2011.25 | Trade Privacy for Convenience

All retailers want to understand their customer better to sell more stuff.  In order to gain an understanding data must be gathered to build customer profiles.  Loyalty or member based card programs were instituted to gather data.  Consumers were and are willing to give up some privacy in return for a reduced price or special offers.  As technology has matured and become ubiquitous, privacy has become more precious to some.  Pricing has become increasingly competitive, and one can only discount so much.

One strategy for driving loyalty and gathering data is by offering convenience in return for taking part in a loyalty program.  One relevant current example is Starbucks’ mobile payment which is available to customers with a registered Starbucks card, and nobody else.  While there are benefits like a free shot of syrup and a free birthday beverage, these are standard items.  More exciting to customers is being able to pay quickly and simply every day, and it can only by done by registered customers.   What if we were to take this registered user benefit further?  Some examples:

  • A customer has coupons and offers tied directly to their card.  The customer only requires a reminder to buy the product to obtain the offer.  No need for customers to clip coupons or remember to bring them along.  When the loyalty card is scanned, and then a product is scanned, the customer gets the special price automatically.  With newer software solutions, this connectivity to the card can get granular enough that individual prices can be offered to individual segments or even individual customers if retailers wish to do so.  Not having to remember pieces of paper in the digital age is a benefit to consumers, and obtaining unexpected offers breeds loyalty.
  • Price guarantees are often provided over a certain time period.  In the online world, pre-orders have price guarantees that are provided automatically.  Why should customers have to go back to stores to ask for their credit?  Why not allow loyalty card holders or high value clients automatic refunds for price guarantees?  While it’s not practical for grocery, it can be done for general merchandise, fashion, and any large ticket items.  While it sounds counter-intuitive to give funds back, it is currently rare enough that it will drive confidence in a retailer to encourage return business on profitable large ticket items.
  • Loyalty customers could be eligible to receive e-receipts.  Retailers like Old Navy and Sears already provide such platforms, however there are some potential holes in the solution as it exists today.  First, if a customer has to provide an email address, there is always a chance that the receipt could go to the wrong place, and the customer will not have a receipt – a potential problem for both parties.  Second, providing e-mail addresses will soon start to slow down the check-out process.  Using a loyalty card or even an account number attached to the card will provide a quicker checkout experience and a database for the receipts.  Apple Stores already effectively do this using a customer’s Apple ID for the transaction based on the customer’s credit card swipe.
  • If a customer leaves an item behind at POS or Self-checkout, they can automatically receive an SMS message to ensure that they have all of their items with them.  This could be triggered by a button on the POS linked to the customer’s loyalty card which has the customer’s mobile number.  If the customer registers their mobile with the loyalty program, when they cash out, the cashier could have a button on their screen that allows them to SMS previous customers a standard message indicating that they should ensure that they did not leave anything behind.
Privacy for lower prices is common enough in the retail landscape.  There are many more creative outlets possible given all of the details in today’s technology.  Sooner or later, a savvy retailer will cash in on these potential differentiators.  These benefits are still novel today, and can win an audience accustomed to convenience and novelty.  Best of all, it uses technology in a way consumers love – in a manner that is ideally transparent to the user.

2011.20 | Square = Payments + Filing Cabinet?

Making payments via a mobile phone is not technically difficult.  What is difficult is making those payments as simple and ubiquitous as swiping a payment card at a point of sale.  

I reviewed all of the points needed to make a mobile wallet work 2 years ago, and we’re still waiting for the breakthrough.  (If we finally get NFC on iPhone 4S in September or on a new Blackberry – we may finally get a version of mobile wallet breakthrough courtesy of Apple trying to get a stranglehold on payments leveraging iTunes.)

Solutions like Square are really pushing the envelope, and that is great for the payments and technology industries.  It’s easy to get caught up in every day work and become comfortable and to say some things are just not possible.   

Sometimes it takes a new entrant who actually tries to do something obvious but so monolithic nobody wanted to tackle it to move a solution along.  While Square was originally envisioned as a personal or small business payment system, their latest attempts at installations in a couple of stores in New York City point to them attempting to move this sort of mobile payment system up the food chain to bonafide small businesses.

What is really interesting about the Square solution is not just the payment side, which has been languishing for many years now and will not be solved without bridging the points I made 2 years ago, but another attempt at leveraging e-receipts on the solution.  I have long been a proponent for at least shortening, and ideally eliminating paper receipts.  I pick up dozens of receipts in a week – just buying coffee or a juice, picking up a greeting card; you name it.   Let’s not mention big ticket purchases or the arm length tapes from grocery stores.  I scan significant receipts onto my PC or Evernote for filing and immediately recycle.  Who can keep track of all of the receipts, and is it worth it?  What Square attempts to do is leverage the integration of payment and mobile to keep a wallet full of those receipts on the customer’s mobile device, skipping the scan and file step.  The solution provides a benefit to both customer and retailer.  The customer gets a record of all of their purchases, and the retailer effectively gets a built in loyalty tracking system.  But when you think about it, what’s the benefit of knowing how many coffees or bagels you purchased to a client?  It’s not incredibly helpful.  Keeping the receipts for the last 10 visits to the local superstore where I bought a pair of pants that don’t fit my daughter that I need to return- that is much more helpful. 

So how do you get a receipt repository that would scale?  There are certainly a number of e-receipt solutions out there.  The problem is around getting some level of scale and a common platform people will use and trust. 

My contention is that the organizations best positioned to do such a thing would be the credit card companies.  The credit card companies are well known, and trusted with financial data.   The data for the transaction total is already passed to them and their servers.  It would be challenging, but much less difficult to add a transaction number or details to the data string sent back to the credit card company via the payment terminals.  While not all clients would use such a service, even a percentage of customer using e-receipts should drive significant cost savings in paper usage and returns fraud.  Given all of the negative press around credit card processors, expanding their business in a new direction to drive revenue from either retailers or consumers for a useful service.

Moving to a receipt free society is a significant challenge, but at least some organizations are trying.  The cash registers (ECR’s in fact) are not gone from the stores where Square is being tested and the first attempts at using were not very smooth – after all it’s a new technology and we should hesitate to trust cellular coverage so deeply to complete a transaction at present.  The wallet as receipt holder is still not there yet, and there are many, many operational hurdles that I haven’t even mentioned, but it continues to become more and more realistic to imagine.

%d bloggers like this: