Fingerprinting the Future

Imagine having the ability to translate customer loyalty data into targeted, individualized marketing plans that are based entirely on each customer’s unique fingerprint.

Biometrics-based solutions such as this take payment systems to a new level of sophistication. Although technical innovations are often led by the large national chains, this particular retail success story originates with a one-store supermarket in Syracuse, N.Y. Green Hills Market is a fourth-generation, family-owned retailer that started as a produce stand run by CEO Gary Hawkins’ great-grandmother. The company’s impressive technology and a hugely loyal customer following enable the 23,000-sq.-ft. grocery store to achieve annual sales of $18 million.

In addition to running his retail business, Hawkins owns a consulting firm (Hawkins Strategic) that advises other retailers as well as consumer-product-goods manufacturers including Unilever and Proctor & Gamble.

Early in 2006, Hawkins decided to take the loyalty-card program that he had initiated at Green Hills in 1993 to the next level by leveraging technologies to move from the industry-standard approach of mass marketing to one of individualized marketing.

Working with San Francisco-based Pay By Touch, he created the SmartShop biometrics-based loyalty plan as a proof-of-concept to validate the success of personal marketing campaigns created from each shopper’s purchasing history.

“The secret of our success is relevancy,” Hawkins said. “We went live with SmartShop in May 2006, and sales have certainly increased since we began to make promotions relevant to each customer.

“Currently, about half of our total sales volume is attributed to customers taking part in the SmartShop program—and they are spending more and shopping more often. We’re also doing a better job of retaining that customer.”

The way it works is simple and fast. Registration at an in-store kiosk takes just a couple of minutes and customers with existing loyalty cards can use the same process to transition from their plastic cards to the biometric SmartShop program. Once registered, shoppers pay for transactions at checkout with a simple fingerprint. When they return to the store, they can access promotions available to them by placing a finger on the in-store kiosk’s biometric pad and the system generates a printout of specials based on that individual’s shopping habits. Loyal SmartShop patrons also have the option of receiving e-mails announcing their personalized promotions or accessing the information through a personalized SmartShop Web page.

“A world of personalized marketing with relevant offers has to be built on good quality data,” advised Hawkins. “The trouble with the loyalty-card programs used by most retailers is that the foundation is not strong enough to support personalization. With one store, we can be very disciplined with our loyalty program. For large retailers with hundreds of stores, there is always a lot of worthless or inaccurate data collected.”

For example, when one shopper forgets her card and another shopper’s card is scanned, it is impossible to achieve an accurate personal shopping history. With biometrics, the system always knows specifically what each shopper has purchased. When there are multiple shoppers in a single household, the system automatically merges all biometric data from each shopper registered in SmartShop, and special promotions are extended based on the entire household’s shopping histories as well as each individual’s.

Benefits extend beyond increased sales to improved efficiencies in supply chain execution and store operations. Hawkins explained, “Offering savings on the exact products our customers like to buy helps us to even out demand across the supply chain. The personalized shopping histories allow us to take merchandising and marketing down to the precise brand and flavor level.”

Marketing programs can be expanded to include like merchandise that might appeal to shoppers. For instance, a customer who purchases a lot of salad ingredients or dressings might receive a special discount on Green Hills’ private-label salad dressings. The store carries between 30,000 and 35,000 SKUs, of which 200 to 250 are private-label products.

Hawkins marveled that in the face of a struggling market, with intense competition from Wal-Mart, Wegmans, Sam’s Club, BJ’s and Aldi’s coupled with Syracuse’s stagnant economy and declining population, his family store has continued to prosper.

“The SmartShop program has significantly increased customer spending and the frequency of visits,” he stated.

Opportunities to expand SmartShop abound, and Hawkins was most excited with the potential afforded by mobile commerce.

“We’re looking at how to take advantage of mobile cell phones and before the year is over we’ll start a pilot to explore m-commerce,” he explained. “We’re also going to bring in more content that can be personalized to our customer’s shopping histories, such as recipes using their preferred products and scaled to the size of their households, with personal nutritional and health-care needs taken into consideration.”