Privacy and In-Store Analytics: A Code of Conduct Establishes Trust

6/3/2014
Privacy and in-store analytics are currently hot topics in the retail industry. Technologies for gathering data about in-store foot traffic and shopping behavior, including location-based tracking of mobile Wi-Fi and Bluetooth Low Energy (BLE) signals, are catching up with the sophistication of online clickstream analytics, and retailers are eager to make use of these innovations to better understand the brick-and-mortar consumer and measure store performance. But with stories about data-stealing drones, hacking breaches, NSA phone spying and social media data mining capturing the public's attention, consumers are more cognizant than ever about the privacy of their personal information and wary about how technologies for gathering data — whether online or in real-world environments — are being used.

With this in mind, how do retailers strike the right balance between improving visibility into what's happening in their stores to serve customers better while maintaining customer loyalty and trust? Here are four key golden rules" for using in-store analytics while also addressing the issue of privacy: 
  • Be transparent and provide a choice. Transparency is critical to trust. Consumers will be turned off if they feel that retailers are trying to track them without their knowledge or consent, so it's important to disclose how data is collected in the store, as well as how it is being used, whether through a publicly available (and clearly worded) privacy policy, onsite signage, or both. Giving consumers a choice in the matter is also essential — no one wants to lose prospective customers who are not interested in sharing their data. Depending on what information is being collected and how, there are different approaches to provide people with simple methods, such as registries, for opting in or opting out of the process. Although many forms of in-store analytics are anonymous and don't capture personally identifiable data, it's always good practice to accommodate various levels of comfort with sharing information. Consumers appreciate being in control and are more apt to trust retailers that are up front about their businesses' analytics practices and that don't force them to participate.
  • Deliver value. Consumers are more likely to embrace the idea of in-store data collection when the benefits are readily apparent. An exchange of value is important. Customer loyalty programs offer a good model. Customers that participate and share information get something in return, whether points towards a gift certificate, discounts, free merchandise, preferential offers or invitations to special events. Using location and behavior-based analytics to reward repeat or frequent store visitors with coupons and special offers is similarly attractive, but the value delivered by these types of technologies goes well beyond on-site promotions. The more that retailers know about what's happening inside their doors, the more adept they can get at delivering an exceptional in-store experience. For instance, an accurate real-time count of in-store traffic can help managers better forecast staffing needs and reduce the time that customers wait in line. Customers looking for a size or wanting to ask a question can be identified and helped more quickly. Information about behavior and shopping patterns can even be used to improve store layout, design and logistics. Incorporating Wi-Fi and BLE analytics also offer an array of possibilities for communicating with customers and helping them find what they need in a store. When that customer who opted out of location tracking sees another customer get a text on her smartphone about which register lane is the shortest, he may even decide to opt back in.
  • Make smart technology decisions. Just because something is possible, doesn't necessarily mean that it's a good idea. Technologies like facial recognition, mini drones, smart sensors and more are quickly moving out of the realm of science fiction, raising some valid questions about what is and is not intrusive. When it comes to in-store technology deployments, smart retailers will do well to understand the difference between solutions that add value (to both the retailer and the consumer) and those that could potentially damage trust and the customer relationship. How do you know what's crossing the line? Often it comes down to good old common sense. Tools that are used responsibly — with transparency, sensitivity to privacy and with consumers' permission — are those that are most likely to be well received. The level of personal detail obtained also makes a difference. For example, technologies that include features like privacy filters that screen out personally identifiable information or that only capture anonymous information to begin with (such as patterns, enters/exits and dwell times) are probably going to be less problematic than facial recognition, creepy mannequin cameras or anything that might make a shopper feel like they are in a real-life version of "Minority Report."
  • Have a code. The best way to be sure you are addressing all of the above? Seek out organizations like the Future of Privacy Forum (FPF), a think tank and government-industry coalition seeking to advance responsible data practices, which provide leadership and guidelines about how retailers and other types of businesses can responsibly balance data analysis and privacy. For instance, the FPF's Mobile Location Analytics Code of Conduct offers a good example of how industry leaders, consumer interests and government are collaborating to address concerns related to data and privacy in a proactive way. Created by FPF in collaboration with U.S. Senator Charles E. Schumer and leading analytics companies, the Code lays out a number of privacy guidelines that participating companies have agreed to adhere to. Under the Code, businesses that collect data through mobile location technologies must limit how the information is used, shared and retained and agree to notify consumers about its use. They must also agree to offer consumers the opportunity to easily opt-out, if they choose. It is efforts like the Code of Conduct that will lead the way forward for retailers that want to use in-store data to improve service and the shopping experience while also continuing to earn their customers' loyalty and trust. 
In-store analytics and consumer privacy need not be at odds. Retailers that use data responsibly and follow a code will be able to offer their customers better service and deliver a better experience, which is a win-win for everyone involved.


Ralph Crabtree is CTO and co-founder of Brickstream, a provide of in-store analytics and participant in the Future of Privacy Forum's Mobile Location Analytics Code of Conduct. He is an expert in the development and application of technologies for brick-and-mortar analytics. 
 
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