Mobile Shopping's Data Goldmine

It is common for organizations to recoil in horror when new technologies emerge that may transform their businesses. They feel threatened and fear the worst: that their profits will evaporate and some new entity will 'steal' their franchise.

The film and music industries scorned videocassette recorders (VCRs) and DVDs (and tapes before that). Financial institutions feared the advent of electronic banking. And now, retailers fear the mobile smartphone.

In the film, music and banking examples, the nature of the business did change dramatically. But instead of losing, in many cases the institutions won new audiences, new revenue and profit sources, and generated new ways of delivering content that increased rather than decreased their business.

We should have learned by now, one would think, that the reflexive negativity associated with new ways of buying and selling is counterproductive. But the fear of the unknown, the sense that a poorly understood power manipulated by people outside one's experience and control generates potent emotions. This is especially true for retailers in the case of mobile commerce. Not only is a new technology fearsomely effective at providing customers with alternatives to your offerings, but they can access it inside your own establishment. They are flaunting their power and your impotence as personally as possible.

The urge to surrender to the online juggernaut is compelling. But in the same way that predecessor industries learned to cope, so must those committed to the physical act of shopping. As the following article explains, embracing this change rather than rejecting it may be the smart choice. Instead of making it harder for people to access their networks, they should be encouraged to do so. The reason has to do with a fair exchange of value. Most people are happy to share information about themselves with businesses. Using that information to tailor pitches to them, remind them when opportunities arise and keep the enterprise's name in front of them can be a good way of expanding rather than reducing sales.

Data and other types of information are the keys successful commerce. Customers who are already in a store are advertising their interest in the products being sold there. Capturing information about them thus increases the likelihood that they will buy - or refer someone who will. Using the resources at one's disposal to recapture extracted value may turn out to be the best revenge - and the optimal business strategy. JL

Margarita Constantinides, Brian Gregg and Brian Salsburg report in Harvard Business Review:

Retailers shouldn't despair when shoppers whip out their smartphones among the product displays. Smartphones could be a retailer's best friend not just because they can open up new buying opportunities.
Mobile shopping is here to stay whether retailers like it or not. Some 44% of shoppers use their smartphones while they're shopping; more than a third of them are comparing prices. The impact of mobile research can be profound, affecting the buying behavior of nearly 90% of mobile shoppers, according to our research.
We believe that the smartphones' greatest benefit for retailers is that they provide a treasure trove of insights into customers' in-store behavior.
Stores need to create incentives for shoppers to go mobile — by offering value, convenience, or, ideally, both while protecting privacy — so that shoppers will share their info.
Despite the well-publicized fears of companies abusing personal information, we've found that some 35% of online buyers are willing to share personal information in return for targeted offers, such as promotional coupons. And these people tend to be from the wealthiest group online.
We see three areas where mobile shopping can provide the richest insights for brick and mortar retailers:

Optimizing in-store shopping
We know that 36% of shoppers who go online in stores are actually visiting the retailer's own app or mobile site (it's the single most common in-store use of smartphones). But what do shoppers do when they're in your store? Qualitative primary research has helped answer those questions, but smartphones can provide another level of insight, through in-store data. Smartphone WiFi signals can be tracked to determine how long and where in the store customers shop. Wal-Mart, for example, has an app that senses when customers enter a store and suggests switching their phone to "store mode." In this mode, shoppers can interact with special QR signage located throughout stores to access useful product information. Wal-Mart, in turn, is able to track their in-store behavior. If sales of a certain item are slow, tracking can show whether customers are skipping the aisle entirely or looking at the product but not buying it so that store owners can make product placement or other adjustments.
The effort is clearly paying off: on average, customers who use the Wal-Mart app make two additional visits to the store each month and spend 40% more than their app-free counterparts.
Using coupons to link Internet behavior with in-store shopping lets retailers figure out which ad slogans or online product promotions work best, how long someone waits between searching and shopping, and even what offers a shopper will respond to or ignore. Mobile couponing, in fact, is a fairly simple way to get into mobile analytics.
Powering frontline sales
Enter almost any store and you immediately notice an imbalance of power: customers are outfitted with the latest mobile devices, while sales staff have no electronic equipment beyond the register. But the most innovative retailers are increasingly putting the power of mobile technology in the hands of sales associates. With smartphones and tablets, they can demonstrate how products work or immerse customers in interactive mobile environments.
The approach can be as simple as training staff to guide customers through existing tools. The Furnish app, for example, allows users to see how furniture would look in their homes. Salespeople can help users order products that are out of stock, which also helps to educate customers on how to use the store's mobile site. Some 20% of Burberry's total sales are on iPads, and half of these are from staff iPads in store. By engaging in activities like these, salespeople shift into the role of helping customers rather than simply selling to them.
This digital empowerment shouldn't stop at the sale. Salespeople can also use these devices to fill in short surveys about customers, such as what their interests are, recommendations for products, and new ideas to improve the retail experience. One hotel chain with a reputation for great customer service has staff fill in a brief survey after interactions with guests.
Lifeline for future sales
Smartphones have created an important lifeline that tethers the shopper to the store even after he or she has left. Retailers need to use this lifeline to pull shoppers back into the store. Walgreens has an app, for example, that provides reminders to shoppers to take their medications, as well as options to refill their prescriptions by scanning the bar code with their phones. Retailers need to go further, however, to integrate mobile behavior into customer lifecycle management programs. Segment analysis of shoppers who return because of a reminder or a coupon will reveal which customers are loyal and spend the most versus those who are opportunistic or who don't spend much. Next-product-to-buy analysis is also critical for getting "local" right. A random blast of coupons at someone walking by a store won't be effective. But tailored offerings based on predictions of most likely next purchases will provide a much higher win rate. A recent development called "geo-conquesting" means that retailers can provide this kind of triggered service near competitors' stores as well. Early pilots indicate an increase in foot traffic to the conquestors' stores.
In return for a useful service that adds value, shoppers are willing to share their mobile information with a brand they trust. That should be music to retailers' ears.