We’ve been following the progress of in-store mobile engagement for some time, so I was interested to check in recently with Todd Sherman, CMO of Point Inside. Point Inside has been developing apps for retailers that combine mapping and indoor location technology with purchase history and intent for several years.
Todd and I talked about their new research on how location technology affects shopping behavior, the difference between in-store mobile engagement and ecommerce, and how retailers are responding to the new capabilities that enable them to both serve customers and see what is happening in their stores.
Brick Meets Click: There are a lot of shopping apps out there these days. Has this made it harder to bring a shopping app to market successfully?
Todd Sherman: Retailer-branded apps are different from standalone apps that compete for attention in the app stores. Retailers have an advantage in that they can cut through the usual app store clutter and draw shoppers’ attention to their apps by
- Promoting the app through their ads and signs in stores.
- Using incentives to encourage trial.
Our research shows that shoppers want help finding items in the store. Do retailers appreciate this need?
Yes, retailers know it’s top of mind. Many cashiers will ask customers, “Did you find everything you wanted?” This has been an issue for more than 30 years, but now mobile location technology makes it practical for retailers to do something about it.
Shoppers definitely benefit when they have access to in-store location technology, but there are real dollar benefits for retailers also. When a customer has a 20-item order and they need assistance finding that last item, helping them locate it generates a 5% increase in the basket.
You’ve done some new shopper research. Tell us about your study.
We set up A/B tests where everyone has the same apps for shopping lists, doing searches, accessing coupons, etc. but only shoppers in the A group had the location technology feature.
What are some of your key learnings?
We found that there was five times as much activity on the apps with the location technology feature compared to those without it. It turned out that when customers could find the items they wanted and also plot their most efficient trip through the store, they put more items on their shopping list and used more coupons. On average:
- Shoppers with the location technology feature put 12 items on their shopping list vs. 3 items for those without it.
- Shoppers with the location technology also used four times as many coupons as those without it.
The availability of location technology changes the dynamic of the way people shop, but it also generates insights into the shopping behavior of customers. Since shoppers with the location technology feature generate five times more activity on the app, they are also generating a lot more information that retailers can use to fine-tune their marketing and merchandising.
How is in-store mobile engagement different from traditional ecommerce?
The value of in-store engagement is that it connects customers to the store; it leverages this important asset. Ecommerce does the opposite; it diverts interest away from the store by taking customers online.
When a retailer is developing an app, there’s a strong tendency to assign the responsibility to their ecommerce group, because they assume this group is familiar with ALL the digital aspects of retailing. But in reality, these folks are usually focused on the website, not the store. Also, ecommerce groups are often measured on their direct online conversion numbers. This is an issue, since 90% of business is still done in-store. In-store mobile engagement contributes significantly to purchases, but the valuable conversion happens at the store register and not in the app.
Finally, it’s important to understand that people interact differently with their mobile devices than they do with their PCs. This needs to be considered when developing the user experience.
Did you look at the impact of bringing a coupon or special price to the attention of shoppers when they’re in front of the item in the store?
Not yet, but we will be looking at that soon. When shoppers use the app’s shopping list function, the retailer already gains important information about what the shopper is planning to buy, and this makes it possible to make more targeted offers to specific shoppers. For example,
- Sponsored ads to switch a purchase from one item to another, which can create a new income-generating opportunity for retailers for brands to invest in.
- Make personalized recommendations for additional items that might be of interest to the shopper on their route through the store.
This also lays the groundwork for a retailer’s own private ad network. Grocers have a tremendous opportunity to deliver ads directly to shoppers in the store. This starts with coupons, but as the information adds value, they will be able to:
- Tell advertisers which shoppers are likely to respond to different types of offers.
- Use POS data to validate the power of an offer to drive sales.
How are retailers reacting to the app?
We’re seeing strong interest. In the next few months, we’re launching two top-ten retailers and have additional pilots are underway. It is very interesting for retailers, because the app allows them – for the first time – to see what’s actually happening in the store. Many find it eye-opening.
In a lot of ways, this is what Amazon does so well – use data to learn what their customers want – and we think this is an important part of Amazon’s appeal. In fact, in a recent Point Inside blog, I proposed that the future isn’t about Amazon, it’s about how Amazon analyzes data. The challenge is – always – that there’s a lot of data to be interpreted.
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