Physical Cookie Solves Retail’s Opt-in Problem

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By Jessica Glynn
Reality Interactive

A year later, retailers are reporting positive results from iBeacon campaigns. There are, however, still challenges from the caveats associated with iBeacons.

Specifically, customers must be iPhone users. They must download the retailers’ app. They must enable Wifi on their phone and opt-in to receive notifications. Many consumers are not willing to opt-in because they have privacy concerns about retailers collecting their data. Physical Cookie gives retailers and their customers the benefits of iBeacons without having to meet all of these requirements.

What is Physical Cookie?

Physical Cookie is a RFID-tag within a piece of plastic, usually on a key-fob,  which retailers can give to their customers as they shop. The customer puts Physical Cookie in their pocket and then has to take no additional steps. Electric readers are then placed around the retail store. The Physical Cookie key-fob collects data in real-time in the same way cookies on websites do (hence the name). Digital screens within the store, show customers advertisements based on their behavior. Customers do not sign up or register, so there are no privacy concerns involved. Physical Cookie has operated in the Citycenter shopping mall in Helsinki, as part of a trial since Fall 2014.

Physical Cookie is easier for the consumer to use than iBeacons. Unlike the Bluetooth technology used for iBeacons, Physical Cookie is always on. Instead of pinging a user’s phone, the actual retail environment reacts to the consumers behavior, which feels much less spammy.

The Physical Cookie Customer Loyalty Program

In the Citycenter trial, a customer loyalty program called VIP-key was launched. The VIP-keys were given to 14,000 randomly selected customers who were then automatically part of a loyalty program, without ever having to opt-in, register, or sign up for anything. The trial was in a shopping center but Physical Cookie has said this can work for both retail chains and for brands working within big-box retailers.

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While this trial was conducted using Physical Cookies in a key-fob format, the company said in the future this does not necessarily have to be the case. The key-fob format was selected with the thought process that customers enter the shopping center with their wallet, mobile phone, and keys with them. The average customers wallet is already full of loyalty cards, and mobile phones would require opt-in. The key chain was chosen instead because it does not already have any smart device on it.

Results:

  • The VIP-key cost the equivalent of about two cents in U.S. Dollars.
  • 15 percent of the VIP-keys were active.
  • They showed a 14.5 percent increase in activity between floors.
  • There a was a 21.7 percent increase in time spent in the shopping center.

This column was reprinted with permission from the Digital Screenmedia Association and originally appeared here.