Given the plethora of mobile apps on the market today and the estimated $60 billion revenue stream they are expected to generate by 2017, why would businesses spend resources on non-product-specific apps? To build trust and brand awareness, according to new research released this month by MIT’s Center for Digital Business.
Two studies aimed at assessing the impact of so-called “benevolent apps” on consumer brand preferences, found “strong value” for the business in developing customer-centric apps where product messaging may be absent or very subtle. The research, conducted by CDB chair and MIT Sloan Professor Glen Urban and Fareena Sultan, Professor of Marketing at Northeastern University, found that the apps “provide consumers with helpful information that can increase trust in and preference for a company.”
In fact, “companies should devote resources to developing, testing and promoting” these apps along with others, the researchers conclude in an article in the Winter 2015 issue of the MIT Sloan Management Review.
Advancing Consumer Interests
While many companies’ smartphone apps and advertising today successfully “focus on pushing product sales,” the authors write that one of the most effective uses of mobile media “will be apps that are designed to build trust.” Urban and Sultan call these benevolent apps because “their value is not directly tied to selling products but rather to advancing consumers’ interests and advocating for their needs ahead of a company’s own corporate profits.”
Apps --such as Kraft Food offering recipes, or The North Face offering snow reports-- build trust by providing consumers with information that help them solve problems or make decisions. Indirectly, the authors say, advice, services and conveniences can improve users’ image of the brand and increase their willingness to purchase products. A wide spectrum of benevolent apps exists. (See chart).
At the left end of the spectrum on the chart are apps whose goal is to sell product. On the right end are apps that provide benevolent service. In between are apps that display differing degrees of benevolence.
Two cases were studied in depth to evaluate the effectiveness of various approaches. For Liberty Mutual Insurance in Boston, researchers set out to determine if and how a benevolent app could build brand, customer preference and sales potential. In the second study, for Suruga Bank in Japan, they attempted to determine the impact of benevolent apps in a global setting with a different cultural context. To do this, they developed a mobile app to help Suruga customers select new homes.
Specific analysis and results can be found in articles and blogs here and here, but in both cases, customers surveyed after the apps deployed were much more likely to purchase services from the company than they were previously. The authors conclude that: “Using mobile apps that exude benevolence can significantly impact sales at a low cost — and thus improve profitability,” even in diverse cultural contexts.
“Benevolent apps lead to increases in perceptions of trust, thus promoting consideration, preference and intention to use the brand. These are powerful forces that can lead to increased revenue from trusting consumers who perceive that the brand has their interests in mind.”
Glen L. Urban is the David Austin Professor of Marketing at the MIT Sloan School of Management and chairman of the MIT Center for Digital Business. Fareena Sultan is a professor of marketing at Northeastern University’s D’Amore-McKim School