Stupid Marketing Comments

Every once in a while, I come across a marketing-related claim or statement made in an article, blog post, or tweet that makes me think: “That’s not right!”

Well, hold on. That’s not exactly right.

It doesn’t happen “every once in a while,” it happens all the freaking time.

Keeping track of these stupid marketing comments could be a full-time job. Here are a few that wedged themselves into my field of consciousness over the past two days.

“Mobile Users Click But Don’t Convert”

According to a report from Macquarie Group, search advertisers experience higher click-through-rates (CTR) for mobile phone and tablet search campaigns than for desktop search campaigns. But  mobile conversion rates were at just 31% of the average desktop campaigns’ conversion rates. The study found that the average cost-per-click (CPC) on mobile phone search campaigns was slightly higher than for desktop search campaigns, but that tablet campaigns were slightly lower than desktop search campaign CPCs.

My take: Exactly who do you think “mobile users” are? Aren’t they pretty much the same consumers that use the online channel and tablets? Sure, there may be some consumers who use the mobile channel and don’t use the online channel or tablets, but how big could that segment be?

Not only is it mistaken to conclude that “mobile users click but don’t convert,” it’s not even helpful to point out that CTR or conversion rates differ across channels. Well, not unless you’re comparing apples to apples in terms of the types of campaigns run across channels, and the scope and scale of campaigns.

“Apple spends $5.5 billion on marketing, while Microsoft spends $17 billion. Whose brand is stronger?”

A FastCoDesign blog post claimed that: “The decreasing importance of promotions in a digital economy explains…why Apple can build the world’s leading brand in by devoting only $5.5 billion (out of its 2010 revenue of $65 billion revenue) to sales and marketing, whereas Microsoft spends more than three times as much, $17 billion out of a total revenue of $62 billion and still has a weak, unexciting brand.”

My take: Don’t ever compare what one company spends on marketing to what another company spends. Here’s why:

1) You don’t know what they’re including or excluding in their definition of marketing.

2) One company’s marketing goals and objectives may be very different from another company’s (even a competitor’s) goals and objectives. Apple is a primarily consumer-focused company, while Microsoft is heavily focused on selling to enterprises. The marketing investments necessary to achieve their differing objectives can’t be measured by looking narrowly at their “brand.”

3) At any given point of time, one firm may need to spend more even if everything else was equal. If Microsoft’s only objective was to improve its “weak, unexciting brand,”  then don’t you think they would have to outspend Apple to make up the gap? Of course it would

“Promotion is the one P whose importance is clearly diminishing.”

From the same FastCoDesign blog post, comes this claim, regarding the 4Ps of marketing. Per the blog post: “What is interesting about all these forms of promotion [WOM, SEO] is that they, compared to, say, successful TV ad campaigns from the past, are predicated on the existence of a great product. People only recommend products they feel strongly about. PR is hard without something interesting to say. And a site’s position in Google rankings is based on how many hits it gets, which is a reflection of how valuable and interesting it is. Even paid ad words are structured according to relevance and popularity. The promotions of today are nothing without a great offer to back it up.”

My take: Huh? Can somebody translate that into English for me? While Wikipedia might not be the best site to source here, according to the site, Promotion — in the context of the 4Ps of marketing — refers to “all of the communications that a marketeer may use in the marketplace. Promotion has four distinct elements: advertising, public relations, personal selling and sales promotion.”

Even if you only looked at “promotion” in a narrow sense, when you consider the number of firms using Facebook to run sweepstakes and contests, it’s hard to conclude that the importance of promotion has diminished. 

But in its broader definition, it’s hard for me to understand how anyone could believe that the importance of “all of the communications that a marketer may use in the marketplace” has diminished. With the proliferation of channels and ways to communicate — two-ways — with customers and prospects, promotion has never been more important. 

And even that’s a stupid comment. Because the idea behind the 4Ps is that they’re levers that marketers can pull to influence the demand for their product. Arguing that, in some generic sense, one P has disappeared or diminished doesn’t make any sense. The importance of any one P ebbs and flows and varies by product, company, and economic situation.

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If you know anybody willing to pay me to do this full-time, let me know. The number of stupid marketing comments coming down the pike is hard to keep up with.

