Customer Identification: Past, Present, and Future

Any retailer can testify to the importance of knowing your customers and the potential lifetime value of each new shopper.  Customer identification has gone from remembering the faces that walk in your store to mannequins tracking and profiling these same faces. Identification tactics range in scales of effectiveness, cost, and creepiness.  What remains constant is the value that is added and the importance of at least doing something.  Before we can begin wading through the world of customer identification, we need to analyze what was done in the past and how value was added to the retailer back then.

In 1845, Tiffany and Co. released a catalog called the “Blue Book” making it the first mail order catalog in North America.  By 1888, The R.W. Sears Watch Co., issued their first catalog which grew to be “the Consumers’ Bible” and led to the fifth largest department store today.  The influence of catalog retailers helped transition society to be familiar with national brands and have relationships with them.  Naturally, all customer records were on pen and paper where the customers were identified by their name, address, and possibly a purchase history.  In this time, the retailer could not have the confidence that this information was correct as it was easy to simply write down another name or not have the data updated when one moved.  Before the advent of computer systems, direct mail and catalogs were the only way retailers could have any idea who their consumers were without face-to-face interactions.  Furthermore, any information that the retailer had on a customer could not be used in-store, for personalization purposes, or remarketing efforts.  This was simply for interested people to ask for more information.  In many ways, having a pure opt-in campaign like direct mail is effective.  Each dollar spent is put to good use since the customers are more likely to buy since expressing interest.  However, similar to a billboard on a highway, mass targeting exists is an effort to pick up someone new.  Maybe they’ll only shop once, maybe they’ll shop a hundred times, but if that one person had to come from one thousand people seeing the billboard, some retailers might believe it is worth it.

Direct mail is the last piece of customer identification that is still used to this day.  Consumers appreciate the style inspiration, the feel of holding something physical, and the familiarity of flipping through a catalog.  However, the primary information that a retailer wants today for customer identification is an email.  A single email today could be worth anywhere from $1 to $40 or more for a retailer.  Email today is the login for the majority of accounts, keeps one’s order history with a company, and it is where direct advertisements are sent.  Email has always been seen as an opportunity for marketers to reach people at a low cost.  Seven years after email was invented in 1971, the first mass advertising email was sent out for Digital Equipment Corp. which resulted in $13 million worth of sales.  Today, it is relatively easy to receive an email address from a customer since the majority will ask for the email at check out online and in stores.  However, prior to any purchases or venturing onto a website, the retailer has more difficulty finding interested customers.  There are ways to get these valuable emails from potential clients but the ethics behind the manner in which it is done is not strong.  Companies and agencies buy and sell emails to make a billboard-like campaign seem like a direct and personalized message.  Many wanted to claim the death of email several times with the increase usage of text messages and social media, but the truth of the matter is 91% of consumers check their email daily.  Email remains as the unifier and identifier of consumers, and yes, other channels are growing but the importance of email still needs to be recognized.

New ways of identifying customers are emerging and some are becoming commonplace such as identifying customers whose phones are searching for in-store Wi-Fi and by using cookie IDs to track intent data when shopping online.  Retailers have the potential to be filled with large amounts of data on current and potential customers.  But, what methods are actually worth it and how does one start using or capitalize on their data?  What methods are dying out and what new ones are emerging? Join us to find out how to take advantage of the offerings of the present and prepare for the future.