Hello Dr. Heinze. I am about to launch an App in the area of insurance. I read some of your papers and would very much appreciate to get some input from you on how to successfully roll-out my App.
This is indeed one of the most exciting questions in m-Commerce.
Like most other technologies, there are numerous influencing factors underlying App success and determine its acceptance in the market. My answer should serve as a summary of the most relevant variables, which should be considered prior to conception of an App in order to early identify weaknesses and to support high consumer adoption. The recommendations are based on my experiences and are complemented with knowledge from science about technology adoption. My considerations exclusively focus on B2C-Apps, and therefore mainly address prospects and customers. However, all measures are derived from the science about technology adoption and thus widely also apply to internal apps and other digital assets such as web portals and wearables. It has to be noted that some variables may be overlapping with others, but are kept to provide a comprehensive insight into app acceptance as well as resistance. Finally, each App has to be considered individually and may require specific adjustments and might deviate from the recommendations stated in this text to suit the specific market. To make my recommendations more tangible, I will repeatedly take the example of a motor claims app, which allows to manage claims via smartphone.
The summary at firstThe success of an app is a complex interplay of multiple factors, which all play an essential role to enable consumer adoption.
In the pre-adoption phase, customer unawareness or resistance has to be overcome. Therefore, the diffusion of innovation has to be considered to successfully conquer the market. This means especially innovators and early adopters must be addressed by the content of the App. To reach the target group multiple ways of communication should be used. Especially, email campaigns are useful. Therefore, customer data consent for digital communication has to be retrieved in the first step.
Second, opinion leaders have to be addressed to multiply the knowledge about the app. In this context, agents and brokers are of high influence, but should be incentivized to make sharing your app appealing. To support word-of-mouth customer should be provided with features to make their usage visible and shareable.
Third, it is important to find the right moment to sell the app, which is most often the point of pain, when the customer need for the app reaches its peak.
Fourth, effective start-up campaigns are mostly needed to give the app the initial push.
Fifth, customer should be provided with free trials, to test an app without being bound. To facilitate the behavioral transition, meaning the adoption of a new behavior and leaving the old habit, the costs for transition have to be reduced. This particularly comprises transaction costs, uncertainty costs and sunk costs.
Finally, avoid a habit slip by tying the new behavior to situations to which customers are accustomed to and incentivize the desired behavior to intensify the new behavior of using the app.
In the pre-adoption and adoption phase, a clear usefulness of the app should be demonstrated, which is the most important factor to reach consumer adoption. Therefore, the use case of the app need to be relevant, useful, exclusively attractive and suitable for apps. For example in the insurance industry risks play a significant role, due to complexity.
There are five dominating risks: performance, time, financial, privacy and psychological risk which have to be taken care for. Especially, user friendliness, trust, information and service quality are counteractive to the effect of risk and lower the barrier to app adoption.
User friendliness is mainly determined by the design, navigation, response time, data security and privacy, availability of service, functionality, multimedia experience, payment options and the amount of enjoyment while using the app.
Trust is strongly influenced by the brand reputation, but can also be increased by building up a trust environment e.g. through using key trust indicators such as trust seals.
For information quality a suitable format of information in an app is essential to succeed. Next to this, information need to be useful and relevant, accurate, complete, up-to-date, easy to understand and must be available at the right place and time in the app. A hierarchical structure of information allows a fast processing for the most innovative consumer, but also satisfies the demands of customer with higher need for information.
Finally a high service quality can compensate for given risks. However corresponding to the common 'research online, purchase offline' behavior in insurance, both technology generated and technology mediated service has to be implemented.
In the post-adoption phase the new habits are intensified and a sustainable behavior arises. Therefore the realized use cases need to be based on frequently reoccurring and time critical tasks to intensify the relationship with the app.
Updates are required to stay the most attractive alternative on the market.
Furthermore, activity can be intensified by triggering and incentivizing usage behavior. For the ladder gamification provides useful approaches, but has to be used with care.
In the following I will explain each point more in detail.
The following picture shows a summary of all named factors according to Heinze and Thomann (2015):
The phases of technology acceptance:To create a successful App, it has to pass three phases of adoption: the pre-adoption, adoption and post-adoption phase. In each phase different factors are of particular importance. This suggests a structured approach of how to launch and manage an App.
PRE-ADOPTION - Unawareness and resistance
The pre-adoption phase is marked by consumer unawareness and resistance towards the product. Customer have no idea or a rough estimation of the service characteristics. This state of uncertainty impedes adoption and poses a high challenge. The reasons are manifold. Heinze, Thomann & Fischer give an overview of published barriers in literature.