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The Future Of Movenbank

If you need a refresher course on what Movenbank is, allow me to steal this passage from TheNextWeb:

It’s an exclusively online, new model of bank that uses social, mobile and gamification technology. To create a bank focused on utility and customer engagement, Movenbank created an ecosystem called CRED, which uses a combination of mobile technology, social media and behavioral game theory to help consumers save, spend and live smarter when it comes to their finances with a built-in reward system.

Here’s how the Movenbank story is going to play out:

Act I: Start-up generates positive press and attention for promising to create new banking model. New firm takes precautions to not get overhyped (like a previous new banking startup) too far in advance of its launch. Fledgling firm signs up 100,000 potentially interested customers.

Act II: With much fanfare, Movenbank launches, but small percentage of interested prospects sign-on. Management team is undaunted as they know full well that too many customers on day one might be more detrimental than helpful. After all, on day one Federal Express flew one plane, not thousands. 

Act III: The dark and lonely times. Movenbank works diligently to acquire new customers. Slowly but steadily new customers come on board. People begin to question the firm’s business model. 

Act IV: Movenbank prospers. Customers find that they can earn their way to better rates and fees, and grow with their existing account instead of switching. More importantly, customers are profitable. While other (i.e., traditional) banks have varying degrees of success driving up account profitability, Movenbank is able to do so through a blend of interchange, merchant-funded incentives, and yes, account fees. As the new model is validated, kinks are worked out, and word of the success of a new banking model spreads, helping to drive new customer growth at a much more effective and efficient rate. 

Act V: A megabank acquires Movenbank.

Huh? What? Why would a big bank acquire Movenbank? 

It’s a classic innovator’s dilemma. Today’s banks would desperately like to reinvent their business model. But, as they say in Maine, “you can’t get there from here.”

But why will Movenbank succeed?

It’s not because it’s a mobile-dominant plastic-less approach (I predict that Movenbank will one day issue plastic cards).

Movenbank will succeed because the product offer is more appealing, simpler, more transparent, and more fair than the [checking account] product structures on the market today.

The OccupyWallStreet people might not like to believe this, but the real 99% of people in the U.S. are OK with paying fees for the products and services they receive. What this majority wants, however, is perceived value for the fees paid. THAT’S the problem with the banking model today — mismatch between between fees paid and value received– and the problem that Movenbank is trying to solve for.  

In addition, the timing helps. While it’s always the right time for some firm to introduce innovation into the market, now is a particularly good time. It’s the perfect storm of economic conditions (producing strong consumer dissatisfaction with banks in general), technology development and — most importantly — demographics. 

Ten years ago, even if the economic conditions and technology had been in place, the demographics wouldn’t have been there. Today’s Gen Yers were just too young ten years ago to make a Movenbank possible.

Which isn’t to say that Movenbank’s only customers will be Gen Yers (just ask PNC about the demographics of its Virtual Wallet customer base). But Gen Yers need more than mobile access to their accounts, or a pretty interface. They need a new product. A product that reflects the fact that their spending and credit needs are rapidly changing.

The organizational walls between debit and credit products in most established financial institutions prevent them from creating and developing new solutions like the one that Movenbank is promising to bring to market.

By Act IV, big banks will take notice of Movenbank and realize that Movenbank is:

  1. The “starter” account they should have created for entry-level customers, and
  2. A platform and business model upon which they can migrate their stale and tired business model.

This, by the way, is why I don’t think Bank Simple’s path is similar. Bank Simple may succeed at creating a new interface for banking customers, but the underlying structure and business model of banking products remains in place. Maybe I’ll be proven wrong here, but I see Bank Simple as simply (pun intended) putting lipstick on the pig.

With that said, I may be wrong about Movenbank, as well. There are a number of failure triggers:

1. Model failure. CRED might not work. From two angles, actually. One is that Movenbank may not be able to collect a sufficient amount of data to validate the CRED concept. The other potential failure angle is that Movenbank may not be able to recalibrate CRED over time. This is what happened with FICO. A 600 score was significantly more risky in 2009 than a 600 score was in 2002. 

2. Technology failure. Movenbank is putting a lot of faith in the mobile channel. Not that it’s misguided faith. But the mobile channel– most importantly mobile payments and mobile customer service — has yet to face its toughest performance, reliability, and risk/fraud management tests. 

