- Category: April 2014 - Mobile Marketing
As I reported last week, new technologies now allow retailers to use cellphone signals to track shoppers when they move around their store. The practice is controversial, and for sure we can expect a great deal of discussions, but it is increasingly widespread and for good reasons.
In-store navigation simply seems to make a retailer’s dream come true and it now can become reality with Apple’s iBeacons:
GPS will tell you how to get to the nearest store and iBeacons guide you once you’re inside, whether it’s to shop or pick up an order, or send messages about products, events and other information tailored to where you are - provided you have downloaded the Apple Store app and (hopefully) have given it permission to send notices based on your location.
Bluetooth must be turned on and the latest operating system, iOS 7 must be installed, so that the location-aware, context-aware, pervasive small wireless sensor beacon can pinpoint the user’s location in a store: iBeacons could send notifications of items nearby that are on sale, or items customers may be looking for, and it could enable payments at the point of sale (POS) where customers don’t need to remove their wallets or cards to make payments. It uses Bluetooth low energy proximity sensing to transmit a universally unique identifier, picked up by a compatible app or operating system that can itself be turned into a beacon.
Without a doubt, the iBeacon scenario offers advertisers new opportunities, since users don’t have to be asked for their consent or app activation anymore, but it is alarming to imagine what could be possible with Location Based Marketing and Advertising. Certainly, country-specific regulations concerning opt- in or opt-out will be discussed intensively sooner or later, but currently only an opt-out option is given, as the app can only be turned off manually. Countries that generally go for opt-in permission marketing most likely won’t make friends with Apple’s current solution.
Apple started to make use of its technology in its U.S. retail stores, but is taking an extreme-permission-asking approach, claiming that it’s a one-way communication with the phone and that Apple is not tracking users in stores or collecting personal information, but actually just tracking how many devices are activated this way.
What’s frightening, however, is the fact that Apple opens the door to more aggressive monitoring, tracking, and adverting that could end up in “location spamming”. To no surprise, the security firm AVG already launched a service that blocks mobile location tracking. As the iPhone continues to communicate with beacons in reach, this being sort of the default setting, the user needs to make sure to turn Bluetooth off if he doesn’t want to be tracked by any system out there. Especially since it can be expected that there will be apps that slip the permission to track with iBeacon written in those terms of service and privacy policies no one reads.
This raises the question, whether the installation of an app is sufficient to be considered as an opt-in to obtain unsolicited advertising messages, especially when considering that with the iBeacon it is easy to turn the app on when in or near a store, send location information to a database and then have some advertising pop up on the screen. Therefore, in the face of proper permission marketing, I think that this is not specific enough. For that reason, the courts in Germany, a country that even upholds double opt-in, just recently stripped the terms and conditions of Apple, Google and Samsung legally on a large scale.
Sanity and reason have been crucial, so far, when it comes to the use of beacons in stationary retail. The dangers, inherent in the use of push messages and the tracking of the behavior of customers in a retail store, seemed to be too high - at least for me - making me extremely cautious when dealing with the ever-growing number of providers in this segment.
OpinionLabs study results
In fact, these concerns just got confirmed last month when OpinionLab released its new study that explains consumer sentiment around these new tracking practices. The pioneer and global leader in Omnichannel Voice of Customer (VoC) feedback solutions revealed that consumers overwhelmingly do not want to be tracked via cellphone without explicit consent – and they expect to receive something concrete, such as a discount or free product, in return for their participation. The bottom line is trust: consumers report that they do not trust retailers to keep their data private and secure and they don’t trust that brands will use data to benefit shoppers (versus their own interests).
In fact, 80% consider the tracking of their smartphones in the store as unacceptable. Based on feedback from 1,042 consumers, nearly 88% of those who disapprove of tracking remain unswayed by retailers’ promises to use tracking data to improve the customer experience. The biggest concerns are that retailers will not keep the data secure (68.5%); tracking feels like spying (67%); and retailers will use the data exclusively to their own benefit (60.5%)
In general the study revealed that consumers do not trust retailers: A vast majority of shoppers (81%) do not trust retailers to keep data private and secure. Surprisingly, shoppers are most likely to trust local stores (15%) with shopper tracking data. Consumers are also twice as likely to trust upscale brands (10%) with data when compared to mass-market retailers (4%) – although trust is dramatically low for both.
This rejection runs through all age groups: Even the Millennials and GenY share suspicion about the new practice: While studies show that Millennials are more comfortable sharing personal data with brands online, this does not appear to translate to in-store tracking: 77% say it is not acceptable and 76% don’t trust retailers’ ability to keep data private and secure. Traps for retailers seem to lure everywhere and they feel like rolling the dice when it comes to rolling out in-store tracking and sales. The study found that 44% of consumers say a tracking program would make them less likely to shop with a brand. A comparable number (48%) say it would have no impact, and only 8% stated it would make them more likely to shop at the at store in the future.
If traders want to track the users in their stores, 64% of the respondents expect an opt-in and only 12% agree with an automatic tracking. At the same time, 64% indicated that even with an opt-in they wouldn’t allow being tracked, not even in their regular shops. Obviously, consumers want to choose and therefore consent via opt-in seems to be vital here (where a consumer actively chooses to participate in a tracking program). However, when it comes to the point where they choose to participate, consumers most likely get cold feet, as 63% reported they wouldn’t opt-in to be tracked – even at their favorite retail stores.
However, even if a glimmer of hope lies in these rather sobering results for retailers who approach their customers candidly, they have to make clear what they do, how the data is used and what the benefit for the customer is if they participate. But as said, it's just a spark, the rejections will most probably outweigh, in my opinion, and no one should think that customers would simply not notice the tracking and do it secretly.
Interestingly, consumers turned to their pocketbooks when asked what incentives would encourage them to participate in a tracking program. Across the board, consumers expect to be directly compensated for their participation, either by receiving cost saving and price discounts (61%) or by getting free products (53%).
“Consumer sentiment shows that retailers need to tread lightly when it comes to tracking shoppers on their mobile devices,” said Jonathan Levitt, CMO of OpinionLab. “There is a ton of suspicion around in-store tracking, but if it has to happen, opt-in with explicit consent is the strongly preferred way. Retailers also have to acknowledge the ongoing fallout from recent data breaches, and really up the game on privacy and security. The good news is that there is an opportunity for brands that are transparent about collecting data, use an opt-in approach and close the loop by showing consumers that these programs translate into something they value.”
If companies really want to use this new tool, the recommendation is clearly that the prior consent of the customer needs to be obtained. The user must know for which purposes and under which conditions he receives messages. If he has granted his opt-in, the marketer can send advertising messages, just as easily as in the case of e-mail advertising.
We don’t want to get the nasty surprise of 'Location Spamming', right?
By Daniela La Marca
OpinionLab presents their study results in an infographic: