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Biology and the Off-Balance Sheet Showroom

By Dave Sikora

Biology and the “Off-Balance Sheet Showroom:” these two topics may seem entirely unrelated, but actually there is a close parallel in the mobile marketing market segment.

In biology, there are millions of bacteria, toxins, parasites and the like that are constantly threatening our bodies. These threats multiply and form derivatives, demanding real-time responses from anti-bodies and other mechanisms.

Our natural immune systems, combined with immunities provided by innovative drugs and formulations, protect our bodies from these threats. Our immune system has to learn how to respond to new and derivative threats and evolve as new threats are introduced into the system.

Interestingly, anti-bodies that are introduced into our systems through vaccines use the threat itself, or a weakened version, as part of the solution.

Using the threat itself as a weapon is a key point I will return to in a minute.

Balancing act
Immune systems can be characterized as a form of competitive strategy. Information technology innovation, in particular, can rapidly change industry structures and dynamics.

These innovations are akin to derivative viruses formed to attack incumbent market participants. How well these incumbents respond to and/or embrace these innovations is highly correlated to enterprise value creation and sustainable competitive advantage.

So how does this relate to mobile marketing and what the heck is an “Off-Balance Sheet Showroom”?

Mobile devices used to be phones, nothing more. OK, there were BlackBerrys for email and also pagers, but the devices had very defined and limited use cases.

All of sudden, the devices became computers, with processing power, storage, color screens, cameras that could be used as scanners, and pretty decent Internet connections. If you are a retailer, is this an “Uh oh” or an “Ah ha”? Is this a virus, or is this an opportunity?

Take the average retailer, selling consumer electronics products.

With the advent of smartphones that have persistent Internet connections, customers can now walk into any Best Buy, Sears or Frys, take their pick, and after settling on the right product they can use their phone to try and find a better price. Wow, that is really unfair to the retailer, right?

After all, they have invested in the physical storefront, salespeople, and the entire infrastructure that enabled the customer to walk in and select the best product. If they do not get the sale, they are what I like to call an “Off-Balance Sheet Showroom” for the company who did get the sale.

Viral effect
Becoming an “Off-Balance Sheet Showroom” is a deadly disease for a retailer.

You have invested millions and millions of dollars in your storefront infrastructure only to find it being leveraged by some pure-play ecommerce company or even another enterprising retailer.

So, if you are a bricks-and-mortar retailer, do you view smartphones as a parasitic toxin to your business? They certainly can be a threat, but can they also be part of your defense?

Let us take a lesson from biology, immune systems and vaccinations. Smartphones have only recently evolved to represent this threat to physical stores. But retailers who use them as part of their “competitive vaccination” will carry the day. How?

Get the picture?
Use the incredible richness of these devices to engage your customers with native applications that take advantage of the smartphone’s personal context, networking capacity and computing power.

Your logo should be available to your customers right from the deck of all the popular smartphones.

When your customer answers a phone call, they will notice your icon in the corner of their eye. With rich apps, you can do many things: you can take advantage of proactive notifications, reaching your customers when you have a sale or promotion, driving them into your store.

You can use the camera in these apps to scan product bar codes while in your aisles to obtain manufacturer reviews and user-generated content.

You can allow your customers to buy right from their smartphone and pick the product up at the nearest present location.

You can add Wi-Fi in your stores so that using your downloadable app as a shopping companion in your store is facilitated and controlled by you. These high-speed connections can be used to stream video or collaborate with product experts or customer support representatives. The list goes on and on and on.

IN SHORT, smartphones represent an incredible opportunity for you to engage your customers. Yes, they can be threatening to your business but just like in biology, the threat must be used as the defense.

Do nothing, and your stores will be increasingly be populated by bar code scanning smartphones using your shelves to only obtain the best price. Do not be anyone’s “Off Balance Sheet Showroom.”

Dave Sikora is CEO of Digby, Austin, TX. Reach him at [email protected]