3. Service failure. You know why ING Direct succeeded as a primarily online-only bank? Because savings accounts require little customer service on an ongoing basis. That’s not the path Movenbank is taking, however. Quite the contrary — it wants to be the provider of the primary spending account. And with a heavy-transaction product comes heavy-customer support needs. Will Movenbank have the customer service capabilities to support a sizable customer base? We’ll see.

There are three additional failure triggers that I can define, but won’t talk about here. If Movenbank wants to know what they are, it knows where to find me. 

Bottom line: I’m bullish on the Movenbank concept. Sadly (for the industry) there aren’t enough people thinking about how to (constructively) reinvent the banking model. Too much focus is on improving the “customer experience” without fixing the underlying cause of the experience problems. Or blowing it up completely.

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Check out Snarketing 2.0: A Humorous Look at the World of Marketing in the Age of Social Media (print or Kindle format):

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Tectonic Shifts In Banking Channel Preferences

The American Bankers Association (ABA) released the results of its 2011 survey of US consumers’ preferences of banking channels. The survey of more than 2,000 U.S. adults found that:

62% of adults prefer to use the online channel to do their banking — up from 36 percent in last year’s survey. And for the first time, the majority (57%) of customers 55 and older say they opt to do their banking online, a significant increase from 20% in 2010. The popularity of all other banking methods has declined since last year’s survey, with preference for branches dropping from 25% to 20% and preference for ATMs dropping from 15%to 8%. The least preferred method of banking was the mobile channel, which dropped from 3% in 2011 to 1% this year.

My take: I have three reactions to these findings:

1.  The shift is too dramatic. I’ve been doing consumer research in the financial services industry for most of the past 12 years — looking at the adoption of online banking, online bill pay, account aggregation, eStatements, PFM, etc. — and I have never seen, year over the year, the kind of change reported by the ABA. 

From 2010 to 2011, the percentage of 55+ year-old consumers that prefer to bank online nearly tripled from 20% to 57%. Why? What the hell happened between last year and this year that suddenly made Boomers wake up to the benefits of online banking?

Even the shift among all adults — from26% to 62% — is huge, but it’s hard to tell how much of that shift is being influenced by the 55+ segment (it shouldn’t be too much if the sample is representative). Did Gen Yers wake up one morning and discover online banking? And are you trying to tell me that a significant percentage of them shifted their preference from the branch and ATM? No way.  

2. We need to ask more specific questions. Whatever the reason for the tectonic shifts in preferences, the results of the study convince me that we researchers need to get a little more specific when asking about channel preferences. Specifically, we need to ask about channel preferences for specific types of interactions and transactions. Eight percent of consumers might say that they prefer to bank by ATM, but the reality is that they can’t do everything they need to (potentially) do with a bank through the ATM. 

3. The mobile number is out of whack. If asked, before I saw the results, to guess what percentage preferred the mobile channel, my guess would have been a lot higher than 1%. I would have guessed that it would have doubled from 3% to 6%. That number might seem to low to you, but keep in mind that only about 15% of US adults are using mobile banking. So 6% of 15% would mean that 4 out of 10 mobile bankers prefer the mobile channel to all others.  But the percentage didn’t double — in fact, it dropped. Very counter-intuitive.

Do Bank Branches Matter? Why The Fed Is Wrong

In a recent Economic Commentary titled Do Bank Branches Matter Anymore?, the Federal Reserve Bank of Cleveland wrote that bank branches matter because a local presence in a market — i.e., bank branches — enables a bank to gather better data about local conditions and make better lending decisions. The authors wrote:

“Bank-customer relationships can overcome [adverse selection in lending decisions]. For banks, interactions with customers allow them to gather information on a customer, so-called soft information, which is not easily captured in a credit score. Banks operating in a local market are also more likely to have information on the local economy, giving them a context from which they can evaluate the future prospects of a borrower that is not readily available to an out-of-market lender. 

Because the gathering of soft information is difficult to do without a physical presence in a local market, the closing of a bank branch is different from the closing of a grocery store. One can still buy oranges, perhaps at a higher cost, by traveling farther to a different grocery store. But one cannot always get a loan by traveling to a distant lender.

We find that low-income homebuyers who obtain their mortgages from banks with branches in their neighborhoods are less likely to default than homebuyers who use banks without a branch in the area or mortgage brokers. These findings suggest that a physical presence gives banks the opportunity to get to know distressed areas better and channel resources to people who can manage them best.”

My take: The Fed is wrong about:

1) Knowing a market. “Knowing” a market doesn’t come from having physical offices (or branches) in a particular market. “Knowing” a market comes from developing a systemic business capability that captures data about a market, and on the impact and results of business decisions made in that market over a period of time.

The “soft” information that the authors refer to — information about spending habits of individual borrowers — is no more accessible to a bank with a physical presence in a market than to a bank without a physical presence.

In fact, I would argue that an Internet-only bank whose customers are heavy users of debit cards actually have better “soft” data regarding their customers financial lives than a branch-oriented bank who customers still rely heavily on cash and checks. Why? Banks’ ability to categorize debit card transactions is more advanced than their ability to analyze check transactions.

2. Correlation and causation. The Fed is confusing correlation with causation. Iit might be true that “low-income homebuyers who obtain mortgages from banks with branches in their neighborhoods are less likely to default than homebuyers who use banks without a branch in the area or mortgage brokers.”

But the only way that the absence of bank branches would be the cause of the default is if applicants applied to both brick-and-mortar and Internet-only banks, and were turned down by the b&m banks and accepted by the branchless ones. This doesn’t seem very likely. 

It’s hard for me to tell from the article, but it appears that the authors looked at data from a selected number of counties in Ohio, comparing 2002 to 2010. Had they looked at California, Florida, or Texas, my bet is that they would have found very different results. In addition, as the authors note, bank branches “have been disappearing in some major metropolitan areas.”

With the economic conditions that existed between 2008 and 2010, it’s hard to conclude that the increase in loan defaults is caused by branch disappearances.

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If the purpose of the article is to convince banks that in order to improve their lending business they need to expand their branch presence, I have to disagree. 

Looking ahead, the opportunity for banks to gather “soft” information about customers and markets will not come from a branch presence. Instead, it will come from the growth in the use of mobile technology — specifically for mobile banking and mobile payments will give the banks much greater insight into spending habits and trends in the markets they do business in. 

So do — or should I say — will bank branches matter? If banks use branches to distribute smartphones to their customers, then the answer is yes. 

Are You Sure You Want To Invest More In Bank Branches?

In its investor presentation regarding its acquisition of ING Direct, Capital One included the following slide:

My take: Are you sure you want to invest more in your bank branches?

June 17 UPDATE: For kicks, I thought it would be interesting to see where the lines would go if the trends extended out to 2011:

Observations/thoughts:

  • Percentage of consumers banking at a branch (at least once in prior 12 months) dropped nearly 30 percentage points since the beginning of the century.
  • The growth rate in online banking leveled off in the mid-90s, then jumped in early 2000s. Why? My guess: The first crop of Gen Yers reaching adulthood.
  • The debit card percentage is misleading. Nine of ten checking account households might have a debit card, but that doesn’t mean that nine of ten uses a debit card.
  • There’s something wrong with these estimates. Why? The numbers I’ve seen from various sources suggests that the percentage of US households that are unbanked is anywhere from 5% to 15%. Even at the low end, that means that 100% of US households could not have been banking in a branch throughout the 80s and into the 90s. I think the chart would have been appropriately labeled “Percent of U.S. banking households.”

 

The Impact Of Mobile Banking

Ten years ago (and by the looks of the picture on the report, at least 10 pounds ago), I wrote a brief titled Banks Cutting Costs Should Cut Mobile Finance.

At the time, mobile banking was making its first appearance at a number of banks, and the crux of my argument was that it wasn’t the right time for banks to be investing in mobile banking capabilities. Why?

  1. Technological hurdles. Smartphones hadn’t quite made it to scene, and the majority of households back then didn’t have data plans.
  2. Consumer preferences. Mobile banking features weren’t important to consumers back then. Believe it or not, only 15% of consumers said they’d check their account balances with a mobile device.
  3. Relationship risk. Bottom line, nobody was going to leave their bank because it didn’t offer mobile banking.

I had a colleague who wrote the opposite — that banks should be investing in mobile banking. The CIO of a large bank flew the two of us out to his firm’s headquarters and had us debate it out in front of his team. I won the debate (of course), and the bank took my advice and eliminated its mobile banking budget. 

