Tracking versus privacy

The well-known management guru Peter Drucker always said that the purpose of business is to create and keep a customer. To do this, marketers must know what consumers think, feel and do--so they can use marketing to influence customer behaviour. Marketers know that customers are using the Internet and mobile devices as they shop or browse. Not surprisingly, marketers are also using technology to influence customer behaviour and satisfy customers.

For instance, Virgin Atlantic is piloting the use of iBeacon (an Apple mobile technology) to track its passengers in Heathrow and provide assistance as needed (or even before). Passengers might receive special offers as they walk through a retail area, for instance, or their boarding pass might pop up as the approach the gate. Many other marketers are exploring the use of beacon technology to reach customers when and where behaviour can be influenced.

Technology to track how many people pass its doors and how many enter, where they walk in the store and how long they pause in front of a display, is increasingly on retailers' shopping lists.

For privacy reasons, however, many consumers want the ability to be notified of tracking and opt out of tracking. A number of tech firms that provide tracking capabilities are allowing opt-out capabilities. How can marketers find the proper balance of tracking and privacy?

Shoppers + Tracking = Better In-Store Experience?

Will shopper tracking benefit customers as much as retailers? Although online retailers have long been able to track their customers page by page, click by click, store retailers generally lack the kind of comprehensive technology needed to unobtrusively monitor shoppers' movements and behaviour from entrance through the aisles to the exit.

Retail stores are keen to compete with online rivals by giving shoppers a better experience--meaning the right service at the right time, the right price, and the right merchandise where and when wanted. Many stores have data warehouses filled with customer details captured from transactions and loyalty-card schemes, but less specific information about the in-store behaviour of individual customers.

This will be the decade of shopper tracking in stores, experts say. The French Connection began using Wi-Fi to track shoppers via their mobile phones last year, for example. The upscale specialty store Nordstrom installed in-store tracking in 2012, counting the number of people entering and exiting its stores by following the Wi-Fi signals on their mobiles. Understanding footfall patterns helps stores plan employees' schedules and merchandise display possibilities.

To its credit, Nordstrom posted signs informing shoppers of the tracking system, explained that turning off Wi-Fi would allow shoppers to opt out of tracking and used aggregated data rather than individually-identifiable data for shopper analyses. But after a public outcry about invasion of privacy, the retailer was forced to stop tracking shoppers. 

Now Apple is promoting its iBeacon technology for shopper tracking. The system allows in-store sensors to detect iPhones in the area and offer those shoppers customised deals such as vouchers or free samples. Shoppers might be reminded to visit aisle 2 for the greeting cards on their shopping list, or rely on iBeacon to alert the store to prepare preordered merchandise for pickup when the shopper arrives.

Other shopper tracking systems include eye-tracking to determine where shoppers look as they push trolleys through the store. Procter & Gamble is using eye-tracking to gauge the appeal of product displays in stores, for instance.

The key to shopper acceptance will be providing a better in-store experience. If shoppers don't perceive any benefit in being tracked, they may object or turn off their Wi-Fi signals or buy from other stores. And if consumers become more concerned about being tracked when their mobiles are seeking out Wi-Fi signals, regulators may step in to force more prominent disclosure of tracking or limits.