A growing interest in transaction data and electronically connecting with consumers is driving interest in mobile marketing and loyalty, evident in workshops and on the trade-show floor at this year’s NACStech conference.
Held in Nashville, Tenn., in May—and boasting the largest attendance of the conference outside of Las Vegas, at about 1,200 registrants—NACStech sessions addressed the potential of mobile phones communicating discount offers, rewards updates and electronic coupons.
“It’s another layer of communication between us and our customers,” said Kevin Brumley, president and CEO of Sac-N-Pac Stores Inc., San Marcos, Texas, whose chain recently initiated a social-marketing strategy. Speaking to approximately 200 attendees at a session focusing on mobile marketing, loyalty programs and social media, he said, “It’s a communication that’s going to happen with or without us.”
The chain’s efforts began modestly, but over time, Brumley felt a successful social-marketing strategy had to have its own resources. His information technology (IT) people were focused on day-to-day concerns, trying to keep the chain’s technical engine running.
His 45-store chain would eventually bring on staff to address social marketing, creating goals that included the following:
- Providing customers a consistent experience.
- Creating a strategy that would cross all operational areas.
- Driving action so the customer interaction would lead to increased sales.
Though many results were qualitative, the chain found areas in which to measure success, including the following:
- The number of times the chain engaged customers.
- Increased participation in its loyalty program.
- Increased database of customers.
- Driving people to the chain’s website.
The company began a points-based loyalty program a few years ago and today uses social media to augment that effort. Using Facebook, Twitter, foursquare and YouTube, it has initiated efforts such as having people take a photo of its company vehicle—heavily done up in the chain’s color scheme—as it drove around town, then post those photos on Facebook.
Similarly, the chain would donate to a particular charity if people “liked” that charity’s photo on Sac-N-Pac’s Facebook page, donating $1 per like and an additional 50 cents for sharing the photo with friends. In that drive, 1,159 people liked the promotion’s photo, while 816 shared it.
Pressure to engage customers is coming from multiple directions, other session speakers said. Houston-based Shell has already “crossed the line,” according to Anton Bakker, president of Outsite Networks, Norfolk, Va., who moderated the panel. The oil company has moved its rewards program beyond ties to partner grocers to cross-discount fuel with c-store items, he said. And, he continued, “it will happen everywhere.”
Mobile communication will become integrated with payment, loyalty and social marketing, with “the power shifting to the consumer,” he said.
To tap into that growing energy, c-store operators are trying to differentiate themselves, reaching out to customers in an effort to stand out, according to Axel Kirstetter, vice president of product strategy for KSS Fuels, Florham Park, N.J. “They’re injecting themselves more in loyalty and marketing activities,” he said.
That increased activity benefits solutions providers such as KSS, because retailers are becoming more sophisticated with their operations and more interested in looking at options. He also noticed a shift in thinking regarding business-intelligence solutions, with dollars moving from capital spending to operational, giving way to software-as-a-service (SaaS) business models.
Mobile Payment?
Meanwhile, other speakers addressed related topics of mobile marketing and payment. In a session on the future of payments, speaker Tilak Mandadi, senior vice president of technologies for American Express Merchant Services, New York, asked the group how many believed mobile payment was an inevitable trend. Most raised their hands.
Mandadi followed by asking how many were willing to invest in the devices that will accept that form of payment. Only about 5% of the attendees did so. Mandadi pointed out the irony and asked whether one could happen without the other.
“If you don’t have the merchant acceptance, you can’t have [a new payment option],” he said.
Historic trends show that payment methods will take off in areas most fertile. For instance, mobile banking in countries such as China is growing because of the lack of banking infrastructure. The United States is a different story.
Developing the ability to accept mobile payment is critical for retailers, said a spokesperson for New York-based mobile-wallet alternative Isis. The company exhibited in the Gilbarco Veeder-Root booth, with the two companies promoting a partnership. Through Isis and other technological modifications, Greensboro, N.C.-based Gilbarco will be able to accept mobile payment. (See related video online at http://on.fb.me/K8pkzg.)
Navigating Data
Other retailer attendees hoping to take advantage of emerging data-driven consumer insight are finding technology difficult to navigate. Wright Gore, a retailer with Oil Patch/Brazos Valley Inc., Angleton, Texas, is having a tough time just trying to extract data from his point-of-sale (POS). “The trick is to get the technology and POS system to do more than ring up a transaction,” he said.
