Personalized Sales Promotions Via Mobile Apps Drive Customers To Purchase

Hyperlocalization works for driving sales - and for homeland security. Will ever-more personalized location technology cross the creepiness line or will convenience prevail? JL

Glenn Rifkin reports in the New York Times:

Combine a shopper’s desires with mobile apps, to get consumers into stores. Beacon technology can pinpoint a customer’s location so precisely that a retailer knows when that shopper is lingering. With the aim of driving shoppers into stores, data analytics filter a shopper’s preferences and send personalized alerts offering discounts, highlighting sales and providing content that might sway a buying decision.

During a preholiday shopping trip to New York, Lisa Libretto received an enticing alert on her iPhone: an offer for a $25 discount on a Vince Camuto handbag that she had coveted on the retailer’s website.“If my phone is alerting me to the discount or some information about items I might like, that will totally pull me in,” said Ms. Libretto, who lives in Ridgefield, Conn.

The alert arrived at an opportune time, pinging as she neared the entrance of the Vince Camuto store. And it cemented her decision: She would buy the purse after all.

But the timing was no coincidence. The app that she had downloaded from ShopAdvisor used beacon technology, a new addition to location-based marketing, to pinpoint her whereabouts before sending the discount. “I hope it’s a technology more companies will use,” she said.

Ms. Libretto, 44, an artist and stay-at-home mother with two young sons, has embraced online shopping. “My time is so short that when I do get to shop, the alerts are fantastic,” she said.Because retailers are acutely aware that despite the popularity of online shopping nearly 92 percent of retail sales are made at brick-and-mortar locations, a technology that will help drive shoppers into stores is certain to attract

a lot of attention.

And with the ubiquity of smartphones, now owned by two-thirds of Americans, retailers and technology companies have spent the last few years trying, with modest success, to find ways to combine a shopper’s desires with innovative mobile apps, to get legions of consumers into stores.

Now, ShopAdvisor, a four-year-old company based in Concord, Mass., has added a wrinkle to location-based mobile marketing that it hopes will be the breakthrough retailers are seeking. GPS-based mobile apps are not new and geofencing, the ability to create a virtual perimeter around a designated location such as a shopping mall, has given retailers the ability to send push alerts to prospective customers nearby.

But beacon technology can pinpoint a customer’s location so precisely that a retailer knows when that shopper is lingering in the shoe department or browsing in lingerie. ShopAdvisor, which offers its own mobile shopping app and specializes in creating multichannel mobile shopping platforms for media companies, as well as retail brands, has incorporated beacon technology in a novel way.

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With the aim of driving shoppers into stores, ShopAdvisor incorporates data analytics that filter a shopper’s preferences and provide a way for retailers to send personalized alerts to consumers who have downloaded a brand’s app, offering discounts, highlighting sales and providing content such as product reviews that might instantly sway a buying decision.

“We’ve had at least three years of heavy-duty location-based marketing under retailers’ belts,” said JiYoung Kim, senior vice president for Ansible, the mobile division of the Interpublic Group, the global marketing company. “Everybody has the same tool, and targeting alone can only take you so far.”

What makes the ShopAdvisor approach enticing, Ms. Kim said, is that it not only precisely locates a shopper in a store but provides personalized creative content from that retailer to that shopper on the spot. Offer that shopper a 20 percent discount on some new black pumps she has been eyeing, along with a positive review from a popular fashion magazine, and a purchase is far more likely.

Shoppers who have downloaded apps from various retailers in the last three years have been flooded with repetitious push alerts that have become like robocalls and tend to be annoying. For proximity mobile marketing to be effective, it requires something more.

“When you give people a marketing message about something that they actually want, in a location where they can act on it, that doesn’t feel like an ad or an annoyance,” said Scott Cooper, ShopAdvisor’s founder and president. “It feels like a service to them. They tend to respond to it.”

The company’s revenues come from monthly fees paid by clients, like media companies and retailers, based on the scale, scope and frequency of the campaigns. It also draws revenue from retailers that subscribe to its proximity marketing service.

