Indoor Location Holds Promise for Marketers’ Use of Customer Analytics

by   |   August 2, 2013 4:48 pm   |   0 Comments

Examples of Macys offers delivered to Greg Sterling's smartphone app in New York City. Images courtesy of Greg Sterling.

Examples of Macys offers delivered to Greg Sterling’s smartphone app in New York City. Images courtesy of Greg Sterling.

Brick-and-mortar retailers can now use technologies like Bluetooth, Wi-Fi, and software in LED lights to talk with the smartphones of customers who are inside their stores or nearby. This new ability is enabling retailers to digitally engage with customers in real time like never before. It’s also allowing them to collect data about what their customers are doing inside their stores—information similar to website visitor behavior that e-commerce companies have been gathering and analyzing for years.

Marketers could potentially benefit from both use cases—customer engagement and real-time analytics of in-store consumer behavior—in this nascent category of “indoor location.” Benefit, that is, if they can weather early storms of privacy fears and can figure out how their location capabilities can offer value for customers. “Even though everything isn’t figured out, I don’t think there are major barriers to the development of indoor location as a major new component of a broader marketing and analytics ecosystem,” says Greg Sterling, a senior analyst at the advisory firm Opus Research.

Marketing Customers Can See
The marketing engagement slice of indoor location is so fresh that there’s not even a single term for it. Some refer to the niche as proximity marketing, geo-targeting, location-based messaging or location-based advertising, for instance. Opus Research, which is holding a conference focusing on the area in October, refers to it as “indoor marketing.”

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Some retailers are incorporating indoor marketing into their store-branded apps and are requiring customers to opt-in to receive location-based information. Companies might push coupons to those who open up the app in their stores. That happened to Sterling on a recent trip to the Macy’s Herald Square store in New York City. The generic discounts came in the form of a “10 percent off” shopping pass and a mobile coupon for “15 percent off” for its Independence Day sale.

But customers who log into the app of Meijer, which operates 203 supercenters and grocery stores in the U.S., can receive more customized coupons for products. These may be selected based on specific branded items customers have added to the app’s “shopping  list”—deals could pop up for those products or others in the category—or even items they’ve clicked on in the past but haven’t added to the list. Meijer and its app partner, Point Inside, might also consider items customers have bought in the past since the app is tied into the retailer’s loyalty program.

The promotion may pop up when someone is inputting items into the shopping list or when the user is near a specific product in the store. “Our idea is we know you’re there, so why don’t we give you something that’s within arm’s reach of where you’re standing?” says Todd Sherman, chief marketing officer of Point Inside, which powers the in-store functionality of Meijer’s app. The company specializes in offering tools retailers can use to engage with in-store customers through their apps, including indoor maps of product locations.

Attempts to reach Macy’s and Meijer for comment were unsuccessful.

Answering Marketing Questions with Shopper Analytics
Though location-based messaging through mobile devices is appealing to retailers, right now many are more focused on analyzing customer traffic because that data can have an immediate return on investment, says

Kellie Peterson

Kellie Peterson

Kellie Peterson, director of marketing for iInside, an indoor analytics company that was launched in June by WirelessWERX, a location technologies firm.

“We realized the value to retailers was not specifically the app. It’s nice to have, but the real value to the retailers was helping them understand their shoppers in a more meaningful way and to crunch that big data,” she says. “It becomes very valuable when it’s presented in meaningful ways that inform business decisions.”

And in fact, some of those business decisions can pertain to marketing. For instance, companies can adjust in-store signage to match consumer traffic patterns. They can also learn which types of displays garner the longest “dwell” time, Peterson says, and how many people visited the brands they’re promoting in marketing campaigns.

IInside gives retailers the ability to collect data about movements of anonymous customers by using sensors that pick up Bluetooth and Wi-Fi signals. With Bluetooth, iInside can understand where someone is within three feet of a specific object. Wi-Fi pings happen every 30 to 120 seconds. They increase the sample size of an audience iInside can measure but the location data is significantly less precise, Peterson says.

