Tuesday July 16, 2013

Return On Investment Grows With Adoption Of Tracking's More Advanced Suite Of Applications

Financial returns to grow with adoption of tracking's more advanced suite of applications.
Enterprise networks that detect cellphones and track consumers enable new applications aimed at improved operations, better shopper experiences, and high financial productivity. The highest ROIs come from tracking's more advanced suite of business applications.

If you are an omnichannel marketer or a store operations executive, there is a customer tracking network in your stores' future. Picking the right network requires forecasting the functions needed by the suite of business applications you will eventually deploy. Because the choice is about function and not just how much capacity, the network selection decisions are unlike those made in the over 25 years since enterprises deployed TCP/IP. Application-specific networks might tempt, but the highest returns will come from networks that will support a suite of business applications. And since deploying any new thing into the stores is costly and time consuming, a one-time build in support of the higher ROIs from more advanced applications, is a real consideration over short-term requirement meeting build-outs. Whether location determination and tracking have a page in your technology roadmap, or are planned less formally, anticipating lifecycle requirements on such networks is essential to realizing an investment's justification. Proceeding without such forecasts can result in not passing the simplest of Goldilocks tests.

Tracking By Numbers

 Footpath traffic data can have frustratingly low value if an Associate cannot identify a George or Henry Kravis on the floor and respond intelligently 
Stephen Grody
Director, Known Presence

Tracking networks have significantly different technical capabilities which enable (or limit) which business benefits each can rightly claim. The Known Network Service tracks cellular phones, while others track Wi-Fi, Bluetooth, attached-RFID, and NFC on-board devices. Known Presence likes the near ubiquity of cellphones already in shopper's pockets and purses. But others prefer to focus exclusively on the technologically-advanced shopper with a smartphone, always-on Wi-Fi, or a next-generation loyalty card ready-in-hand for swiping. Uniquely identifying a device for the entire duration of a single shopping trip is easy for most tracking networks; But some are incapable of knowing if the device in-store today is the same one it saw yesterday or the one that visited a store across town less than an hour ago. The Known Network Service is robust enough to uniquely identify returning shoppers and track their movements both in-store and across an entire store chain.

Even for networks tracking cellphones at a distance, deployment choices effect what applications are enabled. Footpath measurement applications at store egresses and escalator or elevator landings can be accomplished with a sparsely populated deployment in-store. A sparse deployment can be used because both the business application and the range of shopper locations is constrained by the physical path and flow on the floor. There may be no business benefit to determining the location of a phone, other than to know that it passed a virtual turnstile. On an open floor where shoppers have more freedom of motion, tracking networks need to use techniques like triangulation on multiple targets.

A Made-For-Retail tracking network must have consumer privacy features built-in. In the United States and key international locations, the consumer privacy requirements are more stringent than those for enterprise security. The last thing brand owners can afford is surprising consumers with a "surveillance in use on premises" sign or a tracking network that pliantly rolls-over for a hacker or virus. Opt-in and opt-out are but two capabilities these networks need to provide, and stringent security must be ensured system wide. Privacy demands that there be a solution, as Known Network Service has, for how a retailer can not know anything about cellphone carrying visitors who have opted-out, while rightfully getting other realtime information. And when it comes to payments and electronic wallets, CIOs are right to keep those uses of near-field proximity (e.g., less than 1 foot from a reader) separate from networks tracking shoppers at a distance.

Just as each retailer operates in its own way, what tracking can accomplish for each similarly differs. Which applications a retailer selects and to what extent they get integrated with stores and omnichannel initiatives determines who is going to get the highest returns on investment.

Realtime Applications Create Profits; Networks Are Enablers

Tracking introduces two innovations to retail businesses. First, it provides definitive information about shoppers an average of 15 to 20 minutes before check-out. The time value of this information is its usefulness in engaging and steering a shopper through a better journey and to otherwise not considered products and services. Attempting that during check-out -- after the psychological transition out of search-consider-select behaviors and into queue-up-pay-and-get-to-my-next-task -- is irritatingly ineffective. Second, tracking creates new data elements describing a shopper's behavior that are predictive of shopping outcomes and purchases. These data have often never been collected or used in decision-making, because collection mechanisms have been too anecdotal, narrow in scope, unreliable, or expensive.

