Technology paves way to marketing's future

September 2, 2002

BY MICHAEL KRAUSS

I was on my regular odyssey to the gym, riding the Chicago Transit Authority's State Street subway, face to face with Tom Cruise. Well, sort of.

Across the tracks was a poster advertising Cruise's futuristic thriller, Minority Report. In the movie, Cruise plays a member of a socalled pre-crime law enforcement unit that's pilot-testing a new technology that anticipates homicide. Cruise arrests the criminals before they commit their acts.

While the movie's premise is far-fetched (I won't give away any more details of the plot), it features stunningly realistic examples of future electronic marketing systems.

As I stared at Cruise's poster, in my hand was one of the CTA's electronic stored-value fare cards. In the subway entrance, I'd put a few dollars in an automated vending machine, put value onto my card for several rides and passed through a turnstile. I had not dealt with a fare agent on either leg of my journey.

It made me think: Just how far away is the future portrayed by Cruise in Minority Report? What should marketers be thinking about new electronic methods of payment? Should we avoid experimenting with new technologies?

Later that afternoon, I stopped at Sears to pick up some sandpaper and painting accessories for a home repair project. I paid with my Discover card. On my way out of my office building's parking lot for the commute home, I zipped by the cashier's booth and had my ID card scanned at an automated exit lane. My monthly parking fee is charged directly to my credit card.

On the way home I was low on fuel. At the Mobil station, I wished I had a "Speedpass," a radio frequency identification device (RFID) that speeds transactions. Customers who sign up for Speedpass carry a chip on a key ring that's scanned at the pump, bypassing the longer credit card authorization and processing steps. They also avoid having to walk from the pumps to the cash register. Like the E-Z pass devices on many tollways in the country, these tools are speeding us along.

Seeing a near-collision on the highway, I wished I could get a smart card that would store all my healthcare data in my wallet. That way the paramedics could treat me more effectively in case of the worst.

Stopping for a soft drink to ease my anxiety, I had no coins. I wondered when I'd be able to wave my cell phone in front of the vending machine to make my purchase. While telecommunications companies are in a rut today, tomorrow they may prosper by processing financial transactions over mobile airwaves rather than simply channeling voice calls.

Heading home I decided to stop at Burger King for a Chicken Whopper with no mayo. Seeing the long line in the drivethru lane, I elected not to bother. I went home hungry, but thought how much faster "fast food" would be if the stores could scan my thumbprint and charge me electronically instead of waiting for my cash.

Despite the downturn in the tech market, new forms of electronic payment-from traditional credit cards and stored value cards, to RFID tags and toll passes, from smart cards to mobile applications and even biometric payment technologies-are all well under-way.

These technologies can cut costs and increase revenue, and savvy marketers are taking note. The future defined by Minority Report, with its examples of an electronically enabled shopping experience, could be at hand sooner than we think.

Consider upscale retailer Prada's flagship store in New York's Soho neighborhood. The Washington Post recently reported that silicon RFID chips are now attached to garments. As you head to a fitting room, "the chip sends a signal to a flat-screen monitor along your route providing an image of the garment and details about its cut, fabric and color." Not only can Prada protect itself from elite shoplifters, it can use these electronic chips to collect market research information and learn from your shopping experience. Sales clerks carrying electronic wands know what merchandise you're considering and intervene with suggestions and recommendations.

One of my favorite new systems is being tested by McDonald's in Fresno, Calif. As The Fresno Bee recently related the duickservice restaurant chain is pilot-- testing a new finger payment system developed by Oakland, Calif. based Indivos Corp. Customers who sign up for the test "can offer an index finger instead of a credit card when they order a six-piece Chicken McNuggets meal." The paper reports that the same technology is being pilot-tested at Fresno's airport to scan faces for security purposes.

While there are issues of privacy to be considered, marketers would be wise to keep an eye on these efforts for three reasons:

• Cost reduction-Though there's an upfront investment, these new technologies can reduce cost by cutting shrinkage, eliminating cash theft and speeding customer transactions.
• Sales lift-I predict customers will vote with their feet and shop where the lines are shortest. If my fast food restaurant can scan my finger and get me through the fine faster, I'm going to shop there rather than the slower place.
• Customer information-The more we know about customers, the better we could be as marketers. With better information, we can offer the right product mix, reduce inventories and target messages more effectively. In short, we can boost loyalty and begin to achieve the promise of customer relationship management.

It's not going to happen overnight. Credit cards took years to win broad consumer acceptance, but today, the vast majority of consumers carry them.

Despite the dot-com debacle, the promise of new electronic payment technologies is literally just around the corner. These technologies are going to take hold well before the year 2054 portrayed in Minority Report. I think we'll see wide deployment by 2004, especially in fast food and retail grocery stores.

Because of the recession and economic slowdown, many companies will delay testing and deploying these new technologies. That means today's experimenters will have a real head start over the laggards with the attendant change to grab market share and improve efficiency. Don't let that happen to you. Even in a recession, you need to keep up on the latest technology.

Michael Krauss is a partner with DiamondCluster International in Chicago. He can be reached at michael.krauss@diamondcluster.com or news@ama.org.