There's a fine line between tracking the behaviors of customers in your brick-and-mortar store and spying on them. The technology discussed here uses data from customers' smartphones in conjunction with opt-in apps to offer patrons deals and show retailers what's happening in their stores.
By John Brandon
Is there a safe way to track customers in a retail store? Don’t ask Nordstrom, which came under fire in May for tracking the Wi-Fi signal of users who visited their store.
Using a service from Euclid Analytics, Nordstrom was tracking the media access control (MAC) address of a smartphone to analyze customer behavior in the store. For example, the retailer can find out where in the store most customers linger or how often a phone user shops at a particular location. According to an ABC News report, customers were not happy about the privacy invasion.
Fortunately, there are less invasive ways to accomplish the same goals. The six technologies featured here do not track a specific customer or his purchases unless they opt-in to the service. In some cases, data is collected anonymously but isn’t tied to a specific patron’s MAC address.
1. Wi-Fi Fingerprinting: Track Strength of a Signal
This technique tracks the Wi-Fi signal strength of a smartphone or tablet in the store. One leader in Wi-Fi fingerprinting, Bellevue, Wash.-based Point Inside, offers the service through a store’s branded app as part of an opt-in loyalty program. The Wi-Fi signal strength reveals where a customer goes in the store, which then helps a retailer develop product placement strategies.
2. MEMS: Create a Heat Map of Customer Activity
To provide more exact tracking, retailers can use the microelectromechanical systems (MEMS) chip on a smartphone. MEMS data uses the accelerometer and gyroscope within a smartphone or tablet to show the exact angle, direction and position of the device. Point Inside already has the technology to read this data through an opt-in app, but this specific technique appeals to companies because it can create a precise heat map of how a customer has travelled through a store.
3. LED Lighting: Use Frequency Emissions to Determine Customer Location
That’s right—one of the latest methods for tracking customers involves the LED lights in the store, and ByteLight is one early pioneer. Because an LED emits a particular frequency, a smartphone app can detect a specific frequency and therefore determine the exact location of a customer. From there, a store can track a customer’s location and path around a store—and send “hyper targeting” content such as a special on that shirt on the rack that’s right in front of a patron.
4. Bluetooth 4.0: Use Smartphone Signals to Send Deals to Customers
The iPhone and iPad already use Bluetooth 4.0, and Android phones will eventually use it as well. Bluetooth 4.0 uses a low-power signal to communicate a wealth of data.
Swirl is one company finding a way to use this data. First, a retailer installs battery-powered sensors around its store. Then it encourages customers to download a Swirl app and agree to transmit their location (from a range of up to 300 feet). The customer receives discounts, while the retailer knows exactly where shoppers go in the store.
Of course, using a loyalty program is one of the best ways to track customer behavior. A good example is FiveStars, which provides an NFC-enabled card that customers tap on a terminal at check out.
The loyalty program integrates into a store’s point of sale system, too. While you can’t track the paths that customer take around a store, you can track how often they visit, the most common time and day of their purchases and the specific items they buy.
John Brandon is a former IT manager at a Fortune 100 company who now writes about technology. He has written more than 2,500 articles in the past 10 years. You can follow him on Twitter @jmbrandonbb. Follow everything from CIO.com on Twitter @CIOonline, Facebook, Google + and LinkedIn.