5 Ways to Track In-Store Customer Behavior

Is there a safe way to track customers in a retail store? Don't ask Nordstrom, which came under fire in May for tracking the Wi-Fi signal of users who visited their store.

Using a service from Euclid Analytics, Nordstrom was tracking the media access control (MAC) address of a smartphone to analyse customer behaviour in the store. For example, the retailer can find out where in the store most customers linger or how often a phone user shops at a particular location. According to an ABC News report, customers were not happy about the privacy invasion.

News: Researcher Hijacks MAC Addresses From Insecure Embedded Devices for 'Internet Scanning Project'Also: Privacy Campaigners Slam Shopper Tracking Tech

Fortunately, there are less invasive ways to accomplish the same goals. The six technologies featured here do not track a specific customer or his purchases unless they opt-in to the service. In some cases, data is collected anonymously but isn't tied to a specific patron's MAC address.

1. Wi-Fi Fingerprinting: Track Strength of a Signal

This technique tracks the Wi-Fi signal strength of a smartphone or tablet in the store. One leader in Wi-Fi fingerprinting, Bellevue, Wash.-based Point Inside, offers the service through a store's branded app as part of an opt-in loyalty program. The Wi-Fi signal strength reveals where a customer goes in the store, which then helps a retailer develop product placement strategies.

2. MEMS: Create a Heat Map of Customer Activity

To provide more exact tracking, retailers can use the microelectromechanical systems (MEMS) chip on a smartphone. MEMS data uses the accelerometer and gyroscope within a smartphone or tablet to show the exact angle, direction and position of the device. Point Inside already has the technology to read this data through an opt-in app, but this specific technique appeals to companies because it can create a precise heat map of how a customer has travelled through a store.

3. LED Lighting: Use Frequency Emissions to Determine Customer Location

That's right-one of the latest methods for tracking customers involves the LED lights in the store, and ByteLight is one early pioneer. Because an LED emits a particular frequency, a smartphone app can detect a specific frequency and therefore determine the exact location of a customer. From there, a store can track a customer's location and path around a store-and send " hyper targeting" content such as a special on that shirt on the rack that's right in front of a patron.

4. Bluetooth 4.0: Use Smartphone Signals to Send Deals to Customers

The iPhone and iPad already use Bluetooth 4.0, and Android phones will eventually use it as well. Bluetooth 4.0 uses a low-power signal to communicate a wealth of data.

Swirl is one company finding a way to use this data. First, a retailer installs battery-powered sensors around its store. Then it encourages customers to download a Swirl app and agree to transmit their location (from a range of up to 600 feet). The customer receives discounts, while the retailer knows exactly where shoppers go in the store.

Related: How Mobile App Developers Can Best Target Geolocation

5. Loyalty Programs: Track What Customers Buy

Of course, using a loyalty program is one of the best ways to track customer behaviour. A good example is FiveStars, which provides an NFC-enabled card that customers tap on a terminal at check out.

The loyalty program integrates into a store's point of sale system, too. While you can't track the paths that customer take around a store, you can track how often they visit, the most common time and day of their purchases and the specific items they buy.

John Brandon is a former IT manager at a Fortune 100 company who now writes about technology. He has written more than 2,500 articles in the past 10 years. You can follow him on Twitter @jmbrandonbb. Follow everything from CIO.com on Twitter @CIOonline, Facebook, Google + and LinkedIn.

Read more about retail in CIO's Retail Drilldown.

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