Retailers—what if you could go head-to-head with online stores for the dollars of comparison shoppers using your locations as oversized fitting rooms without lifting a finger? A new company called SWARM has developed a way to send targeted push notifications advertising custom deals and programs to shoppers’ smart phones without them ever downloading an app or even opening their browser.
“SWARM detects your wireless antennae when you walk in the store and prompts your browser to open up,” explains CEO and Co-founder Rudd Davis, who also founded BNQT. “In the browser is a message generally along the lines of ‘Welcome to Retailer XYZ! Connect For Access to Deals and Discounts.’ At that point the customer can choose to explore the platform or simply click out of their browser.
“It’s all about capitalizing on behavior that’s already happening,” continues Davis. “Knowing that almost two thirds of smartphone users engage with their phone while they’re in the store—we’re just hopping on board that activity and adding value to the customer’s time in the store.”
While the app is new to the market, it has been heavily tested with numerous partners including La Jolla Group, where it has Daniel Neukomm, who handles corporate strategy and development, extremely fired up.
“SWARM fills a huge gap,” says Neukomm. “In a brick-and-mortar environment, you typically have no visibility on a customer until at or after point of sale. That means you really know nothing about the 50 to 80% of the customers that walk in your door and walk out without purchasing anything. Retail is obviously changing aggressively. It’s no longer about who has the most stuff, it’s about who has the right stuff.
“This is an interesting way that we can facilitate that in a brick and mortar environment,” continues Neukomm, who is exploring ways LJG and SWARM can work together. “Our customers are retailers and our ability to empower them empowers us. We’re a huge advocate of putting tools like this in the hands of our customers to help them merchandise their stores and buy more accurately—it’s all going to be driven by having this level of data that was never available to them. As a brand, it’s important for us to know what sells in stores, to what types of consumers, and how they’re responding to that.”
After hearing Neukomm’s reaction, we caught up with Rudd Davis, whose company’s system starts at $49.99/month/store, to learn more about how it works and the roll-out plan.
We all know that brick-and-mortar retailers are becoming showrooms for comparison shoppers. How does SWARM address that issue?
That’s a great question; we’re able to help retailers with that on a few fronts:
– Intelligence: knowing what in-store mobile behavior is taking place. Are my customers comparing prices on Amazon? On an endemic e-commerce site? Somewhere else? We give them the ability to know exactly how and where they’re losing sales so they can answer to that. For example, a large percentage of our outdoor gear retailers lose softgoods sales to the outdoor e-comm sites. You know what we found? The consumer is seeing this year’s gear at full price in-store, but more often than not they’re comparing it to last year’s gear at 30% off online. That knowledge serves a great line of defense for the shop employees.
– Convenience: By enabling retailers to deliver tools that make the shopping experience easier for the consumer – be that through product recommendations, personalized coupons etc.. – shopper intent goes through the roof. So you’ve got folks, especially in the Action/Outdoor category, who have built really exceptional retail experiences that now have the ability to drop in a layer of convenience and efficiency for the consumer on top. Taking the store beyond a virtual showroom into a truly digital/physical interactive environment.
– Automated Offers: Group M released a study that says a discount of 2.5% is all it takes to get about half of all shoppers to leave the store and purchase online. That’s actually good news for the retailer, it means you don’t have to give up much margin to compete with online prices. That’s relevant here because we’re able to detect price comparison behavior and trigger an automated “rescue offer.” Whether the retailer is going to directly price-match or offer another incentive to the shopper is entirely their prerogative, but the result is the same: the retailer gets a legitimate shot at closing a sale they would have otherwise lost to the internet.
Tell us a little about the group behind it, your expertise, how long you’ve been working on this and where you got the idea.
The founding team is myself (Rudd Davis), CEO; Mark Hydar, CTO; and Ryan Denehy, EVP Sales. I founded BNQT Media Group and over the course of two years grew it to one of the largest sports properties online, ultimately selling it to USA TODAY in 2008. I then led business development and the digital transformation for USA TODAY before taking over their Travel Media Group – so I really got a deep understanding of the on-the-go, out-of-home consumer. Ryan joined BNQT prior to its acquisition by USA TODAY, ultimately assuming the role of GM and continuing its rapid growth and digital innovation. Mark ran data and enterprise management for Yahoo! looking after a 200-person team and a $150MM budget. Prior to that he ran a mobile division of Microsoft and an enterprise division of PayPal/Ebay.
Despite the corporate thing, the three of us are also big skiers. By default that makes us big spenders on gear and equipment. What do we do when we’re at a shop looking for gear? We’re firing up our phones making sure we’re getting the best price or the newest jacket. So back in February we said “Okay, this has got to be a problem for just about every retailer.” Sure enough, it was. We put in calls to CEOs at a handful of different brands and retail chains and the unanimous response was “Look, this is a huge problem and if you think you have a solution then we’re all ears.” Business started.
Explain the look and feel of the program.
The platform can be easily customized to match our clients’ brand, so it looks and feels like their experience. The difference is that it’s entirely web-based so there’s nothing to download. We talk to a lot of folks who invest heavily into building native apps, only to be disappointed by a lack of uptake from their customers. Its not that 95% of your customers don’t want to interact with your brand on their phone, it’s just that they’re not going to download and install 10 or 20 different shopping apps. By delivering it via web while they’re in the store we create a really fluid experience that attracts significantly more uptake than native experiences.
Your presentation has some pretty strong claims including increasing conversion 5-10%, cutting comparison-shopping in half, increasing average tickets by nearly 20% and increasing customer loyalty by 10-20%. Explain how you got those numbers and how you back them up.
We tested extensively before bringing anything to market and believe me, the product changed innumerable times before we felt like we had something we could release to the public.
So that being said, in cases where we drive a high level of shopper engagement the results for retailers have been off the charts. Now to be clear, retailers won’t necessarily see lift like that in every area out of the gate. But we’re pretty good at targeting your biggest problem area – for some it’s price comparison, for others it’s conversion – and tailoring a solution around that. Over time we layer in features to drive lift and mitigate problem areas.
How do those translate into financial impacts for typical small to mid-size retailers?
Early results show anywhere from 20x to 200x ROI. We’re conducting studies right now with launch clients to see how this nets out over a year’s time. This December will be our first holiday season so we’ll have some exciting news to report come January. Ultimately, if you’re a retailer with at least a couple million in turnover and/or multiple doors, then we know we can positively impact your bottom line.
What are the costs for retailers? How long are they locked in for?
We charge a standard technology licensing fee per store location. Retailers sign on for a 90-day trial, no risk. We use that trial to determine what the right mix of features needs to be in order to drive worthwhile gains at the register. The custom feature set then determines the monthly rate.
How do you deliver coupons to customers? Do they have to be searching a particular item?
A few different ways. We can trigger an automated coupon or “rescue ad” if our system detects price comparison behavior. We can target based on your unique purchase and browsing history. Finally, our retailers have seen a lot of success simply extending existing store promotions onto the platform. By getting on the mobile device they’re driving more engagement and higher redemption without expending extra time or energy.
It looks like you have some really solid analytics attached to this. What do retailers get and how can they alter their strategy based on it?
Imagine Google Analytics for your store. As a retailer, you’re able to retrieve store-level data for traffic, dwell time, repeat visitors, coupon redemption/conversion, increasing and decreasing loyalty, path conversion, dayparts etc..
What we’ve heard from our clients is the ability to automatically deliver promotions based on individual customer information has been nothing short of transformative. This new ability has impacted their approach to traditional sales and promotions. They now have a precision tool instead of a blunt instrument and this results in a significant improvement in margin.