Tracking networks' unique capabilities enable four classes of applications:

  1. Intelligence
  2. Measured Operations
  3. Targeted Marketing & Promotions
  4. Personalized Experiences & Relationship

Intelligence: Tracking increases the granularity of traffic measurements and adds new behavioral descriptors for each observation. For example, a shopper's dwell time, whether measured for an entire store, department-by-department, or at key display locations provides insights into variations in shopping styles. The number and relative timing of the multiple visits made by individual shoppers adds to campaign responsiveness analytics, especially when teased for shoppers visiting multiple stores ("why did they do that?"). When combined with fine-grained sales conversion data, tracking helps marketers get better measure of promotion-induced traffic and ROI from media campaigns. Marketing and Store Design personnel clamour for such insights.

Measured Operations: Combine realtime customer traffic insights with realtime Associate location, occupation, and performance rosters and you have a store able to shift further away from, what youth soccer coaches call, a zone defense, to play "man-on-man". Operations managers can move enough of the right Associate skills to where concentrations of shoppers are in need of more attention than can be provided by the Associates nearby that concentration. Loss Prevention managers can offer to help a person of interest find the particular opportunity or item they are looking for that day. And shoppers entering a far-away-from-home store can have a Personal Shopper/Concierge Greeter approach and offer special services the best customers might appreciate when need-shopping under time pressure. Operations applications generally move a store's resources into positions better able to produce great customer journeys and revenues.

Marketing & Promotions: Tracking allows better matching of promotional campaign dollars to generating higher revenues and total lifetime customer value. Today, campaign effectiveness often shows the same results as achieved for decades. A positive correlation between the retailer's ROI and manufacturer's ROI in a campaign can be rare. Fine-grained tracking creates opportunities for step-improvements in Marketing's fundamentals -- relevant message, good targeting, effective reach, and conversion. Digital signage at the front door should provide way finding information to the Buy Online, Pick Up In Store (BOPUIS) customer that is different from the corporate account shopper coming to buy off contract or the fashion-forward style innovators hunting for the next hot thing. Individually targeting media displayed on digital signage is retailing's equivalent of video-on-demand consumers have proven they love. Knowing the individual shoppers to incentivize more shrewdly on each store visit is a first step towards husbanding market development funds for the selling opportunities promising the highest return.

Experiences & Relationship: Tracking lets stores know how to treat each customer better. Associate tools should be suggesting what he or she should, in the moment, propose to a shopper as the retailer's best answer to "what should we help this person with, today?". If discretely whispering such suggestions, or displaying them on a portable screen, helps individual staff members perform more like your best, that is all the better. Customer relationship management can then fulfill its highest and best use as a powerful tool for marketing to shoppers based on a personalized insight into the store's relationship with them (see a related article Developing Good Relationships ... ).

The idea that tracking technology can be explored in a low cost, low risk project can result in under-estimating the surprises in store. Because intial capital costs are small, such projects are more easily justified than the operational improvements and revenue generating applications stores need most. Unfortunately, the unseen risks are significant, whether in the surprises from not meeting hard requirements (e.g., for consumer privacy protection), the financials (e.g., from having to switch technologies to one more apropos than Wi-Fi), or due to ROI potential being limited by network function (see sidebar). And some of retailers' technically successful projects actually remain NPV negative forever, because, in seeking low risk, they are able to capture too little value. Since building a tracking network wants to be done just once, there is premium on anticipating your store's highest and best use of tracking and the suite of applications justify the investment.

Getting Real

It is fashionable to advocate for the collecting and processing of tracking information in "realtime". We agree there is value in analyzing operations in greater detail. Better analytics can require collecting new data elements and siginficantly shrinking the amount of time between observations. But, better analytics will not be enough or even right-minded for every department in every store. Calls for more analytics point to real challenges technology road maps need to address to get real.

We need to be able to act on the realtime information stores have and will capture. Yet we know that using me-too strategies, that forklift online store technology into bricks and mortar, detracts more than helps. Physical stores need to be using what they know about each in-store shopper to improve and differentiate what happens in-store. Shoppers expect an in-store experience in store; they could have shopped online, but didn't. So it is modernized versions of the services and experiences physical stores have always delivered that will make shopping still more of a joy than it already is. Those joyful moments of truth are what sets physical stores apart in the competition for consumer spend. That is the objective: keeping physical stores as the customer attracting nexus that help consumers consume. It is what consumers want.

Acting intelligently to enhance customers' journeys and experiences is the most valuable use of realtime data and analytics. Knowing who the customer is is an essential part of acting intelligently to deliver experiences that reward both shoppers and retailers alike. Physical stores can act more intelligently than any online site or smartphone app, if they actively monitor and respond to events along the shopper's journey. Cellphone tracking is how to include customers in those improved experiences and how to transition from a less-personal than is online today to a consistent quality omnichannel tomorrow. Using tracking's more advanced applications in customer-facing operations is a, and perhaps the, key to stores remaining the standard-bearer in retailing's future.