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In the retail industry’s quest for innovative ways to connect with customers, personalized marketing through mobile devices offers an opportunity to reinvent the shopper experience by increasing promotion redemption rates and nurturing a deeper level of customer engagement. And retailers are recognizing the need to get personal.

The latest RIS/Gartner Retail Tech Trends Study found that developing capabilities for personalized marketing and advancing a mobile commerce strategy were both among the top five major strategies that retailers want to pursue in the next 18 months. But these are mysteries that few have figured out. So how exactly can you do that?

The good news is that the same connectedness that has changed consumer behavior and expectations is also one of the key enablers in transforming the shopping experience and enabling the future of personalized marketing.

The Internet of Things: powering personalization

The Internet of Things (IoT) is here today in the devices, sensors, cloud services, and data your business uses. In retail, IoT refers to using sensors to gather data and enable real-time actions that include monitoring store traffic, refrigeration units, RFID chips, and customer mobile devices.

And while IoT has technically been around for a while, it’s relatively new in retail. Both IoT and big data are gaining momentum for one reason: the cloud. Both the affordability and elasticity—pay for what you use—of cloud computing have finally given retailers the ability to effectively store, handle and process the large volumes of data they currently generate from the point-of-sale, customer databases, inventory, in-store devices and more.

Retailers can now unlock the power of their data for in-store personalized marketing with insights that once only online retailers could capture. IoT is really the bridge between digital and physical retailing.

And what retailers should know is that harnessing IoT’s potential for optimizing shopper engagement in store doesn’t need to be hard. It’s actually easier than it first appears. And getting started doesn’t need to be expensive. There is untapped advantage in your existing devices. And the easiest thing that retailers can do today is to also use the device that shoppers already have with them: their mobile phone.

The three stages of IoT business maturity

Based on customer research and conversations, retailers are at different stages in the adoption and consideration of IoT. In a recent discussion with RIS News and mobile engagement platform provider VMob, I shared the three stages of IoT maturity and its opportunities to positively impact the retailer’s business and, most importantly, the customer experience along the way.

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How Personalized Marketing and the Internet of Things Will Transform Retail from Microsoft

  1. Operational efficiency. The best thing you can do to start on your IoT path is use today’s low-cost sensors with your existing equipment and infrastructure. Things like sensor-enabled shelves and refrigeration units enable retailers to start collecting, monitoring and receiving alerts on areas like in-store traffic and product availability for real gains in efficiencies and customer service.
  2. And, through an opt-in mechanism, the most sophisticated sensor in the store is also the customer’s device for personalized messaging and offers. This stage is about better collecting and understanding your data and customer preferences.
  3. Business intelligence. Retailers that are in the next stage of the IoT business maturity model are the ones that are using a lot of business intelligence & advanced analytics capabilities with the telemetric data being collected. They are looking for patterns and predicting behaviors from the collected data to understand what’s important for store performance and personalization.
  4. All that valuable customer and contextual information – purchase history, profile, favorites, location, traffic and weather conditions – can be combined and measured to create meaningful insights and powerful predictive models that actually drive the sales and behavior change retailers are looking for.

And for personalized shopping, the real-time data is the game changer. Being able to offer the right content specific to that customer, in the right context and location, at the right time, is truly powerful. It’s how retailers will differentiate the customer experience and drive margin back to the store.

In my conversation with VMob and RIS News, we dig deeper into these three areas and highlight examples and real ROI results including cases with 700 percent increased engagement and 40-50 percent spend increase on repeat visits!

VMob also shared some great use cases for retailers including how McDonald’s has used its rich mobile data collection to create relevant, targeted offers for its customers. Check out this great video to see the positive results that this personalized approach to mobile marketing has had on its business.

To learn more about how the future of personalized marketing will leverage IoT to drive sales, improve customer loyalty and transform your business, you can now watch the replay of our webcast. Additional examples of IoT implementations in the retail industry can also be found in my blog post Microsoft IoT Case Studies in the Retail Sector.

LinkedIn: ShiSh Shridhar
Twitter: @5h15h