3 major flaws you should understand about customer tracking

It’s easy to think of customer tracking as the golden goose of retail. After all, if you know where your customers go in the store, what they’re most likely to purchase when, and why they enter your store in the first place, then you could hold the key to increasing sales.

Entire industries have been built around creating and implementing loyalty programs, tracking customers via cameras, and monitoring customer behavior through smartphones. As technology develops, this will only become a more common practice in stores, and there’s the possibility it will be seen as the dominant solution to improving sales.

But as the old saying goes, if it sounds too good to be true, it probably is. There are still quite a few flaws plaguing retail’s golden goose — flaws in the accuracy of the technology and its potential to decrease customer engagement. Retailers who rely solely on customer tracking will end up trying to drive while only looking in the rearview mirror.

Here are some common pitfalls of customer tracking you should be aware of:

1. Inaccuracy

I recently spoke to representatives of a customer traffic company about some of the data they delivered. When I mentioned that some of the data seemed to be off, they told me not to worry about the data — just about the trend. But it turned out that some of the data they were providing was based on a trend they had observed — not specific numbers.

The problem is that there wasn’t a baseline to compare the trend to. Without a set of norms, there was no easy way to see if — or why — customer behavior was changing.

Take, for example, a slow workday. Lulls in customer traffic can lead to restless employees who wander the store, creating false trends on heat maps. Even customers wandering back and forth between aisles could be attributed to a number of behaviors, and there isn’t a technology that can read a customer’s mind.

While we can make inferences from collected data, and video analytics can do a serviceable job of distinguishing customers from employees, the fact is that customer tracking still boils down to educated guesses — something I don’t recommend basing decisions on.

2. Privacy Problems

The latest trend in customer tracking has been to utilize a customer’s smartphone. Nordstrom used in-store Wi-Fi to detect the MAC addresses of customers’ phones to see where they were going inside the store on an individual level.

While this provided Nordstrom with more granular data than had been available before, it also raised the ire of some customers who resented being tracked without their permission. The negatives of the program eventually outweighed the benefits, and Nordstrom shut down this tracking service last May.

3. Lack of Engagement

Technology can be a huge advantage for a business, but it can also serve as a crutch. Apple’s new iBeacon service has promised a way to engage customers with notifications on their phones that offer location-based information and deals in real time, which will allow for greater tracking of customer behavior. On the other hand, it will also cause customers to spend more time looking at their phones instead of shopping.

Services like iBeacon have the potential to enhance the shopping experience, but if retailers become overly reliant on these technologies, they risk losing the benefits of employee-to-customer engagement. It’s difficult for an app to upsell, cross-sell, or help customers find exactly what they’re looking for. That’s a human employee’s expertise.

The funny thing is that Apple knows this best of all. Its revenue per square foot outnumbers its second-place rival two to one, which is mainly due to its stellar customer service. The always-busy Genius Bar and its emphasis on quick, friendly service made Apple’s retail outlet a stunning success — and Apple’s creation of the iBeacon a curious decision.

Changing the Focus

While customer tracking can be useful in limited doses, its flaws are all too telling. A good employee trained in engaging with customers is worth far more than the latest trend in customer tracking. Rather than worrying about customer behavior, here are four ways retailers can refocus their efforts on employee behavior:

1. Invest in good training programs: These programs should be designed to facilitate effective employee-to-customer engagement throughout the entire process, from greeting to close.
2. Avoid checklists and forms: Your focus should be on verifying employee behavior in real-world situations.
3. Role-play: Have managers walk around the store and pose as customers as a training exercise to keep employees at their best.
4. Try before you buy: If you continue with customer tracking, make sure it’s implemented first as a pilot program in some of your worst stores and some of your best. This will give you a more accurate baseline to measure efforts.

The key to a successful retail business isn’t any one silver bullet. By keeping an open mind and aiming for a healthy balance of technology and employee engagement, you will be ready to blaze a new path to higher profitability instead of basing your decisions on inaccurate data and neglecting true customer insights.

“Customer Tracking” image courtesy of Shutterstock.