Three forms of resistance have to be addressedThese variables finally lead to three forms of resistance – Active resistance, passive resistance or resistance through limitations. Active resistance is marked through lack of motivation or dislike of the product. Passive limitations occur when the consumer slips back into old habits through mindless repetition of these old habits or lacks a strategy on how to use the new service. Personal limitations impede the usage e.g. through lack of time, lack of opportunity or “forgot to use the product” cases and on the product side through system failure, damages or too much costs. To overcome each form of resistance, the following measures can be applied.
Address the right target groupTo define the right target group, it is important to know the way innovation distribution works. In general, innovation enter the market via innovators and early adopters. These innovation drivers have to be identified by the project prior to the conception of the App. Each App should be tailored to the needs of innovators and early adopters to foster a fast diffusion of the market. This implies for instance, that established design standards in the market, such as using intuitive icons instead of textual descriptions should be applied. The design should match the most advanced standards in the market – created for the future - and not be overblown by instructions for late adopters. Yiu, Grant & Edgar (2007) review central characteristics, that are prototypical for adopter and can serve as criteria to provide compatibility with the target group.
Reach the target group
Reaching the target group is most essentialThis is the most essential point in the process of launching an App. Many Apps are not adopted, because consumer are just not aware of their existence and their benefits. However, different approaches can help to promote the introduction of an App.
Getting Data Consent to contact customer via mail and mobileAt first, for new and existing customer getting data consent in order to reach out to customer via mail is essential to avoid the media break later on. Therefore, customer need to submit their email-address and mobile number, when signing in to the app. An optional opt-in for the newsletter should be placed. In general, informing via email creates higher response rates then letters itself, since there is no media break (at least for people accessing their mails on the smartphone). Using text messages can even be more effective, since SMS still receive high attention from customer.
Identify opinion leaders and spark the word-of-mouthSecond, identifying the opinion leader who communicate the usefulness of the new App is an important measure. Here agents and broker play an important role, since they have the most meaningful touchpoint to customers. However, if agents and other opinion leader see no benefit, they will not promote the App. So every client referring to clients should be incentivized for his or her word-of-mouth, i.e. getting scores for every reference, which can be used to acquire products or get discounts. Important components to facilitate word-of-mouth is the implementation of “oberservability” and “shareability” features, which allow consumer to share their behavior, actions etc. with their social peers, i.e. via sharing buttons from Facebook, Twitter or WhatsApp.
Find the right moment to sell the App Third, finding the right moment to sell the app is a key to success. This means for example selling a health app, when an injury occurs, selling a motor app, when a claim has to be managed etc. is the most efficient selling point. Therefore, every App related action of a customer should be addressed by stimuli to download and use the related App, meaning to promote the App when the need curve of the consumer approximates its maximum. This piggyback tactic also helps to establish a new habit by connecting a cue to the app in the moment where it`s needed.
Use effective start-up campaignsFourth, especially for prospects strong marketing campaigns are needed, to trigger a download. There are plenty of marketing approaches, which are not treated in this guidebook. It should however be clear, that effective marketing campaigns are needed as start-up support in order to reach a critical mass and to drive the process of market penetration in the App Stores.
Create TrialabilityFifth, to avoid the pig in a poke effect, customer want to test the functionalities of a new app or product before adopting them by i.e. buying a long-term insurance or settling a claim. This so called trialability culture, giving customer the possibility to experience a service, without binding the customer, has to be provided in an App to reduce uncertainty costs.
Facilitate the Behavioral Transition
Optimize the cost-benefit ratio To facilitate the transition from existing behavior (going to the agent) to new behavior (using the app) it is required to overcome the status quo bias, which delineates peoples’ preference to maintain a given status or situation and to stick with the current choice, as long as their demands are satisfied (Samuelson & Zeckhauser, 1988). Therefore, app provider have to optimize the perceived cost-benefit ratio of the app. This suggests the following steps:
Reduce Transaction, Uncertainty and Sunk Costs: Prior to launch the app provider have to thoroughly analyze which costs arise for customers to adopt the new app. The following costs are particularly important:
Transaction costs occur whenever the switching costs exceed the efficiency gain retrieved by the superior alternative. To reduce transition costs a high information, service and system quality have to be established. In example numerous of service features such as guidance via video and audio tutorials, info buttons, FAQs, search functions, customer hotlines, chat (personal or bot), email and other supporting tools which have to be available at all time. Information should be organized, accurate, concise, timely etc. and the system free of errors, easy to use, and secure etc.
Uncertainty costs arise when risks induce uncertainty in the decision process, for instance concerning the reliability and completeness of information that the app provides. To mitigate uncertainty trust and assurance seals, guarantees, product trials, re-assurance through product reviews and external information sources can be presented to provide transparent conditions.
Sunk costs commit consumers to the status quo based on the desire to preserve prior resource investments by engaging in further such commitments (Samuelson & Zeckhauser, 1988). The effect can be reduced by making an app compatible with existing behavior and by choosing a successive introduction of new products. In initial versions established processes in the consumer interaction should be copied as far as possible and without negative impact on the app value, to make consumers’ acquired skills in other channels reusable for the app. In example, if people usually start with research online as common for ROPO customer, provide them with a selection of valuable information (see also information quality) in the first step, which should be displayed inside the App to keep customer in the App. Then provide personal service to support the customer in complex queries and to fill knowledge gaps in the second step. In the third step lead customer back to the new behavior - signing the contract in the app and do not provide another option – otherwise the new behavior will not be learned. This successive introduction is common in marketing and can be easily applied in Apps as well.
Avoid a Habit Slip: Many marketing researchers despair from customer responses in market tests which assure a high intention to use the product, but are completely uncorrelated with the actual behavior of the customer subsequent to launch. A basic reason for this behavior is the so called habit slip. Customer miss to use the new service due to a lack of strategy to integrate the new behavior or due to mindless habitual repetition of past actions. To avoid habit slip, new services have to be introduced within everyday contexts (see also finding the right moment). Cognitive strategies should be build up by advertisements, which tie the new service to an existing behavior in order to promote adoption. Especially effective is habit cueing, where consumer piggyback use of a new product onto an existing one (e.g. first brush, then floss, Labraque et. al 2017).
Incentivize Desired Behavior:
When the customer has shown the desired behavior, e.g. managing a claim in the App incentivize him duly. This means that at first show symbols of victory, such as a green screen and a check mark. Highlight all benefits retrieved through this purchase, i.e. by giving scores leading to discounts or by showing statistics saved money, saved time (i.e. your car will be reimbursed in half of the time), saved paper, saved trees, reached bonus, reached coverage / reduction of coverage gap, information about the process such as time until task was completed, words read, buttons clicked, give feedback about claim status etc. A good example is google maps, which incentivizes you through different mostly positive statistics for using its service after having reached the destination. If you have nothing to show here, reflect about the usefulness of your app. Though incentives are supportive for transition, they have to be used moderately to preserve an authentic effect and to not distract user from using the core functions in an app.
PRE-ADOPTION AND ADOPTION PHASEWhen the pre-adoption phase is almost passed, and the user has decided to download and use the app, it comes to a detailed exploration of the app in the adoption phase. Here an intensive interaction with the app starts and concrete attributes of the app are evaluated. The most important challenge in this phase is to deliver a sense of usefulness of the app.
To create attractiveness the customer must perceive the app as relevant and useful The creation of usefulness has the most significant impact on the success of an app. To create usefulness the following variables have to be satisfied.
Relevancy: At first, to use the app customers have to perceived a relevance of the app based on inherent needs, values and interests. Settling a car claim conveniently via app for example is important because of getting financial reimbursement, having a working car to stay mobile and also to save time.
Usefulness: To make an App effective it should reveal significant gains compared to prior ways of solving the task. The app needs to assist the customer to meet better decisions, to improve his or her performance, productivity and task quality, to save money and to make life easier. Also a consolidation of multiple single purpose apps can provide extra value. The critical amount of useful items has thus to be evaluated during the conception phase.
The app should be exclusively attractiveNo Alternative Attractiveness: To succeed the app further needs to be perceived as being better than its precursor, than other apps in the store and than other available channels. More in detail, this implies to offer a unique advantage to the customer, i.e. a higher quality and a higher value than prior apps or apps of other competitors. Furthermore the app needs to be perceived more attractive than other channels (i.e. agent or PCs) from a significant group of user. As an example information apps which give valuable information about insurance products, appear to be useful. However, have accustomed to start their research by using established search engines (i.e. google) instead of searching in an app. They provide a variety of sources, more objectivity and are highly flexible. For product research, this leads to higher attractiveness of the alternative and has to be taken into account, before such an app is built.
The use case of the app has to be compatible with the characteristics of the technology Task-Technology Fit: The task must be compatible with an app, meaning that the app must have suitable attributes (i.e. mobility, ubiquity etc.) to efficiently solve the challenges of the task. In example, people perceive very low compatibility between the task of buying a life insurance and the mobile app as technology, for the reason that the high complexity and the high uncertainty of life insurance creates a high need for information, which is currently not believed to be satisfied by an app (i.e. because display to small, not enough advice, data insecurity etc.). However, less complex areas such as travel insurance or car insurance reveal a higher fit and thus are more suitable to be sold via App. Nevertheless, buying insurance via mobile device has not yet reached a good fit, but many features which are consumed along with insurance. Better fitting features are a document safe in a travel app, a bad weather alert in a car app, a vaccination status overview in a health app or inventory for domestic assets in a home app.
