By Brendan O’Meara, Microsoft Retail
The Internet of Things (IoT) is poised to transform retail marketing in a big way in 2015. Sensors, beacons, near-field communication, video recognition and the other technologies associated with the IoT are nearing maturity, powered by advanced data analytics and the cloud. What that means for marketers in a nutshell? More and better data about customer behavior, more precise marketing metrics, more ways to offer personalized experiences in person and online, and access to insights that can help retailers optimize merchandising, staffing and store design.
1. Enables a complete view of the customer, online or offline. Digital commerce sites and apps generate data that helps retailers better understand customer behavior, but it’s been difficult to capture the same kind of information around in-person transactions. And it’s been tough to connect the customer in the store with the customer’s online profile to provide personalized service at the point of sale.
Now sensors and beacons can connect to the customer’s mobile device, allowing retailer to associate historical customer data from other systems with the person standing in the store, and provides a single view of the customer in real time. Due to privacy concerns raised by this kind of tracking, many experts recommend that retailers clearly communicate their programs and policies, offering customers convenient ways to opt out as well as incentives to opt in.
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2. Connects marketing campaign performance to store traffic. One of the abiding mysteries of retail advertising is trying to figure out how much of a spike in store traffic and sales is due to the effects of a promotional campaign, relative to other factors such as the weather, traffic, and competitive activities that are beyond the control of the retailer.
Even relatively anonymous mobile tracking technologies can help clear this up, using location services (GPS, Wi-Fi, beacons) to provide a precise picture of store traffic in real time, including information such as the customer’s zip code (indicating how far they travelled and the effect of targeted direct mail), how much time they spend in the store, and even whether they are shopping for items that have been advertised. Some third-party services are offering a market-wide view of customer position data, including where customers go before and after a trip to a specific store, to help retailers identify affinities and potential partnerships.
3. Helps promotions hit a moving target. Promotions and offers delivered to customers at the point of sale, as they are actively considering a purchase, can have an enormous impact on sales conversions. Location-based technologies that know when customers are near the store, department or product location can help retailers deliver highly targeted, time-limited offers directly to the customers’ mobile devices to maximize influence.
4. Provides a richer customer experience. Store associates can provide better customer service if they know more about the customer. Facial recognition technology applied to in-store camera and sensor data can help identify customers when they are physically present, and automatically provide sales associates with historical data that can enable more personalized attention as well as identifying upsell and cross-sell opportunities. This kind of data can also inform automated customer experiences, such as making it more convenient to get product information on a mobile device or find an item in the store that the customer was searching for online.
5. Gives decision-makers precise insights. IoT can transform retail behind the scenes by providing unprecedented real-time visibility into operations, merchandising, store planning and HR performance. Sensors and mobile tracking lets managers keep abreast of store traffic, identifying congestion areas, places where customers are pausing to examine signage and store displays, popular locations and neglected areas.
Data from IoT systems can pinpoint peak demand for service help so stores can optimize staffing levels and the expertise of staff to serve customers efficiently. It can track inventory depletion levels and automate the replenishment of popular items before they go out of stock on the shelf. Sensors can also enhance loss prevention efforts, both by tracking individual items with beacons and tags, and by recognizing suspicious behavior from video surveillance and notifying store management. All this data can help retailers continuously optimize their store performance to deliver the best possible customer experience while keeping costs low.
From IoT to the Cloud. Tags, sensors, cameras, beacons and mobile devices are the tangible manifestations of the IoT revolution, but the real action is happening in the cloud. That’s where all the data is gathered, analyzed and integrated with other business systems, then presented back to retail managers and staff in convenient, accessible ways like dashboards, alerts, automated mobile notifications and KPIs.
Retailers interested in taking advantage of these solutions should look at technologies that offer a complete end-to-end solution through the cloud.
Brendan O’Meara is Managing Director for Microsoft Retail at Microsoft.
