Nomi Door Counting Primer V Door Counting: An Essential for Customer Experience Measurement and Management

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1 Nomi Door Counting Primer V Door Counting: An Essential for Customer Experience Measurement and Management

2 Nomi Door Counting Primer V If you can t measure it, you can t manage it. This common saying should ring particularly true for retailers looking to better understand their customers in-store experiences. While Amazon proved the power of analytics online, brick and mortar businesses from retailers to concert halls to sports venues have not been able to take a similar approach. Door counting, though not a new technique, has advanced recently and is the first step towards implementing analytics commonly associated with web and mobile in the physical, offline world. History of Door Counting At the most basic level, the data provided by door counting answers the question How many people are in my space? For many years the only way retailers could know this was to place someone near each entrance to count by hand, and perhaps also jot down simple information about the number of men versus women. As technology advanced, manual counting was replaced by door mats with pressure sensors or simple beam-based tripwires, though these tools were not reliably accurate. For example, large numbers of customers entering a store side-by-side could confuse these early technologies, resulting in under-counting. These systems also could not distinguish people from shopping carts and adults from children, or determine whether a customer was entering or exiting. Door Counting Today Today, door counters have evolved to include sophisticated methods of tracking the comings and goings of customers using advanced beams, infrared detectors, and video cameras. These systems can also be replaced by or supplemented with Wi-Fi and Bluetooth sensors thanks to the increasing number of consumers with smartphones. Door counting is now much more accurate across different types of entryways and geographies Still, adoption of door counting solutions among retailers is relatively low at 35% though it is growing quickly. Manual Survey Accurate, but not scalable Thermal Sensor Inaccurate during temperature spikes in winter and summer months Beam Counter Inaccurate, can t detect multiple simultaneous participants Video Camera Can be expensive if cameras are proprietary and require on-site servers. Streaming video can also require expensive bandwidth.

3 Nomi Door Counting Primer V Benefits of Door Counting Marketing Marketing ROI: How many customers did we attract today? How does that compare to last week or last month? Are our campaigns attracting customers? Labor Staff Ratio: How many customers did we have compared to employees available to assist them? How did the ratio change over the course of the day? Operations Benchmarking: What are the busiest times of day? How do stores compare? Are we attracting enough foot traffic? Going one step further, retailers can use door counting data combined with basic sales data to calculate conversion ratio: the number of purchasers divided by the number of customers who entered the store. This is a commonly-used metric, and an indicator of overall retail performance and customer satisfaction. Looking to the Future: From Counting to Interior Analytics The essential information provided by door counting is beginning to be combined with other data, such as how customers and employees behave in-store. Sophisticated computer analytics can interpret video and infrared data in order to understand how visitors browse a store, allowing businesses to deliver the best possible in-store customer experiences. By implementing interior analytics, businesses can: Identify high-traffic zones and dead zones that don t attract customers. Modify staffing to match foot traffic demand by department and time of day. A/B test in-store signage.

4 Nomi Door Counting Primer V Continued... Given these advancements, door counting is increasingly considered to be just one component of an Internet of Things analytics package, which can identify, measure and connect with both customers and employees. ABI Research forecasts that interior analytics will be a $3B industry by According to Forrester Research, the majority of this spending will be undertaken by companies committed to differentiating themselves by providing a seamless customer experience. On the other hand, the majority of organizations will make smaller incremental moves to assess what s broken, manage a portfolio of fixes, and measure the results they need to build enterprise wide support for [customer experience]. Similarly, Gartner rates what they call Real-Time Store Monitoring Platforms as adolescent, with current market penetration of 5% to 20% of the multichannel retailer audience. Benefits of Interior Analytics Interior analytics allows retailers to understand more than just how many visitors enter a store; it empowers them to take a data driven-approach to improving the shopping experience by measuring actual observations of customer behavior on an ongoing basis instead of a one time survey. This maximizes the likelihood that consumers who enter the store not only make a purchase, but also come back and purchase again in the future. In addition, interior analytics can help retailers understand what drove customers to the store, as well as what merchandise or staff they interacted with while there. These types of insights allow retailers to make adjustments to layout, merchandise mix, staff levels and positions within the store, and more. Some questions to consider when looking at Interior Analytics platforms: How is the data presented, is it visually intuitive? Can the data integrate with other marketing, staffing or business intelligence tools? Do you receive just data or consultative, actionable insights as well? Can you customize metrics, KPIs and the dashboard? DASHBOARD ABC COMPANY STORES ALL STORES This Week Window Conversion Avg Visit Duration Visit Frequency OPERATIONS 4.8% 0 6.5% vs Last Year 40.7min % from Previous Week 20.94% % from Previous Week MARKETING 41K Visits 22.3% Repeat MOBILE 100M Passerby 65% Bounce Rate 77.7% New Popular Devices 40.1% Apple 1 6% from Previous Week Cross Store 37, % from Previous Week Revenue $3,316, % from Previous Week Samsung 31.2% 5.8% 2 stores Blackberry 18.4% 1. Chelsea $1,234,567 LG 10.3% 1.2% 3+ stores 2. Times Square 3. SoHo $1,134,567 $1,034,567