One of about 200 people participating in a conference session on data mining, Gore listened to speaker Dave Hamilton, head of global analytics for data-mining company Aimia Inc., Montreal, talk about how it develops databases, segments customers and creates action plans.
Hamilton spoke of three components driving transaction analytics:
- Shopper behavior: Develop ways to understand and motivate shopper attitudes and behavior.
- Retail offer: Create a format, product offer and promotions tailored to customer needs.
- Third-party relationships: Nurture mutually beneficial partnerships.
Data-mining companies are able to extract, refine and deliver information that creates an “agent for change,” he said, but pointed out that having information is only a step toward effective data use. Implementing change is equally as important.
With every transaction, information about the payment, product and the customer comes into play. “After knowing transaction history, I can say if this person just had a baby or bought a new car,” Hamilton said.
In the c-store business, Hamilton said, frequency is a major goal, with increasing spend per visit adding less to the bottom line than a returning customer purchasing a whole new basket of goods.
Appealing to that customer may sometimes mean cutting items, especially if the goods are redundant or fail to add to the “breadth” of opportunity for the store set. For instance, some products are preferable as a second choice if a first choice is not available, he said. Knowing what those products are and having them on hand is critical.
Connecting transaction data to specific individuals so that targeted offers will result can be a complex matter, especially if no names, cellphones or e-mails are involved, Hamilton said. Ultimately, via loyalty programs, those core elements are desirable.
The mood around technology is changing within the industry, said Gray Taylor, executive director for the Petroleum Convenience Alliance for Technical Standards (PCATS), Stafford, Va. “Used to be that IT got dragged into a project to make sure it worked,” he said. “Now [retailers] drive IT to take the lead.
A Fixed Point
Predicting the future is more about setting a fixed point on the horizon and aiming toward it, said Michael Rogers, a New York-based technology author and futurist, in the conference’s closing session. “You may not get there directly,” he said. “But it’s somewhere to shoot for.”
Rogers, who used to be a columnist for The New York Times, said five trends are developing: Consumer devices appearing “everywhere,” wireless becoming ubiquitous, intelligence in “the cloud,” digital standards, and digital “personalities.”
With all types of devices, wireless connectivity and standards accelerating the adoption of technology use, change will happen quickly, he predicted. One of the examples he spoke of was futuristic eyeglasses (joking of Apple’s future “iGlasses”) that when worn would overlay digital information before the eyes of users. He envisions people with these glasses walking along with their hands in front of them, manipulating the digital options before them.
He also spoke of supercomputers housing enormous amounts of data, with one experiment in particular involving medical information. In that test, a virtual physician in a corner drug store could conduct an initial diagnosis for a walk-in customer.
The Tech Event
At the close of the conference, NACS officials announced that NACStech will merge with the annual meeting by industry standards group PCATS.
The new show, The Tech Event, will take place in May 2013 and feature “more focused educational sessions, networking time and a different format for suppliers to showcase their products and services,” said Hank Armour, president and CEO of NACS, Alexandria, Va. “Next year, the power of NACStech will double as we merge our industry’s two biggest tech events into one. The Tech Event is another step in our seamless integration of PCATS under NACS.”
Prior to this announcement, PCATS held its annual standards-focused meeting in January. Its content has typically been working sessions surrounding software protocol, integration and data-security concerns. Time will tell how that will blend with the NACStech meeting, which has adopted an educational bent tied to a sizable trade show.
Show-Floor Trends
On the trade-show floor, numerous vendors showed how c-store technologies appear to be melding, adapting to consumer demands and retailer needs:
- Dispensers Absorbing Technology to allow for mobile-phone payment. Austin, Texas-based fuel-pump manufacturer Wayne announced near field communication (NFC)-enabled readers that allow consumers to pay, present loyalty cards and redeem offers with the wave of a smartphone. Tied to its iX Pay Secure Payment solution, the modular, in-pump device supports mag-stripe contactless, Euro MasterCard Visa (EMV) contactless and NFC mobile-payment programs.
“Contactless and mobile-payment technologies are going to help retailers provide their customers tremendous value and incentives, as well as attract new customers with their differentiated offerings,” said Tim Weston, Wayne North America product manager. “With the emergence of contactless payments and NFC technology on smartphones, Wayne is … offering this technology as part of our innovative secure-payment solution.”
