When Dr Bala Rajaraman imagines the future of retail, he gives it just three seconds – the amount of time a store will have to establish your identity and personal preferences as you enter and use them to market to you.
The CTO of cloud platform services at IBM uses the example of Bobby, a fictitious customer that walks into a computer game store.
“The game company has three seconds to capture Bobby's attention and personalise the interaction,” Dr Rajaraman told a recent IBM event.
“This is not abnormal because our attention spans when we shop are getting very short.
“So when Bobby walks into the store and you want to target a particular campaign to him, what needs to happen in the backend? We need to verify the identity, where is he in terms of location (within a store for example), what did he purchase recently, and if he’s a member of the [loyalty] club.
“How do you process all this information, pick the right recommendation and eventually play the right video [advertising a new game on an in-store display] for Bobby so you can capture his attention [in three seconds]? It’s a fairly complex problem.”
It’s a challenge retailers and technology companies are trying to attack from a variety of angles.
Some of the early players are looking to social media to establish key personality traits of customers; intelligence that can provide clues on how best to personalise a service or market effectively to them.
Take IBM’s own app ‘Your Celebrity Match’ – on the surface, a fairly benign use of the company’s Watson engine that matches your personality, gleaned from what you tweet, to a celebrity with supposedly similar personality traits.
However, a car maker is already looking at how it might apply to the showroom floor.
“We were demonstrating this to a car manufacturer, and they said 'can we match people who walk into a store based on their social persona to the right salesperson?’” Dr Rajaraman said.
“So if someone is sensitive, they don’t want perhaps a very aggressive salesperson.”
Author Robert Scoble cites a similar example in VinTank – a US start-up that “studies anything you say about wine”.
“So if tonight you say on Twitter, ‘I just had the best bottle of Penfolds I’ve ever had’, or you go to the winery and tweet that you just bought a case, think about what you just told the world and this system,” Scoble told this week’s Telstra Australian Digital Summit.
“If that bottle of Penfolds is $100 a bottle and you bought a case, you just told me you make $100,000 or more in one tweet. If it’s a $10 bottle of wine that tells me something else.
“And if you go into my winery … I’m going to serve you differently based on what VinTank tells me about you, because you’re walking in my front door with a beacon in your pocket [that helps me identify you].”
That “beacon” is your smartphone, and more and more it is expected that retailers and marketers will seek to use it to establish your identity.
About 20 retailers at Westfield Hornsby are presently participating in a trial of an iOS app called CommBank Offers.
Customers that opt-in to use it receive “timely and relevant offers” to their phones based on their GPS location – or, in other words, their proximity to a participating store.
Observers such as writer Shel Israel anticipate the emergence of more sophisticated examples of this technology in the not-too-distant future.
“They don’t exist yet, but in the future the mannequins in [shop windows] will have beacons on them,” he predicted at the Telstra digital summit.
“These beacons will take a signal from a phone and let the store know that you’re interested in those goods, and if they happen to know who you are because you’re a loyal customer, they’ll know your size and the colours you probably prefer.”
Personalisation or pollution?
If some of this seems to overstep a line or border on intrusive, it quite possibly does.
Telstra retail industry executive Gareth Jude voiced his “scepticism” of the Westfield proximity marketing trial – and of similar technology test cases - at GS1’s recent supply chain week in Sydney.
He was particularly concerned that marketers won’t be able to help themselves in pushing the boundaries of what the technology can do – and it’s retailers who will suffer the consequences.
“When you’ve been around as long as I have, you’ve seen it all before – and I’ve seen it all before twice,” Jude said.
“The first time was when database marketing came to town, maybe 25 years ago. We had meetings like this where people got together and discussed the power of databases and how we could turn that into pieces of mail that were really targeted at consumers.
“We could do the maths and work out how we could make a campaign profitable. But then we all went home and found our mailboxes full of crap. The marketers couldn’t help themselves.
“The same has happened with email marketing. The percentage that the email marketers need to return to get a profit is so fractional that they bombarded all our mailboxes.
“I really fear that this is going to happen to mobile devices and proximity, and it will happen to the detriment of retailers if they’re not watching.”
Jude urged early adopters of proximity marketing to tread carefully when it came to hitting the mobile phones of customers or passers-by.
“When you move to the mobile, you move to personal space. It’s very personal space,” he said.
“How do you react when you get a direct marketing call on your mobile phone? I bet the words 'how did you get this number?’ comes into your phrasebook.
“You don’t care when they ring home but when it gets to your mobile it’s much more personal.
“And I feel unless these messages are really carefully thought about, that they’re timely and relevant to the consumer, and that they represent value to that specific consumer, I think we may be in the mailbox full of paper syndrome. We need to use this really carefully.”
One aspect of proximity marketing that Jude considered critical was that it be opt-in – and that the customer continually be offered ways to opt back out again.
“You’ve got to let them opt out – not just offer once then wriggle-out-if-you-can,” he said.
“It’s continued options to opt out, otherwise you’ll lose the brand connection.”
Those that got the mix right could be onto a winning formula. Redemption rates for personalised offers were generally much higher than blast emails, and the technology involved – such as beacons – is fairly “low-cost”.
“You can give customers lots of information when they pass a particular retail display with their phone about what’s going on, and you can use the information you collect to serve the customers better next time,” Jude said.
“It doesn’t mean you’ve got to spam them.”