Thursday Apr 11, 2013

The Cookie in My Mobile Phone

The traditional Marketing Mix covers product, price, place, and promotion and often people and process are thrown in for good measure.  Retailers spend their time adjusting these "P levers" to satisfy customers and drive sales.  But the P that interests me most is personalization.  For years the online experience has been personalized to varying extents.  Cookies track the sites I visit, and advertising is changed in real-time to reinforce promotions in an effort to retarget me.  I get product recommendations based on past purchases, and I get invited to "exclusive sales" from time to time.

In general, its not a bad relationship.  I get relevant product information and promotions, and nobody tries to blindly sell me things I'll never want.

These capabilities are slowing making their way into physical stores.  The key enabler of websites is the ability to identify the customer, either generally (e.g. cookies) or specifically (e.g. account login).  Physical retailers have tried to achieve this using the loyalty card.  However, loyalty cards are used at checkout, the very end of the shopping process.  To influence shoppers, retailers need access to the shoppers when the enter the store, or perhaps even earlier.

Smartphones that have WiFi enabled send out signals to nearby routers identifying themselves using a unique number called a MAC. The MAC can be used like a cookie.  Retailers can monitor the MACs that come into their stores, see their paths, measure dwell time at endcaps, and record frequency of visits.  If the retailer can convince the customer to identify themselves and associate a name with the MAC, then that's as good as logging into a website.  Now as soon as the person enters the store, the retailer can personalize the shopping experience.

Perhaps a welcome message is flashed on an overhead monitor: "Welcome back, David.  Thanks for visiting us."  Perhaps product recommendations tailored to interests can be sent to the smartphone.  "To complement the shirt you bought, get 10% off any tie."  Perhaps the manager approaches to shake my hand and offer help. 

I like walking into my favorite restaurant for lunch and having iced-tea immediately served because the waiter knows me.  Personalized service, even at scale, is now possible for large retailers too.  It can be subtle, like simply tailoring promotions, or it can be more overt.  The technology exists; retailers need only decide the level of personalization and weigh the impact of customer privacy concerns.

Speaking of privacy, the Location Privacy Protection Act is making its way through congress.  (You can see other pending legislation at the NRF Integrated Mobile Initiative site.)  It seeks to limit the ability to track smartphones.  The press has been reporting on the battle between Al Franken, the bill's sponsor, and Euclid, an in-store analytics company started by some ex-Google employees.

Remember, retailers should target technology investments for the future.  Yes, a great deal of your current customers might think tracking smartphones is creepy, but their kids don't, and their kids will be your customers in 5-10 years. As a society we need to ease into these advancements.

Of course if you really dislike being  tracked, even anonymously, you can turn off the WiFi on your smartphone.  That is, until face-recognition is perfected.

Wednesday Feb 27, 2013

Amazon Winning the Race

Amazon has been at the forefront of innovation in e-commerce, and that's because they are constantly looking for new ways, not to sell, but to satisfy customers.  That's a key point.  Instead of advertising products, they provide information and advice to customers either directly or via other customers.  This helps people make better decisions about their purchases.  Looking back, we can see Amazon has been a leader in many areas:

  • 1995 - customer reviews
  • 1997 - recommendations & bundles
  • 1997 - 1-click ordering
  • 2001 - look inside the book
  • 2001 - where's my stuff?
  • 2002 - free super saver shipping

The latest feature I've seen is the Customer Questions & Answers. On certain product pages, you can click on "Questions" and pose a question to other customers that have purchased the product.  Apparently Amazon send the question via email to past customers that purchased the product and they are encouraged to reply with an answer.  Shoppers can browse past questions and answers as well.

This emulates the physical world quite nicely.  You see a product, like a digital camera, and want to know how many pictures it can take without a memory card.  A current owner responds with an answer, and you are better positioned to make a decision.  Its just like asking your co-workers and friends, except Amazon knows who already owns the product so they do the "matchmaking."  Amazon claims 96% of the questions get answered, and 40% within two hours.

So what should retailer's take away from this?  Focus less on traditional advertising and selling, and shift to satisfying your customers' needs.  The selling part will eventually follow.

Check out this fantastic presentation on Amazon to learn more:


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