Tech Profile: RapidBlue Solutions

What is RapidBlue Solutions, and how did you and your team get started in this field?

RapidBlue Solutions is a Finnish, VC-backed startup with the vision to make brick-and-mortar ultimately measurable. We’re on mission to revolutionize how brick-and-mortar retailers view, think about and act on data and analytics in order to improve their bottom line.

We originally started developing our idea back in 2010. Coming from backgrounds in businesses where data was widely used as a basis for decision-making, the amount of opinions, guesses and assumptions surrounding the decisions of retailers was overwhelming to us. We began to ask why. Retailers agreed they needed to make the most of their in-store visitors, and they knew that understanding their shoppers better would lead to higher profits. Their biggest challenge seemed to be in applying data in day-to-day operations, as the viewing and usage of data on a wider scale was traditionally reserved for back-office analysts, not front-side retail or marketing managers. Data was largely used weeks or even months after its collection.

What are the main offerings of the RapidBlue platform? How can retailers use the data collected to identify problems in the store environment and influence purchasing behavior?

From the beginning, we wanted to impact day-to-day operations with the data we provide to retailers. We understood that building a “Google Analytics for brick-and-mortar” would not suffice, as using such a solution in daily retail operations was not in the DNA of front-side retail people. Therefore we’ve built our main offering around providing retailers with metrics about their retail shoppers that have a direct relationship with sales (we originally tested these metrics with our early-adopter clients, who opened up their sales figures to us). Such directly sales-related metrics include window conversion rate and abandonment rate, as well as Gross Shopping Hours (GSH).

By providing retailers with select, easy-to-understand metrics that have a direct relationship with sales (as opposed to in-depth multi-page analytics reports), we’re transforming the way these retailers use data. We’re enabling them to understand sales in real-time through these metrics. They can then act on any slumps in sales (apparent through our metrics) compared with their own historical behavior or industry benchmarks — even in the middle of a trading day.

What trends and changes in the retail market led you to realize that RapidBlue Solutions would fill a void?

Consumer spending has already scattered across three main channels: brick-and-mortar, online and mobile. This fundamental change in the shopping behavior of consumers has changed the retail landscape forever. It’s no longer enough for retailers to open up shop and expect a return in the form of sales due to a great location or a strong brand. Today’s consumer conveniently uses multiple channels in the same purchase process, resulting in an increase in behavior where products are seen, felt and tried through one channel, but eventually purchased through another.

This is where the void for brick-and-mortar lies. This “browsing” behavior and the subsequent losses in sales are not visible to brick-and-mortar retailers. If you don’t buy, the retailer might know you came (if they have counters at doors), but doesn’t know you turned away from the door because of excessively long lines. Or that this was the third time you did that this week for the very same reason. Understanding sales is necessary, but understanding shopping trips that don’t result in sales is equally necessary. And that is a problem for brick-and-mortar — a problem online and mobile sales channels do not face. And as a brick-and-mortar retailer, if you want to compete for the spending power of consumers with sales channels that already have the advantage of being accessible 24/7 from anywhere, can you really afford to fall even more behind by not knowing your visitors to the extent that online retailers do?

What is GSH and how can retailers use this metric to better understand shopper behavior?

GSH refers to our trademarked retail metric, Gross Shopping Hours. GSH is a sales-related retail metric that has a 95 percent correlation with sales. For example, visitor counter data only has a 60 percent correlation with sales at best. GSH is a proprietary metric consisting of retail visit count and visitor in-store dwell time.

Because of its relationship with sales, GSH is best used as a KPI to measure the impact of retailer activities, for example marketing and advertising campaigns. Whether or not a marketing activity, advertising campaign or any other retailer action is deemed a “success” or “failure” often has nothing to do with reality and more to do with internal company politics and perceptions, as well as interpersonal relationships.

GSH provides one significant, fully independent metric, which leaves no room for excuses, explanations or interpretation. If an action has improved GSH, regardless of what the action is, your action has directly affected sales. Because we live in an era of tight corporate budgets and a need to justify activities, retailers embracing the GSH way of thinking can be sure they know they are not wasting money by conducting activities which do not yield maximum results.

Many brands have been concerned the ROI of digital campaigns and if and how they affect in-store sales. What evidence have you seen to show the impact of digital campaigns on in-store purchasing?

We actually ran a campaign with one of our retail customers to test exactly what type of impact an online advertising campaign can actually have on in-store sales. By alternating the timing of digital ad campaigns for various retail sites of the same retailer and simultaneously measuring the impact on shopper behavior in brick-and-mortar stores through our Retail Shopper Analytics, we were able to attribute a double-digit percentage improvement in GSH (consisting of a double-digit percentage improvement in visitor count and a double-digit percentage improvement of in-store dwell time) directly to a Google AdWords campaign.

This is one of the great ways our platform can and should be used by retailers. Because media campaigns are often multichannel, we need to realize that consumer actions as a result of a campaign can occur in other channels, not just the one where the consumer was exposed to the advertising message.