Eliminate the Risks Even if the App is useful, emerging risks can cause rejection of the app. There are particularly five risks which have shown to impede app adoption. Performance Risk describes the possibility of the product malfunctioning and not performing as it was designed and advertised and therefore failing to deliver the desired benefits. An example is a skiing-app, which provided coverage for ski-equipment, but just in a locked car on in a locked skiing-room. This neglects the most relevant cases such as theft in front of a ski hut. Time Risk delineates the potential loss of time associated with using the App to for example file a claim, doing research and making a purchase, only to have to replace it in case it does not perform to expectations. The tolerance for time consuming processes is much lower in m-commerce as compared to e-commerce. Therefore, though long policies should be available, those information can be summarized and pre-indicated by key signals, which allow making a decision without investigating every detail.
Privacy is the potential loss of control over personal information, such as when information about you is used without your knowledge or permission
Financial is the monetary outlay associated with the initial app acquisition costs, purchase price as well as the subsequent maintenance cost of the product, and the potential financial loss due to fraud.
Psychological risk capture the feeling of tension, frustration, anxiety or discomfort which is caused by the interaction with the app and leads to avoidance of the service.
Trust can acts as an antagonist to given risks Trust is often seen as antagonist to the risks. It can accelerate customer adoption, by providing user an initial idea of which amount of quality of service or product can be expected. High trust reduces customer’s need for research and speeds-up the decision making process. Next to a trustful brand name, other key indicators for a trustful app are trust and assurance seals (i.e. test seals), giving a guarantee, social recommendations, reviews and assistance through service can increase consumers trust. However, the amount of trust elements has to be adopted to the amount of complexity to not distract customer from using the app. As a rule of thumb - the more complex the use case in the app, the more trust elements are required.
Create User Friendliness
User friendliness is determined by design, navigation, response time, data security and privacy, availability of service, functionality, multimedia experience, payment options and the amount of enjoyment while using the app
The second most important factor which influences customer adoption after usefulness is the usability of that app. To establish a high user friendliness, the following criteria have to be considered:
Design: A clean and lean design following the KISS principle (Keep it short and simple) is highly recommendable to attract early adopter. However, there is no one design, but the design has to be adjusted along with upcoming trends and needs to be aligned with the corporate identity (also brand design).
Navigation / Intuitiveness: Navigation can be facilitated by having navigation panes which are available on every place in the app. The navigation should be in line with common standards in the app world, to provide an intuitive user interaction. For processes a status bar is helpful to give customer a sense of control and transparency. Buttons and icons should be intuitive and match given market standards. Speaking links such as “What is in for me” can help to establish an understandable dialogue and provide a feeling of social presence.
Response Time: Fast responses to actions free of lagging or jerking sites are mandatory for modern apps.
Availability: the App should be free of downtimes and accessible at any time. Availability rates of 97-99% are acceptable. The same applies for service, at least for the technical generated service in the app (see Service Quality) to exploit the smartphones advantage of ubiquity.
Multimedia Experience: Apps provide a lot of digital features, of which should be made use to provide a multimedia experience and create an innovative appearance.
Convenient Payment: Most people still have concerns to do financial transactions via App. Using common payment options reduces concerns. Especially direct payments e.g. via Paypal is a must for digital transactions. Giving feedback and control via Email also reduces the feeling of financial risk. Finally, transactions should of course be free of errors.
Creating enjoyment / Playfulness:Enjoyment can be very specific for different target groups and areas. Think of the Ikea App which projects furniture into your living room by using augmented reality. In the insurance branche similar approaches were used to document car accidents.
Provide Information Quality
To provide a high information quality the content of the app must be useful, relevant, accurate, complete, up-to-date, easy to understand and be available at the right place and time
The information quality arises from all material that appears in an app and should provide all information needed to make a well-informed decision. To achieve this information must be useful and relevant, accurate, complete, up-to-date, easy to understand and must be available at the right place and time in the app. The format of information, e.g. audio stream, video tutorials, text passages etc. must be chosen suitable to the technology, which is particularly important to reduce concerns about the effort, privacy, performance or else. Showing long text passages, using small fonts or long bullet lists often creates a feeling of poor ergonomic and should be avoided.
