Tuesday, April 17, 2007

Personalized Marketing Program Has Good Numbers

Among the lakes, hills and gorges of upstate New York, the Green Hills Market began its retailing life as a farm stand in 1934 just outside of Syracuse. It thrived on local products and service that catered to individual customers. But as it has grown into a modern supermarket known for technology innovation, it has found new ways to offer customers its personal touch.

Green Hills is out to perfect the widely held if elusive desire of retailers to market to a large number of customers on a truly one-to-one basis, says proprietor Gary Hawkins. And he's doing it by applying web-based analytics, the same principle that lets web sites analyze online shopping behavior and create highly personalized shopping experiences and marketing offers to the physical store. One of our goals is to bring to brick-and-mortar retailing the capabilities of the online world,he says.

So when a shopper participating in his store's loyalty program walks in the door, the first thing she does is touch a finger to a web-connected biometrics scanning device at a SmartShop kiosk, placed prominently near the store entrance. Within seconds, the kiosk prints out a list of coupons tailored to her recorded shopping behavior.

When she's done shopping, the shopper touches another fingerprint scanner at checkout, which sends a record of her purchases through a web-services-enabled network to a back-end database, where special algorithms work with sales data and promotional data to configure a new personalized batch of coupon offers.

And so the cycle starts all over. The system is designed so that, when the shopper returns a few days later and again touches the SmartShop fingerprint scanner upon entering the store, it will print out a new list of coupons based on her up-to-date shopping behavior.

Customers respond

PBT's SmartShop system is just one example of how retailers are bringing the web into stores as a way of better understanding and engaging customers. The applications differ, but all focus on developing relationships with shoppers to turn them into long-term, profitable customers, and for most that means across multiple channels.

In-store web-enabled devices provide a foundation to provide the highest level of customer service and provide a link to other channels,says Sunita Gupta, executive vice president of retail consultants LakeWest Group LLC in Cleveland. And two things that most retailers talk to us about are how to offer better customer service, and how to satisfy the requirements of multi-channel retailing.

Deployed a year ago in Green Hills Market, SmartShop has elicited an unusually high coupon redemption rate of 20%, Hawkins says. By comparison, the retail industry average for coupon redemptions is about 1%, according to several sources including research and consulting firm Aberdeen Group Inc.

The program is also helping to generate more repeat store traffic and sales, Hawkins adds.

The SmartShop service has been extremely popular, and shopper participation is already impacting 50% of store revenue he says. Shoppers enrolled in SmartShop have increased their visits by 10% over a comparable period a year ago before the program was available, he adds.

Hawkins and his separate consulting practice, Hawkins Strategic, helped develop the SmartShop system with Pay By Touch, a company that also provides fingerprint activated payment devices. Following a test of the SmartShop system by Green Hills, Pay By Touch made it generally available in January and is talking with at least two other large retail chains about deploying the biometrics version.