A year later, I got an email from the CIO thanking me for making the right recommendation. He told me they redeployed millions of dollars of capital to more important initiatives. 

Roll the clock ahead 10 years, and I’m still an analyst writing about mobile banking. But man oh man how my tune has changed. 

Aite Group just published a report I wrote called The Impact of Mobile Banking: The Case for Mobile Marketing. I always walk a fine line when I blog about reports I write because I can’t give away too much. But I will share two conclusions from the report:

  1. If you think that mobile banking — like online banking and online bill pay before it — is a way to improve retention among more affluent customers, you’re seriously wrong.
  2. Mobile banking will have a detrimental impact on revenues. 

If you think that these conclusions  sound like arguments for not investing in mobile banking, I’d understand. But that’s not what I’m arguing for. Offering mobile banking capabilities is an imperative — consumer interest and demand is overwhelming and growing. But simply providing mobile banking capabilities — e.g., checking balances, transferring funds, paying bills — won’t pay for itself.

Banks and credit unions must get a whole lot better at mobile marketing — in the form of cross-selling, influencing choice of payment cards, merchant-funded reward offers, and driving mobile payments — in order to recoup their investment in mobile banking. And in 2011 — unlike in 2001 — there’s no putting off this investment to the future.

For more specifics, I’m afraid you’ll just have to read the report.

Don’t Listen To Your Customers

At a financial technology conference this week, in response to a question about the state of mobile banking in his firm, the CIO of a community bank said:

“Maybe we’ll be doing something later this year. We surveyed our customers and only 20% wanted mobile banking.”

This comment has so much wrong with it, it’s hard to know where to begin, but I’ll try:

1. It was bad market research. I’m assuming here that the survey simply asked customers if they wanted mobile banking (or how interested they were in it).  If that assumption is true, then the bank violated the number one rule of consumer research: Don’t ask people a question that they can’t answer.

Think back, for a moment, to when blepfards were introduced. Remember what they felt like in your hands? Remember what they felt like next to your skin? Of course you don’t. Blepfards don’t exist. And because they don’t exist, trying to imagine what it’s like to hold it and feel it is a fruitless effort.

This is what I call the blepfard effect:

Asking people to imagine a situation, a state of mind, or something that they can’t possibly imagine because they have no basis of experience to do so.

For people who interact with their bank online, or prefer to avoid the online channel, and continue to use branches and the call center, visualizing or identifying the potential benefits or added convenience of mobile banking is an impossible task. For people who aren’t interacting with other firms using their mobile device — and despite what you might have heard, that’s still the majority — anticipating the benefits of mobile banking is difficult.

2. The CIO should be reprimanded for dereliction of duty. Guess what, Mr. IT Dude: Sometimes YOU have to take the reins and tell customers what THEY need based on your vision of what technology can do for them. My favorite response to an executive who tells me “well, my customers aren’t asking for XYZ” is “yeah, well Apple’s customers didn’t ask Steve Jobs for the iPod.”

Here’s another thing I’ve done at conferences when this subject comes up: I ask audience members to raise their hand if they drive car. Pretty much everybody raises their hand. Then I ask “how many of you pump your own gas?” Pretty much everybody raises their hand. I follow that with “and how many of you wrote letters to Exxon, Mobil, etc. and told them you’d prefer to pump your own gas? And, of course, nobody raises their hand. You CAN get consumers to change their channel behavior. You can use the carrot or the stick, different tactics will work in different situations.

If it’s better for you — as mobile banking promises to be for banks (not to mention consumers) — then sometimes you have to WORK AT DRIVING ADOPTION. Novel concept, eh?

3. 20% — in and of itself — is not an adequate decision point. I have no idea if the 80/20 rule holds true for bank customer profitability. If it does — and if the 20% that wants mobile banking is the 20% driving 80% of your profits, then are you really sure you want to dismiss an initiative because “only 20%” of the customers you surveyed want it?

And what about the customers you want to acquire but don’t already have? Did you think to ask THEM what they wanted? If 80% of Gen Yers consider mobile banking a major criteria for selecting a bank — and if Gen Yers are a segment of consumers you want because they represent a disproportionate percentage of demand (compared to the percentage of the overall population they represent) — don’t you think you should offer mobile banking?