Information should be organized in hierarchies, with the most superficial in-formation on the first level, which supports fast decision-makers. On the second level extra information can be provided to satisfy customer with more need for information. This can be continued until the greatest detail is shown. It is important to not impede the user experience by too much information. The first level should try to convey a lean and clean design.
In many contexts providing a structured guidance for user has proven to be useful. A smart way of doing that is to simulate a dialogue asking the custom-er clear questions, which can easily be answered by selecting a given option (i.e. Are there further persons you want to insure), instead of showing the fields by default. This tailors the shown site to the customers’ needs and reflects the way how customer are used to interact with their agents and thus facilitates habit transition.
From an insurer perspective, for a professional appearance it additionally required to be political and legally correct, meaning that the app should not show personal, ideological or political opinions.
Provide Service Quality
To implement a high service quality both technology generated and technology mediated service need to be provided
Service Quality denotes the extent to which a website facilitates efficient and effective shopping, purchasing, and delivering of products and services. To establish a high service quality different kinds of assistance have to be implemented. Service in apps is a mere face to screen service, which is either mediated through technology or entirely generated by the technology. For technology-mediated service those cues can appear in the form of hotlines, email or live chat functions, while technology-generated service refers to features such as FAQs, navigational tools (i.e. search engines) or test seals. Those features are especially needed to reduce risks, which occur during the interaction, meaning that service increases customer self-confidence to handle the task in the app by mitigating uncertainty. It is important that both technological mediated and generated service are integrated, since just both together improve usage intention of the app.
The post-adoption phase captures the sustainability of apps, meaning the persistence of an app in terms of usage. This phase is marked by new habit manifestation, i.e. buying day-based bicycle insurance instantly on the way.
Find Frequent Use Cases
To reach a sustainable usage, the use case realized in the app should be a frequently reoccurring task. This is a point where many insurance Apps fail, because their usage is very infrequent. An app that offers the possibility to file a claim seems useful on the first view, but is just rarely needed. The probability of slipping back into old habits, by calling an agent is high. The same applies for insurance selling apps, health features such as a vaccination overview, contract overviews, agent calendar functions, emergency features and so on. To increase the task frequency, these single or few purpose apps have to be consolidated to exceed the critical threshold of usage frequency to persist on the customers smartphone, though single purpose Apps were trending recently.
Find Time Critical Use Cases
The provided use case should be critical to time, meaning that it has to be solved instantly when it occurs or at least provides enough leeway to be postponed. An example is the need for navigation, the reading of news, the weather forecast, listening music, social chats. These are all use cases which are based on daily impulses and cause people to solve them in near time, suggesting a high fit for an app. In contrast buying a life insurance or making the tax declaration are not impulsive and thus reveal low a suitability for an app.
Prevent Alternative Attractiveness
Updates should be run on a regular basis to stay the best alternative in the marketAlso in the post-adoption phase it is of high importance to keep track with new market developments. It is therefore necessary to run frequent updates and to stay up-to-date to become or stay the most attractive solution in the market.
Activation triggers help to remind customer of using the app
A frequent usage can be triggered for example by pushing notifications and attaching small news bullets to the app icon (cf. WhatsApp). However, this must be treated cautious, since non relevant content that is repeatedly pushed to the smartphone will lead to the deletion of the app or blocking of push notifications. For instance pushing new articles about life insurance or remember somebody to finish the health tutorial, which he obviously does not want to do in the moment, will bother the consumer. Pushing information about a new message from the agent or an upgrade of the insurance coverage gained through high app usage of the customer is more valuable and will increase usage of the app.
As mentioned earlier incentivation can increase customer retention, frequent usage and activity of customer. Gamification is a useful approach, but has to be treated with care
To incentivize customer a valuable means is to use gamification. It can increase customer retention by increasing the involvement of customer. Very common is the provision of badges, which have to be gained and getting scores for usage. In most cases this indeed helps to increase usage motivation in the short run. However, gamification has just a positive and sustainable effect if it is a) related to the general app context, b) the rewards are relevant for the customer, c) the rewards fulfill a concrete need and pose a concrete benefit for the user and d) the rewards are transparent for the user. An example could be a telematics app where a user can gather scores each time the telematics feature is used. However, a scoring system is meaningless, unless it can be used for getting discount on the own car insurance premium or to get a higher coverage when a certain score is reached. Getting badges for the driving style might be fun, but also needs to be relevant for customer. People often like the competition in this matter – showing a highscore list for the driving style in the same age group could thus be appealing. Another method is to activate more features, the more scores a user has reached. Finally, the options are manifold, but have to be tied to a deeper sense to affect the customer retention.
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