The traditional way of measuring the impact of an online campaign in terms of CTR or website traffic increase is no longer sufficient. An online campaign can be a success even if it has a seemingly negative impact in the online channel. If you don’t measure its impact on all other channels (including brick-and-mortar), you might as well shoot in the dark and hope for the best.

How is mobile changing the way that consumers research and purchase goods? How should retail locations be using this as an opportunity?

Mobile in my view is a truly disruptive force in commerce today and is becoming increasingly important for retailers as we speak. Not only does the use of mobile phones by consumers enable us to gain unparalleled insights into customer behavior and act as another channel to sell goods, but mobile in itself acts as a way to increase loyalty and spend. Do away with your old punch cards or loyalty card schemes — who needs them anymore when everyone has a mobile phone?

Mobile has already penetrated into the mainstream as a purchase channel, customer retention tool and an information channel for consumers, and it’s well on its way to becoming a viable payment method for retail transactions.

Retailers should all take the leap and be in the front line of this development, even if they perceive their target customer segments might not be there yet. Retail locations should also understand and take the advantage of the local opportunities of mobile presented through its use in a location context.

If you are a retailer and think you’re in the front line by having a mobile app where consumers can find more information about your products, think again. Mobile provides the opportunity for retailers to be creative in the ways they serve consumers, therefore the potential of this creativity should be explored by every retailer. And no, having a mobile app with content about your products isn’t a creative use of mobile.

In July, RapidBlue was granted a European Union patent to gather information on consumers in retail locations. What types of data and information will you be working to gather? How will this information be used to improve the retail experience?

The patent RapidBlue was granted enables us to go much deeper when providing insights into retail shopper behavior. Through the patent, we’re able to create profiles of consumer mobile phone location data collected through either WiFi or Bluetooth signals the consumers’ mobile phones are emitting.

This is a massive opportunity. Imagine being able to understand not only every shopping trip not resulting in a purchase, but also who these shopping trips represent — or being able to know how your advertising campaign affected different demographic groups in your brick-and-mortar stores.

Along with this patent, we want to bring data to the mainstream. To bring the same level of knowledge that can be achieved through snapshot market research studies to the front line of business people making everyday decisions about retail operations and marketing — simply, effectively and easily.

To this extent, since the beginning of 2012 we have been able to profile 132,000 consumers, mostly in Finland and the UK, so that retailers can extract meaningful information about these profiles.

RapidBlue Solutions has joined with Nokia, Sony Mobile and Samsung to create the In-Location Alliance. Can you tell us about the initiatives of this group? What do you hope to accomplish?

Officially Nokia responds to inquiries related to the initiatives coming out of the In-Location alliance. However, the purpose for us being involved in the alliance is to ensure that we are at the forefront of new technologies and services related to indoor positioning, as well as the creation of standards for the industry. For our clients, this translates into peace of mind that our technological platform and solutions offered to them will never fall behind in technological development, even in the future. In addition, our acceptance further validates the technological choices we’ve made as a company and ensures that what we provide our clients is nothing short of quality.

We are absolutely thrilled to be involved, working with the likes of Samsung, Nokia, Qualcomm and Broadcom in defining and shaping the future of indoor positioning and related services.

What does the future of RapidBlue look like?

At RapidBlue, we are really on the path of taking data about customers away from back office analysts and bringing it into the frontline for daily and weekly operational use in brick-and-mortar.

We want to enable retailers and brands’ understanding of not just the purchase, but the entire route to the purchase in brick-and-mortar. We believe our data provided in combination with sales data will become a key for our future development, as the data we collect and gather has a much higher value when integrated with sales data.

In the future we will continue partnering with market research companies, point-of-sales and payment system providers, as well as directly with media and media agencies to bring brick-and-mortar shopper data to the frontline. Without forgetting direct client relationships with retailers and brands, of course.

As far as our expansion goes, although we’re focused heavily on Europe and the Middle East currently, the increasing interest from the US in our services, from media, media agencies and retailers alike, is a clear sign that the metrics, benchmark data and insights we provide are relevant globally.

The main barrier to our expansion is lack of knowledge. Retailers and brands today have limited knowledge that receiving the type of metrics we’re able to produce is even possible. For those who are our clients and who know, they’ve proved to be not only valuable, but downright crucial.

With a business education background in Finland as well as IT-project management experience internationally, Sampo Parkkinen co-founded RapidBlue Solutions in 2007 to become the “Google Analytics” for brick-and-mortar out of the need to provide similar tools for brick-and-mortar which had surfaced online. Prior to launching RapidBlue (and still some time after), Sampo was leading the implementation of Oracle-based proprietary ERP-solutions in the Nordics and Baltics for the logistics business.

A side project until 2010, RapidBlue initially focused on testing the value of different types of customer data for retailers and gaining an understanding of the retail world on the side, something which the team at the time lacked.

The realization that metrics for brick-and-mortar needed to be sales-related came through iteration in 2011, ever since which the company has focused its efforts heavily on bringing customer data to the front line.