I’ll tell you a little story: Back in 2002 (maybe it was 2003), I wrote something for the analyst firm I was working for at the time that argued that banks should not be investing in mobile banking at that time. My argument was that there were higher priorities to focus on.

A colleague of mine wrote something with the exact opposite opinion.

The CIO of a large bank flew us both down to his office, and in front of his management team, had us each present our case. I won (I guess), since the bank discontinued their mobile banking investment, and a year later, I got an email from him thanking me for convincing them to stop investing in mobile banking because it saved them millions of dollars, with absolutely no negative impact on customer satisfaction or retention.

Fast forward to 2011 and the situation is very different. The rapid adoption of smartphones will drive demand for mobile interactions and transactions (not just in banking but across a range of industries), and — perhaps more importantly — will create opportunities for banks to develop apps to add value in ways they can’t do in other channels (I like to call these “purely mobile” apps).


Taking a pass on mobile banking because “only 20% of your customers” want mobile banking is short-sighted, and, I might add, a bad management decision. For g*d’s sake, don’t listen to these customers.

Oh — and please don’t try and tell me how your customers don’t want PFM.

Lies Consumers Tell

I really like Paymnts.com. Read it every day. Love the content. But I really hate misleading headlines and questionable conclusions on market research. And Paymnts.com may be guilty on both counts.

The site recently ran the headline: 90% of Consumers Would Pay for Mobile Payment Options.

Nothing gets my BS-alert-o-meter buzzing like a vuvuzela at the World Cup like a “90% of consumers” statement.

Reading a little further, here’s what I found: 57% of consumers are interested in having mobile payments on their phone; 90% would pay for the service; 64% would switch carriers in order to have access to mobile payments services; 58% would switch banks in order to have access to mobile payments services.

I’m guessing here that it’s really 90% OF THE 57% that said that they’d pay for the service. Which, if I’m correct in my guess, would make it “51% of consumers would pay for mobile payment options.”

That’s a little more reasonable.  But still not realistic.

I am loathe to criticize or critique any other firm’s market research, and I hope that’s not what I appear to be doing. But the “57% of consumers are interested in mobile payments” is a far cry from what Forrester Research found in April 2010. According to Forrester, “18% of US online adults express interest in mobile payments.”

I don’t know who’s right. Personally, I tend to agree with whoever has the more conservative numbers. Why? Because consumers lie.

There are probably more reasons than the ones I came up with, but here are four of the most common lies that consumers tell (usually to market researchers) in particular order:

1. I’m going to tell everybody I know how great you are. Net Promoter Syndrome Sufferers should stop reading this post, because they’re not going to like this. On the other hand, it’s been said so many times in the past four or so years, that they’ve probably developed a keen ability to ignore this: The gap between the percentage of people who say that they’re likely to recommend your product or service and the percentage that actually do is huge. Survey someone right after a positive experience with a firm, and you’re just asking for an even bigger gap.

2. I make well-informed, carefully considered decisions. I’ve yet to do a consumer study, or seen one from anybody else for that matter, in which any significant percentage of consumers said “I had no rational or logical basis for why I chose the provider I did” or “I flipped a coin, threw a dart, or rolled the dice” or “The woman I talked had a nice blouse on”. Consumers will always tell you that their decisions are the result of intelligent thinking.

3. I’d switch providers for that one thing you just asked me about. If 57% of consumers are interested in mobile payments, why would a higher percentage be willing to switch carriers for the service? What about the fees they’ll get hit with for breaking their contract? When push comes to shove, consumers lie down and don’t do anything. In the world of financial services, the percentage of people who actually pick up and leave their bank because someone else has a service their current bank doesn’t have is small. Really small.

4. I’m willing to pay a lot of money for that if you build it/develop it. Sure, go ahead and ask me if I’d be willing to pay for some new product or service you’re thinking about. No skin off my back to tell you “yes.” But did you ask my wife if she’s going to let me pay for that product or service when you release it? 🙂 More seriously, though, in hypothetical situations, consumers are always more likely to say they’d pay for a service. But what happens when they’re presented with a real-life choice of five add-on services? They might have said in research they’d be willing to pay for one, but they didn’t say they’d be willing to pay for all five, at the same time.

But hey, don’t let me dissuade you from thinking that 90% of consumers would pay for mobile payment options.

Mobile Payments’ Killer App

The term “killer app” gets thrown around a lot, so here’s what I’m thinking it means when I use it: An app that drives a step function increase in the adoption of a technology.

Spreadsheets are the best example of a killer app that I know of.

It might be hard for many Gen Yers to imagine what the world was like before the Internet, let alone before PCs. But when PCs first arrived on the scene, their widespread adoption was not a slamdunk. After all, we had word processors for word processing (duh!) and mainframe and mini computers for geeky database stuff. But until PCs came along, people who had to work with a lot of numbers had to rely on an ancient device called a calculator.

Although calculators were pretty  good at making individual computations, people needed to make series of calculations and….you know all this already, don’t you?

And so the spreadsheet was born. And it was the spreadsheet that became the killer app that  led to the widespread adoption of PCs.

Roll the clock forward 30 years or so to 2010.

Payment alternatives have proliferated over the past decade. A new mobile payment technology seems to launch every day. Aite Group forecasts that mobile payments — which includes mobile bill payment, mobile P2P, mobile phone billing, mobile top-up, etc. — will reach US$214 billion by 2015.

In addition to the technology developments, regulatory changes are throwing wrenches in the payment stew. The Durbins of the world propose and create legislation that create uncertainty and diseconomies into the payments world.

What does this all add up to for consumers? Mass confusion.

What’s going to happen at the register or online  when we want to pay with one mechanism, but the retailer or merchant wants us to pay with another, and a third-party payments provider wants us to pay with a completely different alternative? Retailers and alternative payments provider will lure us with discounts and offers that align with their economic priorities, while  debit and credit card providers will dangle rewards and cash back in our faces. Which form of payment will consumers use?

We’ll probably use what we’ve always used. Millions of consumers make religious use of their credit cards to rack up points. And despite what you might have heard otherwise, debit card rewards programs will continue to proliferate, further cementing the use of debit cards among Gen Xers and especially Gen Yers (sorry retailers, but these folks — especially those at the younger end of the generation — don’t carry cash, and they don’t write checks).

It’s going to be confusing to figure out if the retailers’ and alternative payments providers’ offers are worth giving up our rewards and points.

What we’ll need is…..a calculator. A slightly more intelligent calculator than the one we used back in 1 B.C. (Before Computers), though.

The calculator I’m describing will evaluate the various payments for a particular transaction — and to be fair, we’re probably talking about a transaction whose dollar volume is in at least the three digit range (to the left of the decimal point, smart guy) — and recommend the best alternative for us, the consumers.

Who’s going to develop that calculator?

Actually, everyone, because technologically, we’re not talking rocket science. The problem is: Whose calculator will consumers choose to use?

All the payment providers will develop their own version of a calculator, and most likely — surprise, surprise — it will recommend their payment mechanism. (This will pose yet another test for financial institutions to prove whether or not they have their customers’ best interests at mind, or just their own bottom line — the true meaning of customer advocacy).

Riding in like white knights to save the day: PFM providers like Mintuit (Mint.com/Intuit — I’m going to get a phone call for this, you know), Yodlee, Geezeo, Strands, etc.

Increasingly, these firms’ interests are becoming more aligned with the financial institutions’ interests as each month goes by, so it might be harder for them to truly represent consumers’ interests. But the best opportunity to access a full (or, at least, fuller) picture of a consumer’s financial picture in order to recommend a payment mechanism rests with the tools these firms provide.

After accessing their mobile device to use the payment mechanism calculator, consumers will find it convenient to simply complete the transaction using their mobile device. And help make the forecasts for mCommerce (a subset of the overall mobile payments landscape) a reality.

Mobile payments — not just mCommerce — will grow rapidly over the next few years in the U.S. I’m quite confident in Aite Group’s forecast, because I know how it was developed (and helped, in part, to develop it). It’s partially driven by the identification of a segment of consumers — we call them the Smartphonatics — who will be the early adopters.

Smartphonatics don’t need to be convinced to use their mobile device to make mobile payments. But later adopters (I’m not talking about the laggards) could use a prodding — and a mobile calculator that helps consumers make smarter payment mechanism decisions can be a killer app to accelerate the adoption of mobile payments.