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.

About


David Dorf, Sr Director Technology Strategy for Oracle Retail, shares news and ideas about the retail industry with a focus on innovation and emerging technologies.


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