- Integrating with “the Cloud.” Kirstetter of KSS Fuels said even the smaller players are trying to develop customer-relationship management (CRM) intelligence as a way to stand out. To do so, many are opting for solutions based off-site, in the Internet’s “cloud.” The company provides analytical services that help retailers better understand consumer demand, competition and the effect of changes on local markets. It quantifies factors influencing how and why consumers shop certain locations, highlighting how location, facilities, merchandising, competition and other retail attributes combine to influence purchase decisions.
- Multiple Options. Plano, Texas-based Retalix brought many technology elements to the site level, with products such as self-service kiosks and mobile-phone technology that allows payment via “the cloud.” Brad Prizer, vice president of global marketing communication, said its solution is assisting Framingham, Mass.-based Cumberland Farms and its mobile-payment program.
- Network Management. Growing from strictly processing payments to managing a retailer’s entire data-transfer network has been the path for Plano, Texas-based Heartland Payment Systems, according to Bill McCollough, executive director of petroleum. The evolution was a natural one, he said, explaining how a critical development was moving from dial-up to digital. Heartland had always offered payment processing, but the technology evolution “was like building a six-lane highway with only one car going up.”
Another important trend was cost, in that bandwidth along the information superhighway grew as costs dropped. As a result, so-called “managed networks,” or services that build and monitor electronic networks, are gaining in popularity, said Dirk Heinen, CEO of Acumera Inc., Austin, Texas. With more and more companies competing for retailer business, customer service can be a differentiator, he said.
Other networking companies are evolving. Dan Glennon, senior vice president of marketing and strategy for Cybera, Franklin, Tenn., said his company is focusing on network security, providing solutions via the cloud.
- EMV Experience. As security becomes more of a concern for retailers, network providers must address evolving security issues, according to Pat Polillo, vice president of sales for AJB Software, Mississauga, Ontario. That includes including EMV, a technology that many of its Canadian clients have already adopted.
- Data Integration. Consumers today are looking to integrate loyalty with pricebook information, trying to figure out what’s working well, according to Chris Kiernan, director of retail applications for ADD Systems, Cranston, R.I. Retailers often can’t access data that’s coming off their devices, “They know the data exists and they need to find it,” Kiernan said.
- 3-D TV. A three-dimensional TV shown at the booth of KickBack Rewards System, Twin Falls, Idaho, on the trade-show floor lengthened the viewing time of the average customer from 5 seconds to up to 90 seconds, say booth officials. Displayed images showed rotating bottles of beer and cartoon airplanes seemingly floating in front of the TV screen.
- Device Integration. Integration between devices—such as POS registers and display signs—and advancing technologies for mobile payment and cashier upselling will continue, said James Hervey of VeriFone Systems Inc., Clearwater, Fla. In addition, data movement and access to it has become a priority for retailers, said Aaron McHugh, division director of PriceAdvantage from Skyline Products, Colorado Springs, Colo. Compliance with data-security mandates has brought the industry to a place where data manipulation from a variety of devices, including price signs and POS, will be standard, he said.
- Bill-Stacking Safe. A “stacker bag” for safes, which stacks notes into a plastic deposit bag, was a feature from Tidel Engineering, Carrollton, Texas. A heat-sealing mechanism packages the money, creating a cost savings for retailers, according to Ed Grondahl, executive vice president of global sales. A new removable door in that model allows access to validator heads, helping employees clear jams and cutting down on service calls.
- Item-Level Transition. Movement to item-level tracking is helping retailers create efficiencies and get a more hands-on feel for what customers want, said Melissa Fox Hadley, retail solutions manager for The Pinnacle Corp., Arlington, Texas. “The big thing is to get people within the [retail] chain on board,” she said. “Discipline is needed to track item-level movement.”
Retailers are focused on controlling costs in a very competitive environment, said Bruce Bates of PDI, Temple, Texas. Along with other exhibitors on the trade-show floor, he suggested retailers take a very hard look at item-level inventory. “The sessions offered at NACStech pertaining to this topic were well attended,” he said. “PDI is well positioned to offer its customers the technology base to support this … way to [better] manage the store environment.”
Retailers today stand at the cusp of a commercial revolution, Rogers said. He told the story of Russian author Leo Tolstoy, who at an old age was able to view an early silent film. Rogers said Tolstoy regretted that he was unable to take advantage of this new way of storytelling. Referring to today’s technology, Rogers said, “This is our challenge; it’s happening on our watch.”
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