. For entrepreneurs looking to build the next billion dollar m-commerce company, it pays to understand who these groups are, what their mobile activity looks like, and how to best serve them. When it comes to finding customers in mobile commerce, remember the Three Ms: moms, millennials and multinationals.
Moms are a great consumer demographic, accounting for more than 70 percent of U.S. household spending according to a 2009 survey by Boston Consulting Group. Moms are also smartphone power users. According to Edison Research, 64 percent of moms owned smartphones in early 2013 vs. just 53 percent of the general population.
The same study indicated moms spend an average of 8 hours and 37 minutes a day with media, 89 percent of moms report having their smartphone within arm’s length always or most of the time, and 42 percent of moms say their smartphone is the first thing in their hand every morning. The combination of moms driving a large majority of U.S. spending and being highly engaged smartphone users makes them the single-most powerful constituency driving m-commerce today, particularly in the retail enablement, mobile retail, marketplace, and on-demand service categories.
Today, mothers tend to be constantly juggling activities, so whether your app is selling a product or a service, make her life simpler with a friendly user interface that she can navigate easily. Companies like Houzz and Wanelo do a great job of this with their mobile apps.
Entertainment and gamification also work well. Dot&Bo increases shopper engagement and spend by wrapping a story around every piece of furniture and home décor it sells. Meanwhile, Zulily boosts loyalty and retention by personalizing a mom’s shopping experience and rewarding her with discounts for buying within a specified window of time.
Finally, be respectful of her time and space. A mom has enough on her mind without your app constantly pinging her with push notifications, so make sure you build intelligence into your app so that you’re tailoring engagement to her unique rhythms.
If it wasn’t obvious that today’s teens and twenty-somethings spend a lot of time on their smartphones, then a recent ComScore study makes it clear. According to ComScore’s data, 81 percent of U.S. Millennials (defined as 18-34 year olds) owned a smartphone by the end of 2013 vs. 68 percent of 35-54 year olds and 40 percent of the 55+ population.
Furthermore, 85 percent of millennials consume digital media on mobile versus 80 percent of 35-54 year olds and 58 percent of the 55+ population, and 18 percent of millennials are mobile-only, meaning they do all their Internet browsing, emailing, social networking, and news reading on a smartphone or tablet. That’s 3.5x the percentage of 35-54 year old mobile-only users and 6x the percentage of 55+ mobile-only users. millennials are driving growth in several App-Based Service categories like dating and fitness, and are also an important force in mobile retail, particularly teen and college-age women who spend a lot of disposable income on apparel, accessories, and beauty products.
Today’s teens have increasingly short attention spans, so to capture share of mind and wallet with this valuable demographic, an entrepreneur must first capture their imaginations. According to the National Center for Biotechnology Information, average attention span dropped 33 percent in the last decade from 12 seconds in 2000 to 8 seconds in 2013.
Apps targeting teens and twenty-somethings must demonstrate value quickly to gain acceptance, so skip the long onboarding process in favor of Facebook Connect or throw it out entirely and immerse users in your app’s experience from their very first click. Millennials are also hyper visual, as proven by the success of social apps like Snapchat, Instagram and Whisper.
A picture is worth more than a thousand words because the average teen will only read the first 10. Finally, teens operate on smaller budgets, so make price points accessible to convert shoppers into buyers.
According to data collected last year by Statista, the U.S. ranks 13th in smartphone penetration globally. The four countries topping this list – United Arab Emirates, South Korea, Saudi Arabia, and Singapore – are all from the Middle East or Asia. Meanwhile, a recent Pew Research Center report highlighted an explosion of mobile payments in Sub-Saharan Africa, where a much higher percentage of mobile users (as high as 68 percent in Kenya) report regularly using phones to make or receive payments vs. a median of just 8 percent in other countries surveyed.
Outside of traditional m-commerce, social messaging apps are booming in Southeast Asia where WhatsApp competitors Line, Kakao, and WeChat have accumulated hundreds of millions of registered users. The lack of a large installed base of PCs has allowed mobile penetration in many developing nations to outpace penetration in more industrialized parts of the world. This trend, paired with rapidly-rising GDPs among the BRIC nations (Brazil, Russia, India, China), Asian Tigers (Hong Kong, Singapore, South Korea, Taiwan), and parts of the Middle East and Africa, indicate it’s only a matter of time before the global share of m-commerce shifts increasingly abroad, particularly in categories like Mobile Payments, Mobile Retail, and Marketplaces.
It’s difficult to prescribe a list of winning m-commerce strategies for multinationals because they exhibit fewer consistent patterns than moms and millennials, but a couple general principles are transferrable. First, know the cultural context you’re operating in. Digital goods may be a great monetization mechanic in Southeast Asia but not in other countries where there’s no cultural basis for valuing these items. Second, if you’re expanding an app outside its native market, localization matters.
Even if all your users understand English, you’ll need to adapt your messaging to build emotional attachments. Crowdsourcing can be a powerful solution for this problem, as Facebook famously demonstrated when it designed a tool to let users translate its platform into their native language. Finally, in markets without significant PC penetration, mobile-first design principles are even more important, as many users will be mobile-only.
Moms, millennials, and multinationals certainly aren’t the only groups driving m-commerce. In today’s increasingly mobile world, smartphone penetration and usage is increasing across nearly every demographic. However, for m-commerce entrepreneurs looking to build the next big thing, targeting at least one of the three M’s represents an effective strategy for establishing a core of highly-engaged early adopters.
Moms and millennials also tend to be above-average users of social media, creating greater potential for organic user acquisition and viral growth. Given how important moms, millennials, and multinationals are within the m-commerce ecosystem, understanding their usage behaviors and meeting their needs can be the key to building a great business on mobile.
Disclosure: Trinity Ventures is an investor in Dot&Bo, Zulily, and Whisper.IMAGE BY Shutterstock USER pcruciatti