I grew up in a small town, a town with more animals than people and with not even one traffic light until well after I moved away. Families have lived there for generations. Everyone knows everyone, their business, their religion, their background. Those who chose to live in small towns chose to concede privacy for the benefit of community, community safe for business and for family; knowing everyone around you in a small town network is a tremendous safety net.
Our family ran an auto parts businesses. In small towns you can serve customers in ways unheard of in densely populated areas because you do know everything about your customer. In some cases frequent customers from town could walk in, say they are changing their oil and my dad or uncles could walk to a shelf and grab the right oil filter for their vehicle without asking more questions. Along the way they could generate conversation about other maintenance areas for their vehicle that might need to be addressed. That’s small town personalized service and people love it. People in small towns can rely on it in more than just an auto parts business, every small town business can personalize their customer experience because they know you, your family, your habits, where you live, where you work, if and where you worship, where you went to school, where you like to fish and on and on. Small town business owners understand a customer’s context!
I came to the Bay Area in 1997. Community is different in a metropolitan area. Most people don’t even know their neighbors, let alone their neighbor’s oil filter. Yes, there is a lot of privacy but there is also a lot of mistrust. People don’t know everyone they interact with and connections and service are not as personalized; that small town familiarity just doesn’t happen. Not only that, even though humanity has survived for thousands of years with small town familiar type relationships, it seems that sort of familiarity in today’s metropolitan areas is unwelcome. This presents a service challenge as businesses have grown into large chains with operators who cannot know their customers at a familiar level.
Of course, businesses have tried to scale small town-like personalization because they know of the benefits; that’s why Ritz Carlton tracked which candy bar wrappers were in the garbage in guest rooms on 3×5 cards long before databases could store long-tailed customer data. When people started buying with credit cards, things started to get easier. Marketers could get to know their customers by accessing info through data brokers. Loyalty cards brought more change and insight. Businesses could analyze a basket of goods and anticipate future behavior.
But then Target determined a daughter’s pregnancy before her father knew and then people became concerned about privacy because they thought marketers were getting too familiar for their own good. It gets more interesting, though, if you look at the game changing role of the internet and networks. Why? Because in order for a network to work, it needed everything to have a unique identifier and MAC addresses were introduced for every electronic device. Flash to the small town: everybody knowing everybody is a network of people and businesses where one’s identity is akin to a MAC address, all nodes are known to the network.
Here is a snapshot of the available Wi-Fi signals inside the Walgreens around the corner from my place. There are five and all five are full strength. They are all secured so this is not Walgreens providing superb free internet to its shoppers. Having a great connection for staff and registers is no justification for five either; the whole store could be covered with one, maybe two. There are five because of a little known fact that your phone’s Wi-Fi broadcasts its MAC address and, while I have no insider information on this from Walgreens, my guess is that Walgreens is using MAC address tracking on every MAC address emitting device that comes in range. There are more than enough points for triangulation through some basic trigonometry, the same math taught in my small town high school, for Walgreens track every Wi-Fi enabled device is as it moves around the store. With this information Walgreens can not only analyze the basket of goods at purchase but how that basket of goods was constructed. There could be huge marketing benefits for both the business and the consumer because of that type of analysis at scale.
BUT wait, isn’t this an invasion of privacy knowing how someone walks up and down the aisles in a store and connecting it to what is in the basket at the end of the purchase?!?!?! Well, go back to the small town stores example. You might also think about small boutique shops. In more personal, intimate shopping experiences the shop keeper watches you, interacts with you, knows you and provides you with better service; they know how the basket of goods is constructed and they know to a certain level how it might fit into your life. Walgreens understanding how their customers construct their baskets of goods is not that different from the thousands of small town store owners who understand how their customers shop in their stores.
Of course, Apple’s announcement that it will randomize MAC addresses affects what Walgreens might be able to do. However, there are still other ways to circumvent the randomization if a customer ops in. For example, Walgreens has an app and if a user agrees to install it and use it in store, MAC randomization does not matter because a customer tells Walgreens who they are regardless of MAC randomization so they can know the customer, their loyalty card and so forth. Wi-Fi also isn’t the only way to detect a phone and Walgreens could partner with ProxToMe and use Bluetooth Low Energy to go beyond simple tracking as I discuss here.
Offering a contextual recommendation or coupon on a smart phone relevant to an individual and their location inside a Walgreens in my book can be just as helpful as an attentive shop clerk in a small town who knows their customer and offers contextually relevant recommendations. And as far as privacy goes, even if Walgreens knows my detailed purchase history and shopping pattern, it isn’t the same as the small town drug store pharmacist knowing me and knowing what goes in my basket of goods for whatever medical ailments people in my household might have because to Walgreens I’m a number (maybe even a MAC address) and to the small town pharmacist, I’m a neighbor (at one point the pharmacist lived across the street). There are some things your neighbor ought not to know so go ahead Walgreens, be innovative and partner with entrepreneurs and put technology to work offering contextually aware products and services without telling or being the neighbor.