She says the company’s sensors do not access information about a device’s owner, only its MAC address, its manufacturer and signal strength. IInside then strips away the MAC address and aggregates the anonymous customer data.

Pushing Coupons to Motorists at the Pump

Apps requiring opt-ins are just one vehicle for proximity marketing. iSIGN Media Corp. offers retailers or other merchants a different option: They can push messages to people outside their stores. About 200 U.S. gas stations of petroleum distributor National Oil & Gas have installed transceivers from iSIGN that enable them to send text messages to phones that are within 300 feet of their stores and have Wi-Fi or Bluetooth activated.

The phone’s owner remains anonymous but iSIGN is able to capture the device’s make and model, monitors how long the phone stayed in proximity to the transceivers, and tracks the offers the owner rejects and accepts. The gas stations have seen acceptance rates of 20 to 30 percent for an offer giving a 10-cent discount on gas, according to Alex Romanov, iSIGN’s president and CEO.

Retailers would be able to identify customers only if they opt into a store-branded app and into location-based communication. (IInside clients can use its software development kit to add location-based services to their branded apps like push notifications with deals and indoor mapping.)

“Our system ‘sees’ customers and other indoor traffic who carry Bluetooth and/or Wi-Fi-enabled devices in a completely anonymous manner,” Peterson says. “We are conscious of the evolving privacy debate and are proud to have designed a product that provides valuable insights while protecting consumer privacy.”

Offering Benefits for Opting In
At the core of that debate is the idea that being monitored with a smartphone – even anonymously – doesn’t sit well for many customers, and that’s making some retailers nervous about implementing indoor location technologies. For example, a New York Times report describing tests the department store Nordstrom was doing with the startup Euclid to gather and analyze shopper location data received critical reaction online. (Nordstrom subsequently said it had ended its test. Attempts to reach Nordstrom were unsuccessful, and Euclid declined an interview request for this article.)

“Where the danger is as illustrated by the Nordstrom reaction is that retailers will get scared and delay or back away from the technology,” Sterling says.

Greg Sterling

Greg Sterling

“Ultimately the value to them of learning about how consumers interact with their stores is going to trump the PR stuff for them. Ultimately they will figure out how to disclose [tracking scenarios] or how to get opt-in participation from the consumer.”

Sterling predicts tracking will become less scary and more acceptable to customers when they get a tangible benefit. For example, a consumer could receive a special offer for doing something that triggers tracking, like turning on a store’s Wi-Fi or downloading a store’s app. In contrast, he says, “In situations where there is no apparent consumer benefit – that’s more problematic. The consumer doesn’t really see any value and there’s the scary notion that they’re being tracked.”

Meanwhile, it isn’t far-fetched to think customers will trade information about themselves for even a minimal return. A study commissioned by Swirl, an in-store mobile marketing platform provider, found that of the 1,000 women shoppers with smartphones surveyed in March, half would share their phone’s location and other personal information with a retailer in return for an in-store credit, gift, flash sale, early access to new styles or style recommendations. Forty-seven percent of respondents would do so for a mere $5 in-store credit. Only 17 percent said they would never volunteer their location.

Likewise, many people have already shown a willingness to broadcast their locations on programs like the social app Foursquare, the shopping app shopkick and the traffic and navigation app Waze. “People are used to pulling out their smartphones and saying, “I’m here, look at me, look what I’m doing,’” says Derek Top, editorial director at Opus Research. “You look at Waze where it’s crowdsourcing [and for which people offer] ‘where am I and where am I in relation to other people around me.’ They see the value in that and the same thing could go for in-store experiences with a smartphone.”

Mindy Charski (mindy@mindycharski.com), a contributing editor for Data Informed, is a Dallas-based freelance writer. Follow her on Twitter: @mindycharski.








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