Boosting retail sales with IoT-powered customer engagement

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Retailers are descending on New York City this week for the National Retail Federation’s (NRF) Annual Convention & EXPO, hoping to discover new tools and strategies to create a unique customer experience through differentiation, engagement and rich insights into behavior. Technology is a vital part of the evolution of retail, and not just the array of barcode scanners, point-of-sale (POS) devices and digital signage available in stores. The real key for retailers is to connect and track these line-of-business assets to improve efficiency and reduce costs; to optimize operational performance with real-time intelligence; and ultimately to transform by interacting with customers in new ways. With the Internet of Things (IoT), retailers can combine and analyze data from different sources to deliver truly personalized and individualized engagement — when and where customers are ready to engage.

The brick-and-mortar store is still the heart of the retail experience. In Embracing Innovation: Deloitte Global Powers of Retailing 2015, Deloitte reports that the 145 Top 250 companies with e-commerce operations generated 6.2 percent of their combined retail revenues online in 2013. Remove Amazon and JD.com from the equation — they’re the only two online-only retailers among the Top 250 — and e-commerce as a share of total retail revenue falls by one-third, to 4.2 percent. This shows how crucial it is for retailers to engage with customers in ways that draw them into stores.

New Zealand-based VMob is harnessing IoT to help McDonald’s transform its customer engagement in the Netherlands, Sweden and Japan, regions that represent about 12 percent of the food service retailer’s locations worldwide. With VMob, McDonald’s expanded its existing mobile app in these markets, building on standard features such as product information, restaurant locator and mass offers for promotions and specials. They did this by combining the mobile app with contextual information and social engagement to dynamically personalize the customer experience. Watch this cool video to see the solution in action:

When customers open the McDonald’s app, they get individualized content based on their location, the time of day, the weather, and their own habits of purchasing and responding to promotions. For example, on a sunny summer afternoon, a customer who is walking near a store might get an offer for a free ice-cream with a sandwich purchase. Early on a cold, gray morning, the offer might be for coffee or for one of the customer’s favorite breakfast items. If the customer is moving quickly, the offer may point to drive-through locations. As a result of deploying the VMob platform, McDonald’s in the Netherlands has seen a 700 percent increase in offer redemptions, and customers using the app are returning to stores twice as often and spending 47 percent more.

The VMob platform enables far more than a sophisticated mobile app. First, to fuel this customer experience, the platform constantly pulls data from a vast number of digital touch points in addition to users’ devices — weather data, POS terminals, in-store Wi-Fi, and beacons and other sensors that track where customers are in the store, from the sales counter to the drive-through. Then by using Microsoft Azure Blob storage to process vast volumes of data from more than 40 million endpoints in the cloud with Azure Stream Analytics, the platform analyzes customer behavior patterns and responses to offers to ensure that targeted promotions are the most relevant and desirable for the customer. Finally, customized offers are sent back to customers through Azure Notification Hubs, regardless of mobile platform — Windows, Android or iOS. And VMob works with customers’ marketing agencies or in-house teams to provide data for reporting, which can be done through Power BI for Office 365 or fed into customers’ bespoke analytics systems.

The platform also offers retail experiences beyond the quick-service restaurant sector. VMob is working with a gas retailer in Norway and is developing solutions for hospitality and beverage customers. But any retailer can benefit from the ability to tailor customer engagement to the time of day and location, and to analyze promotions to discover what offers have the greatest impact. For example, by adding Azure Machine Learning to the platform, retailers can combine information on customer behavior with weather data and social listening to predict the response to offers and promotions and can plan to adjust inventory to meet demand.

Today VMob is delivering a platform that makes use of mobile phones as the customer’s primary access point. But it’s just one of a wide range of digital touch points, from Wi-Fi networks to beverage bottles to wearable fitness bands, and those touch points will only increase.

For more information on Microsoft’s activity at the NRF Annual Convention & Expo, visit the new Microsoft Business Matters blog.