Location based marketing is the term used to describe the use of in-store technology like Bluetooth LE, Visible Light Communication (VLC) or security cameras to determine the location of a shopper while in the store. Technology is relevant, but business purpose trumps technology...and it's very important for retailers to decide where they are going before they argue about how they get there.
Improving Traffic and Shopper Experience must be addressed
Less shopper traffic and a lower number of store visits per shopping trip begs the question of what changes to Brick and Mortar retail will cause your chain to attract more traffic, and equally important, what will raise the conversion rate once the shopper is in the store.
Today is Black Friday and most shoppers have a clear idea of where they are going. The urgency to innovate in Brick and Mortar is underscored by the superior sales performance of e-commerce to stores on ThanksGiving and Black Friday. Today, retailers have challenges to overcome and are piloting many competing alternatives of their scarce funding for innovation.
But according to Kurt Salmon, an improved shopping experience, one that gives the shopper offers that are relevant to the purpose of their trip to a store is what will create the kind of differentiation that will lead to acceleration of revenue growth and improvement in shopper loyalty. One to one personalization is a journey, not a short-term easy fix. The journey does offer potential improvements in revenue growth, conversion and category growth.
Lots of small steps is better than one daunting step
The big payoff, one that enables a shopper to feel like a personal guest may require a series of steps that gradually build trust and gradually transition the shopping experience from what is today. The former CIO of Whole Foods, Mike Clifford argues that shoppers can’t handle big transformations in one fell swoop, but rather must be nudged along in small steps.
Many want to debate which technology is best to enable this fundamental change in the relationship between the retailer and their shopper/guest. Our point today is, first you should debate what kind of a shopping experience you seek to offer rather than what kind of technology you should deploy. It is true that technology has moved with great speed over the last 2 years, creating possibilities we couldn't have envisioned as recently as 2012. After the experience you seek and the emotional connection you want to achieve is defined, then technology and equally important, the way you implement technology can be easily revealed.
We think the debate on pull and push offers and their impact on the shopper must cover not only how to move the needle on new revenue, but also how to move the needle on the emotional impact on the shopper. We don't think that it's push vs. pull but rather how you deliver offers to your shopper...it's how do push and/or pull, not which one is better. Some feel that push delivered on smart phones would be too intrusive. But you can deliver one to one personalization with push, just as you can have shoppers pull deals off the shelf that have no context about the shopper or the purpose of their visit to your store. In a recent investor call, Kohl's revealed that they can do 1:1 personalization via push, based on the location of the shopper in the store.
The answer lies in creating a personalized experience
There is a lot of energy expended now on taking advantage of where the shopper is inside the store to push messages at them. Similarly there is interest in moving advertising spend away from newsprint to mobile phones by delivering offers that are already in the loyalty program or the planned Free Standing Inserts (FSI's). The working assumption is most shoppers love deals, and bits are free after you deploy the technology, so let's get started. The problem is that delivering a more personalized experience requires a fairly large investment and a prolonged time to actually deliver offers that are relevant to the individual. The large investment is not just technology in stores. The bigger investment may be in back end systems that enable intelligent delivery of offers to an individual shopper. This will require a multi-disciplinary approach including marketers, store operations, merchants and technologists. Such a strategy requires organizational agreement and commitment to a specific definition of where you are going. In addition, it may require stealing a page from Netflix and Amazon who use algorithms about individual shopper behavior that account for 75% and 35% of revenue, respectively according to McKinsey in an article titled How retailers can keep up with consumers.