Digby VP: The Next Generation of Retail Apps Will Change Everything

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mq1By now, the phrase “the year of mobile” has grown a bit overused, but it’s reasonable to argue that the smartphone reached a tipping point in 2013. According to an Internet Retailer report published earlier this year, mobile retail commerce in the United States is projected to grow 63% this year to around $34.17 billion, up from $20.95 billion in 2012. Meanwhile, a study from comScore found that over half (55%) of all of all time spent on digital retail sites were spent on mobile devices

The overwhelming smartphone usage clearly points to an opportunity for retailers: they can maximize sales by speaking to consumers at a given location, whether that’s on their couch or the aisles of a store. But in order to compete with a voracious consumer appetite for mobile content, retailers need to develop smarter HTML5 and native apps. A recent report by Statista, for instance, suggests that the average smartphone user downloads 25 apps over the course of phone’s lifetime.

Austin-based Digby is trying to help retailers adapt. The company’s Localpoint product, which has gained traction among major national retailers including Kohl’s and Cabela’s, helps retailers serve offers and discounts to customers in their homes and offices, as they approach the store and within the store. Street Fight recently spoke with with Eric Newman, the company’s VP of products and marketing, to learn more about how retailers can develop richer location aware apps to speak to consumers in a relevant way and drive in-store visits.

Tell me a bit about Localpoint’s value proposition for retailers.
Localpoint allows retailers to connect to consumers at the right time and right place with messages targeted to drive in-store visits. By integrating our software development kit (SDK) in their mobile apps, national retailers can provide consumers with hyperlocal shopping experiences. They can deliver different offers and coupons to consumers based on whether they are in their home, office, the store’s parking lot, or serve a survey even as they are leaving the store. Basically, Localpoint makes a retailer’s app richer by making it more time- and location-aware.

Can you give us a few examples of how retailers are using Localpoint?
Kohl’s is the 20th largest retailer in America with annual revenues of 20 billion dollars. They’ve used Localpoint to serve coupons to guide customers to their stores and drive in-store purchases. They trigger coupons to customers that are one to two miles away from the store before the lunch hour. The customers who drive to the store are then delivered relevant promotional messages from the moment they drive into the parking lot and enter the store. Last year, Cabela’s used Localpoint to serve time-sensitive offers during Black Friday. The coupons incentivized customers who checked in early during the pre-Thanksgiving rush with special offers.

What are some of the trends in mobile retail you expect to see this holiday season?
The most significant shift is going to be the development of Gen 2 versions of retail mobile apps. Until recently, many retailers didn’t see the value of this exercise. Many brands were content with developing an online e-commerce site. That has all changed with the explosion of mobile shopping.

What are some of the features retailers should look to integrate in their “Gen 2” apps?
For one, local opt-in features that allow retailers to serve compelling offers at a regular frequency. Retailers can also offer loyalty cards can counter the trend of app abandonment. The entire payment system is a crucial part of the relationship. Customers should be able to do things like check balances, top up and redeem loyalty points. Lastly, richer apps should have deep location analytics through which retailers can analyze store traffic patterns. They can compare the patterns between two different stores and see why customers visited a particular location, but didn’t end up buying a particular product.

This brings us to the issue of privacy. If Localpoint stores customer purchase history, how are you ensuring that consumer privacy is not compromised?
Localpoint does not capture PII data. We place a unique fingerprint on that device so we can identify people who are repeat visitors and the store locations they have visited. However, our fingerprint does not translate into something that can uniquely identify the user.

We work with retailers who link our generic identifier with their own data about the opted-in consumer by using their back office systems. In these cases, all we do is serve as the trigger, as the brand uses their own opt-in data to communicate directly to the consumer.

Where are you looking to expand?
Deeper analytics is going to be an area of focus — things like linking offline marketing efforts to in-store behavior in order to get a more holistic view of the marketing effort.

In addition, we also have plans to increase Localpoint’s adoption beyond major retailers. There is an obvious opportunity among the smaller retail outlets in that they don’t have their own mobile apps. To this end, we are working with larger media companies like local newspapers. We have several media aggregators are conducting trials with Localpoint, and we are going to be making some announcements shortly. Retail has gone mobile — and we expect to see both larger brands and mom and pop shops capitalize on this opportunity.

Arun Krishnan is a marketing consultant living in Amman, Jordan. He was previously the VP of Marketing and Communications for Pontiflex.