STORES 2014 BIG Show Daily - January 14, 2014 - 14
Mapping the Latest Frontier of Customer Engagement
echnology can change in the blink of
an eye. Every time a retailer thinks it
has the latest and greatest, something
new is on the horizon. These days, highly
targeted location-based mobile marketing
is the frontier of customer engagement. By
using small sensors in and around stores,
a retailer can set up a perimeter to know
when consumers with enabled apps venture
into its zone.
Jim Walz, director of mobile strategy
for Alliance Data, said location-based mobile marketing is a highly effective strategy
of customer engagement. Whereas retailers
used to expect consumers to "follow" them
via social media like Facebook and Twitter, they are now taking a more proactive
approach and "following" their customers.
Walz said consumers are already using their phones in stores to showroom,
compare retailers, find out more about a
product and use them as customized virtual
sales assistants. Retailers who are willing
to reach out can approach mobile-enabled
consumers in the vicinity of the store.
"We think there is a lot of value to mobile
impulse buying," Walz said. "If you can
deliver just one incremental visit per year
from [a previous shopper], it can provide
a huge sales lift."
Tech company Swirl uses batterypowered sensors that automatically detect
when a Swirl user is within range, triggering
the delivery of relevant content and offers.
Vice president of marketing Rob Murphy
said the Wi-Fi-tracking or self check-in
mechanisms allow retailers to identify
precise locations in a store without extensive hardware; Swirl also provides tools
to analyze and influence shopper behavior.
Online market research firm uSamp
also communicates with consumers via
their phones in-store. Instead of sending
special offers, however, uSamp sends survey requests. Director of mobile products
Allen Vartazarian said having consumers
take surveys while in the store provides
more detailed and reliable feedback.
"'In the moment' is an interesting and
valuable metric for these companies," he
said. "It's one thing if you have to recall
your last trip to that store, but it's another
if you are standing there."
uSamp mobile location research
often involves customers taking photos
and videos of product locations. The data
can show where consumers were standing
-what aisle they were in and exactly what
products they were viewing. Vartazarian
said it can offer critical information on
Opt-in, customizable apps
A number of generic location-based
platforms have been on the market for
years. Most retailers who employed such
tactics in the past relied on Facebook's
"check-in" capabilities, often using discounts, contests or giveaways to entice
consumers. In return, retailers obtained
enhanced social media marketing to the
"There is a lot of
value to mobile
impulse buying. If you
can deliver just one
incremental visit per
year from [a previous
shopper], it can
provide a huge sales
- Jim Walz,
millions of users who saw that their friends
checked-in to a certain store.
One of the keys of active mobile engagement, specifically geofencing, is that
it typically requires users to voluntarily
"opt-in" to the system (meaning the customer must voluntarily agree to be tracked
or receive such offers). This is critical,
said Walz, because pushing messages to
unwilling consumers could be perceived
"People are going to ask, 'What's in it
for me,'" he said. "You have to give them
a compelling reason to use your app" and
engage in geofencing.
Vartazarian said consumers are willing
to engage in location-marketing capabilities or surveys for a number of reasons. He
believes many consumers enjoy giving
feedback to brands and retailers to help
influence the decisions these companies
make, as well as the discounts and offers
they receive for participating in research.
Finally, Vartazarian said many tech-savvy
consumers simply enjoy using their phone.
"Many just love using the capabilities
of their phone but also enjoy being more
productive with it," he said. "They get an
alert and they take their phone out, shoot
some pictures, some video and scan a barcode. It's fun."
Murphy said Swirl offers a great
benefit for consumers because they don't
have to remember to open an app and look
for offers. If phones are enabled to receive
push notifications, they can automatically
be informed of special offers or discounts
the moment they enter a store. If they don't
opt for push notifications, the sensors will
still automatically connect to the app: If
the consumer opens the app, it will display
relevant offers based on their location.
"We want to make it as easy as possible for the consumer. They don't have to
remember anything or check anything,"
Murphy said. "The retailer can automatically wake up their phone and deliver offers
or relevant content."
Location-based mobile marketing is
very successful in fashion, said Murphy,
because it often appeals to emotion and
can elicit impulse buying. But it could
be successful in any retail environment,
perhaps delivering messages to stave off
showrooming at electronics stores or to
increase basket size with offers in general
"There are a number of marketing
tools that the brands can use, but [locationbased mobile marketing's] impact is multiplied by the fact that you are standing right
there," he said.
There are a number of risks in location-based mobile marketing, the most
important of which is the "creepiness"
factor. A consumer who is walking near
a store and receives a message offering a
discount for a product he was looking at
online two days ago could get a sense that
the retailer is wielding too much power and
overstepping the boundaries of privacy.
Vartazarian said retailers must tread carefully and allow consumers to select the
level of engagement.
"The way you can control that [privacy] factor is to empower the consumer,"
he said. "Make sure they have the power
to set the limits they are comfortable with.
The more control you give the consumers, the more likely they are going to keep
Privacy concerns are a growing issue. NRF senior vice president and general counsel Mallory Duncan worries that
broad legislation that doesn't factor in the
specific uses of new technologies may
inadvertently quash tools that benefit both
merchants and their customers. He said
new technology, regardless of how benign
its purpose, sometimes triggers undue
alarm; there's a tendency for groups and
legislators to broadly overstate concerns,
even when that new technology is simply
serving old purposes.
Consider technology that allows merchants to determine where customers tend
to cluster (or not) in their stores. To an
extent, Duncan said customers have always
been observed, either by security or associates. With new phone-based technologies,
that observation is being used to benefit
the customer and improve the shopping
experience by facilitating changes in layout
"If there is a rush to adopt ill-advised
legislation without thinking about how it
operates in practice, policy makers could
put at risk the tools that were designed to
provide more effective and desired services
to our customers," Duncan said.
Murphy said retailers also don't want
to "overuse" information and automatically enroll consumers in e-mail lists or
campaigns. While he admits there are
concerns about privacy, he said since most
programs are strictly opt-in, few consumers
are being tracked against their will. With
customized solutions, he said consumers
can also tweak the level of engagement
"If consumers feel
and location] is
and the retailer is
willing to give them
something in return,
willing to share it."
- Rob Murphy,
that they would like, including whether or
not to receive personalized offers or not to
be "pushed" messages when they are in the
vicinity of a retailer.
"Marketers need to be very careful
about not overusing information," Murphy
said. "What we don't want is every person
being bombarded every time they walk
into a store."
That is highly unlikely to happen today but it could be an issue in the coming
years as more retailers engage in in-store
mobile marketing. Swirl has found that
roughly half of consumers would be
willing to share their location information if they knew they would receive a
$5 store credit. The study "What Women
Want When Apparel Shopping," released
in July 2013, found that when enticed
with a $25 in-store credit, that number
jumped to 83 percent. For an exclusive
flash sale, that number was 59 percent;
for a gift with purchase, 63 percent said
they would opt-in.
The study noted that only 17 percent
of respondents said they would never volunteer their location for any offer.
"If consumers feel their [information
and location] is worth something and the
retailer is willing to give them something
in return, they're generally willing to share
it," said Murphy.
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