5 Nomi Door Counting Primer V Key Considerations to Developing Door Counting / Interior Analytics Capabilities When considering whether and how to develop door counting or interior analytics capabilities, it s important to answer questions in four key areas: Strategic Goals How will the business use the data? What problems will it help to solve? For example, if the goal is to measure the volume of customers to study traffic patterns and help inform staffing, ensure that your door counting system can export traffic data into a labor management tool. If the goal is to calculate conversion ratio then a solution capable of ingesting sales data may be required. Going one step further, if the goal is to identify which areas of the store or which merchandise customers most frequently interact with, a full interior analytics solution likely involving video, Wi-Fi, or Bluetooth will be most effective. These solutions can predict foot traffic by section of your store and help you deploy the right number of staff to match demand. Additionally, some solutions that ingest sales data can identify which sections of the store attract foot traffic that doesn t convert into sales. To solve the problem, you can deploy additional staff to those areas. Budget / Business Case How much money and time is available to evaluate and implement a solution? Once Strategic Goals are established, the next step is to consider what resources are available to set up a solution. This includes not only funding, but also managerial or corporate time to evaluate vendors, create a business case to identify the potential ROI of different solutions, and then train key personnel to use and respond to the data once a solution is chosen and installed. Before conducting a detailed analysis, it makes sense to understand the magnitude of available funding for the solution to ensure the Functionality and Technical considerations are realistically evaluated. The business case will be guided by the Strategic Goals and available funding, and key inputs to the business case will be discovered by answering the Functionality and Technical questions. For example, a comprehensive system will require more equipment, but may also produce more benefits by eliminating ineffective marketing and operations expenses. Functionality What capabilities must the system have to accomplish the Strategic Goals? Some of these functional considerations will be straightforward, including whether the system will use existing assets in the store (e.g. Wi-Fi, video cameras), and how accurate the door counting solution must be. Real Time does the system provide live data or is the data only accessible in daily increments? How critical is the timing of data to analyzing business performance? Permissioning who has access to the data? Is it a few administrator-level managers or can there be multiple accesses enabled down to the employee level allowing them to measure their individual KPIs? Fleet Management Can the system work with existing in-store infrastructure? Is it scalable or limited in size? Does the system allow the exporting of data into existing business tools? Technical How will the solution function given the required Functionality? Technical considerations will be key inputs to the business case and will determine implementation once a vendor is chosen. They typically include; how much equipment will be required per location (a store with a large number of doors and a large footprint will require enough equipment to get adequate coverage), how the equipment will be hooked up to existing infrastructure, and what are the bandwidth requirements? For example, a video-based solution may require an on-site server to ensure the data is analyzed and transmitted quickly.

6 Nomi Door Counting Primer V Technology Summary Currently, there are two general classes of beacon manufacturers, with the majority focused on small-scale production of beacons and SDKs (Software Developer Kit - allows for integration with other apps) targeted to hobbyists and developers, and the other on making scalable solutions suited to large enterprise clients. System Type Strengths Weaknesses Beam Thermal Video Relatively inexpensive Simple installation Can cover wide entranceways Low power consumption Bi-directional counting (captures entering/ exiting) Unaffected by shadows, background objects, ambient light levels (captures emissions from moving objects) Can cover large / broad entrances Proven technology Bi-directional counting, filters out objects like strollers, determines height to identify adults vs. children Suitable for a wide range of environments Wide range of hardware for different applications Can t differentiate entering vs. exiting customers Inaccurate with high traffic volumes / side-byside customers Can be blocked by customers standing in entrance May be negatively affected by sunlight Cannot accurately measure people standing still / in line Accuracy can be affected by high ambient temperatures or when customers enter with cold or hot beverages Size - visible to customers as a smoke-alarm sized object Requires adequate light, sensitive to shadows Potential loss of data if power is disconnected Relatively high power consumption Bandwidth considerations when streaming data Installation can be complex, invasive, costly to maintain Wi-Fi Bluetooth Low Energy (BLE) Low cost and rapid deployment if store has Wi-Fi connectivity Detects unique visitors and repeat visits Some vendors offer both Tap-to-trigger functionality and geo-fence interactions Small size allows variety of installations Enhanced experience for customers with native App (messaging, content, rewards) Detects only customers with smartphones and active Wi-Fi Requires Wi-Fi installation if no existing infrastructure, or additional hotspots to improve coverage Adoption is lower than WiFi, but growing rapidly Requires installation of BLE infrastructure Robust analytics are limited to customers who have downloaded a retailers mobile App

7 Nomi Door Counting Primer V How to Evaluate Door Counting / Interior Analytics Vendors After determining whether and how to develop door counting or interior analytics it s time to evaluate different vendors and technologies. The following are some specific questions to ask: Door Counting Capabilities Which technologies does the system use for door counting? (Is it video only, or several technologies combined, like Thermal and Wi-Fi?) How accurately will the solution count customers? (Can it differentiate between people entering and exiting or between children and adults?) What adjustments or customizations will be required? This can include: Number and width of entryways Volume and density of customer traffic Climate and atmospheric conditions (sun exposure, heat) Location / availability of power sources Interior Analytics Capabilities How does the technology feed into understanding the end-to-end customer journey? Does it track customers and employee movement and merchandise interactions in-store? Through what channels (like video, Bluetooth, or Wi-Fi) can the system track customers and employees? Can the system identify previous interactions that the customer has had with the brand? For example, if the customer previously visited the store or the website What other data sources can the system incorporate? For example, queue management data or point-of-sale transaction logs Reporting What reporting / analytics tools are available to analyze data that is captured? How frequently is data available? Who will be able to access the data, and how (through a web dashboard? A phone / tablet application?) Is data accessible in real-time? Technical How many beacons are needed? (a beacon every feet is recommended) How secure are the beacons? Can they be piggy-backed or hacked? Is firmware configurable? If so, how is it secured? Financial Is there a one-time fee, and / or ongoing maintenance fees? What support does the vendor offer to maintain the platform? Is the hardware expensive permanent installation or off-the-shelf and easily replaced? Who ultimately owns the data collected?

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