Beware of Big Brother stigma in shopper tracking

The next time you enter a grocery store, you could be added to a private database that records not only what time you went to the HMR department and had rotisserie chicken for dinner, but also that you went to the gym just before and perhaps what movie theatre you went to after.

Did you stop at the bakery and drool over the scent of freshly baked croissants on sale?  Did you buy some delicious strawberries because of an attractive in-store promotion? How long did you spend in that department? Do you shop in the area often? The masses don’t know it, but radio technology in your smartphone that allows you to connect to Wi-Fi is squealing on you.

Explaining to my retail clients about how a CRM initiative can drive customer loyalty is relatively a simple subject. However, explaining which CRM initiative to implement and how to do it tactically is a complex process. While detailed CRM information gives retailers insight into consumer behaviour and helps identify and reward their best customers, there is growing angst amongst consumers that retailers are violating their privacy.

Customer Relationship Management is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. CRM programs help retailers understand consumer behaviour to achieve a win/win scenario: the retailer understands the customer’s buying patterns and the customer gets rewarded with, for example, loyalty points that can be redeemed later. According to Pareto’s Rule (a famous marketing and sales rule of thumb) 80% of company’s sales come from just 20% of its customers. Thus, it is vitally important that retailers understand and retain their best customers.

But while there are many benefits of a well-designed CRM program, many consumers are concerned how their information is given and how it's used. The degree to which consumers feel their privacy has been violated depends on: 1) their control over their personal information (Do customers feel they can decide on the amount and type of info collected by the retailer? ) and; 2.) their understanding of how the information will be used (Do consumers know what information is being collected and how the retailer will be using it?).

CRM in Canada has roots with Canadian Tire money to more modern, advanced social media programs and most recently, MAC tracking (Media Access Control, explained below). Moreover, CRM initiatives have grown from the days of mass media advertising and price promotions–treating all customers the same–to highly focused programs concentrating on providing insight on their target market and delivering programs that provide value to their best customers. Research indicating that it costs over six times more to sell to new customers than to existing customers supports the rise of CRM technology.

Ultimately, CRM programs use information about customers to create marketing programs that result in customer satisfaction and loyalty. But some CRM initiatives now employ customer tracking tools without consumer’s knowledge, driving fears of privacy concerns.

One company that utilizes passive technology to detect radio signals that are constantly broadcast by your phone, is a Toronto start-up company, Turnstyle. Turnstyle technology can monitor customer behaviour in a store by detecting a Wi-Fi network, the signal used in your smartphone as it transmits when the customer enters through the doors. Any shopper, who utilizes a Wi-Fi-enabled phone (which is most of us!), is in constant communication with routers, sending out Media Access Control (MAC) address in search of networks. By tracking this MAC address, Turnstyle gives retail clients the ability to gain consumer behaviour insights.

Turnstyle Solutions offers a suite of marketing solutions and customer analytics that provide retailers with actionable insights to optimize their customer interaction and maximize the ROI of marketing initiatives. With Turnstyle technology, retail clients can analyze: overall foot traffic’;  window conversion;  location of people within a store; repeat vs. first-time visits to a store, dwell times, and more.

So not only do Turnstyle clients uncover the success of a promotional campaign, but also can determine staff scheduling and adapt hours of operation to correspond with trends and changes in walk-by traffic.  Oh! I can just see now the marketing professionals and store managers salivating over all the information from this easily digestible data!

But while CRM initiatives rooted in database technology are a valuable tool, allowing retail marketers to glean insights into their best customers, it also provides specific information on individual customers in order to be effective. While CRM is an excellent tool for retailers to understand their best customers, security for consumers is at the forefront of customers accepting CRM initiatives.

Before utilizing CRM programs that trigger a concern over invasion of privacy and potentially suffer the wrath of customers and the scrutiny of the media, retailers should engage in privacy forums (if and when they are available) and thus keep a pulse on trends and concerns. Also, retailers can utilize voluntary signs that they post to warn customers of the intrusive technology and steps to an “opt out”.

Bottom line is while the benefits to tracking customers are immense, the risks associated with such Big Brother information can be equally devastating. Ensuring there is a transparency for your customers is the best and safest strategy.

Customer safety and security: now that is something I would want measured and tracked.

David Bartolini is principal at Bartolini Consulting (www.bartolinibrands.com) in Toronto. He has more than 15 years retail executive experience, including in the grocery industry. He's also a part-time professor at Humber College and instructor at the University of Toronto, teaching professionals retail strategy via a course he developed: Fundamentals of Retail Merchandising.