ShopAdvisor spent its first two years searching for a promising value proposition. It raised $11 million in venture financing but was still in search of what Mr. Cooper called “the breakout business model.” The advent of beacon technology this year solidified the mission. “That last leg on the stool has really exploded the business,” he said.

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ShopAdvisor incorporates data analytics that filter a shopper’s preferences and provide a way for retailers to send personalized alerts to consumers who have downloaded a brand’s app. Credit ShopAdvisor

For example, when Elle, the popular women’s magazine, began planning for its 30th anniversary this year, the publication decided it had to do something noteworthy in addition to its celebratory September fashion and beauty issue. The 668-page issue, the largest in Elle’s history, would be flush with special content to support its many advertisers but “we felt it was incumbent upon us to do something innovative,” said Kevin O’Malley, Elle’s senior vice president and publisher.

Elle connected with ShopAdvisor and in August they started a pilot program called Shop Now. As part of the Shop Now campaign, Elle formed partnerships with such advertisers as Guess, Levi’s and Vince Camuto, and ShopAdvisor placed beacons in more than 1,600 stores around the country. Beacons, introduced in the last two years, are inexpensive, battery-powered, hockey-puck size digital sensors placed in locations to precisely identify and communicate with customers carrying smartphones.

ShopAdvisor created a mobile app using beacon and geofencing technology for Elle readers, who tend to be avid shoppers. The geofence detects that an Elle reader with the app is near, and the beacon then precisely tracks that shopper’s movements when she enters the store. It also sets off push alerts for that customer, suggesting specific items such as jeans or shoes that the customer has previously expressed interest in, along with curated content from Elle magazine. The content includes product reviews, top picks from Elle editors, coupons and other personalized marketing messages just for the customer.

“If you get a generic jeans offer from Guess, you are more likely to disregard it or delete it,” Mr. O’Malley said. “Of course Guess will tell you they are the best. But if we say those skinny, low-rise jeans in this model is one of our picks, that’s an editorial endorsement and brings third-party credibility and authority to the alert.”

According to Mr. O’Malley, previous location-based marketing resulted in less than 1 percent of smartphone users entering stores, a disappointing result. After six weeks of the Shop Now campaign,

more than 8 percent of those who received the app visited the stores, an increase retailers consider highly significant. Elle plans to start the next phase of the program in early 2016.

Vince Camuto, the women’s shoes and fashion retailer, saw immediate results. According to Leah Robert, executive vice president of the company, the Elle campaign was introduced in 23 locations and within a week, average sales per transaction rose 30 percent and the number of units sold increased significantly. Not only were many new customers coming into the stores but regular customers were visiting more frequently.

“The number of transactions per week almost doubled versus a typical average week for us,” Ms. Robert said. “We had click-through rates that were five times the industry benchmark. We drove several thousand additional shoppers into the stores over a four-week period.”.

Since the Elle pilot campaign ended on Oct. 1, 20 percent of the same customers have, unprompted, returned to the stores of the participating retailers, according to ShopAdvisor. Users of its app who had been prompted to visit Vince Camuto stores during the Elle program did so 32 percent more than customers who did not use the app.

Part of the success of the Elle campaign is ShopAdvisor’s ability to identify customers who have shown serious interest in products using the company’s app. “If you clicked on Vince Camuto black pumps and got near a Vince Camuto store, we can be superaggressive with you,” Mr. Cooper said. “You are absolutely someone who wants that message. If you have never shown any interest in that stuff at all, we leave you alone. We don’t bother you.”

Privacy concerns loom as the biggest challenge for companies that contact smartphone users. “Customers want to feel special, but they don’t want to feel it’s too Big Brother,” said Ms. Robert of Vince Camuto. “We have to be personal but not creepy.”

Despite the early success indicators, however, analysts remain wary.

“Beacons are very new, and these are very small examples,” Ms. Kim said. “This is a crowded and very competitive space, and everybody wants a piece of what ShopAdvisor is doing. Because of privacy issues as well as not wanting to freak people out, nobody wants to be the first to do something dumb with a technology that powerful. The results so far are good but they are still in the very early stages.”