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In the Moment

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Technology can change in the blink of an eye. Every time a retailer thinks it has the latest and greatest, something new is on the horizon. These days, highly targeted location-based mobile marketing is the frontier of customer engagement. By using small sensors in and around stores, a retailer can set up a perimeter to know when consumers with enabled apps venture into its zone.

Jim Walz, director of mobile strategy for Alliance Data, says location-based mobile marketing is a highly effective strategy of customer engagement. Whereas retailers used to expect consumers to “follow” them via social media like Facebook and Twitter, they are now taking a more proactive approach and “following” their customers.

Walz says consumers are already using their phones in stores to showroom, compare retailers, find out more about a product and use them as customized virtual sales assistants. Retailers who are willing to reach out can approach mobile-enabled consumers in the vicinity of the store. “We think there is a lot of value to mobile impulse buying,” Walz says. “If you can deliver just one incremental visit per year from [a previous shopper], it can provide a huge sales lift.”

Tech company Swirl uses battery-powered sensors that automatically detect when a Swirl user is within range, triggering the delivery of relevant content and offers. Vice president of marketing Rob Murphy says the WiFi-tracking or self check-in mechanisms allow retailers to identify precise locations in a store without extensive hardware; Swirl also provides tools to analyze and influence shopper behavior.

“We help retailers communicate with their customers directly through their mobile devices,” Murphy says, “anywhere from the neighborhood level all the way down to a particular area of the store.”

Online market research firm uSamp also communicates with consumers via their phones while they’re in stores. Instead of sending special offers, however, uSamp sends survey requests. Director of mobile products Allen Vartazarian says having consumers take surveys while in the store provides more detailed and reliable feedback.

“‘In the moment’ is an interesting and valuable metric for these companies,” he says. “It’s one thing if you have to recall your last trip to that store, but it’s another if you are standing there.”

uSamp mobile location research often involves customers taking photos and videos of product locations. The data can show where consumers were standing — what aisle they were in and exactly what products they were viewing. Vartazarian says it can offer critical information on consumer behavior.

Opt-in, customizable apps
A  number of generic location-based platforms have been on the market for years. Most retailers who employed such tactics in the past relied on Facebook’s “check-in” capabilities, often using discounts, contests or giveaways to entice consumers. In return, retailers obtained enhanced social media marketing to the millions of users who saw that their friends checked-in to a certain store.

One of the keys of active mobile engagement, specifically geofencing, is that it typically requires users to voluntarily “opt-in” to the system (meaning the customer must voluntarily agree to be tracked or receive such offers). This is critical, says Walz, because pushing messages to unwilling consumers could be perceived as spamming. Walz says there has to be a compelling reason for users to download an app, install it on their phones and then enable it to accept push messages.

“People are going to ask ‘What’s in it for me,’” he says. “You have to give them a compelling reason to use your app” and engage in geofencing.
Vartazarian says consumers are willing to engage in location-marketing capabilities or surveys for a number of reasons. He believes many consumers enjoy giving feedback to brands and retailers to help influence the decisions these companies make, as well as the discounts and offers they receive for participating in research. Finally, Vartazarian says many tech-savvy consumers simply enjoy using their phone.

“Many just love using the capabilities of their phone but also enjoy being more productive with it,” he says. “They get an alert and they take their phone out, shoot some pictures, some video and scan a barcode. It’s fun.”

Murphy says Swirl offers a great benefit for consumers because they don’t have to remember to open an app and look for offers. If phones are enabled to receive push notifications, they can automatically be informed of special offers or discounts the moment they enter a store. If they don’t opt for push notifications, the sensors will still automatically connect to the app: If the consumer opens the app, it will display relevant offers based on their location.

“We want to make it as easy as possible for the consumer. They don’t have to remember anything or check anything,” Murphy says. “The retailer can automatically wake up their phone and deliver offers or relevant content.”

Location-based mobile marketing is very successful in fashion, says Murphy, because it often appeals to emotion and can elicit impulse buying. But it could be successful in any retail environment, perhaps delivering messages to stave off showrooming at electronics stores or to increase basket size with offers in general department stores.

“There are a number of marketing tools that the brands can use, but [location-based mobile marketing’s] impact is multiplied by the fact that you are standing right there,” he says.

Consumer-led engagement
There are a number of risks in location-based mobile marketing, the most important of which is the “creepiness” factor. A consumer who is walking near a store and receives a message offering a discount for a product he was looking at online two days ago could get a sense that the retailer is wielding too much power and overstepping the boundaries of privacy. Vartazarian says retailers must tread carefully and allow consumers to select the level of engagement.

“The way you can control that [privacy] factor is to empower the consumer,” he says. “Make sure they have the power to set the limits they are comfortable with. The more control you give the consumers, the more likely they are going to keep participating.”

Privacy concerns are a growing issue. NRF senior vice president and general counsel Mallory Duncan worries that broad legislation that doesn’t factor in the specific uses of new technologies may inadvertently quash tools that benefit both merchants and their customers. He says new technology, regardless of how benign its purpose, sometimes triggers undue alarm; there’s a tendency for groups and legislators to broadly overstate concerns, even when that new technology is simply serving old purposes.

Consider technology that allows merchants to determine where customers tend to cluster (or not) in their stores. To an extent, Duncan says customers have always been observed, either by security or associates. With new phone-based technologies, that observation is being used to benefit the customer and improve the shopping experience by facilitating changes in layout and design.

“If there is a rush to adopt ill-advised legislation without thinking about how it operates in practice, policy makers could put at risk the tools that were designed to provide more effective and desired services to our customers,” Duncan says.

Murphy says retailers also don’t want to “overuse” information and automatically enroll consumers in e-mail lists or campaigns. While he admits there are concerns about privacy, he says since most programs are strictly opt-in, few consumers are being tracked against their will. With customized solutions, he says consumers can also tweak the level of engagement that they would like, including whether or not to receive personalized offers or not to be “pushed” messages when they are in the vicinity of a retailer.

“Marketers need to be very careful about not overusing information,” Murphy says. “What we don’t want is every person being bombarded every time they walk into a store.”

That is highly unlikely to happen today but it could be an issue in the coming years as more retailers engage in in-store mobile marketing. Swirl has found that roughly half of consumers would be willing to share their location information if they knew they would receive a $5 store credit. The study “What Women Want When Apparel Shopping,” released in July, found that when enticed with a $25 in-store credit, that number jumped to 83 percent. For an exclusive flash sale, that number was 59 percent; for a gift with purchase, 63 percent said they would opt-in.

The study noted that only 17 percent of respondents said they would never volunteer their location for any offer.

“If consumers feel their [information and location] is worth something and the retailer is willing to give them something in return, they’re generally willing to share it,” says Murphy.

Walz says there’s a risk that too much contact can backfire, creating a negative perception of the retailer. Some best practice guidelines say to never send more than eight text messages per month; Walz says that’s still too many and recommends no more than three. Even with location-based in-store marketing, he recommends alternating messaging between coupons, greetings and product recommendations.

“You can do all kinds of things and don’t have to have giveaways all the time,” he says. “Just think of it as engagement between you and the consumer.”