September 29, 2006
Biometrics to Change Relationships
John Costello has an impressive resume as a marketing executive with Home Depot, Sears and Yahoo. His new job, president of the biometric payment company Pay By Touch, doesn’t seem as prestigious at first glance, but don’t tell that to Mr. Costello.
As far as he is concerned, he is in exactly the right place, he told Ad Age, because he believes biometric systems have the potential to transform the relationship among consumers, retailers and manufacturers.”
As he sees it, marketing is in the process of evolving from mass communications to one-to-one relationships. In the future, as he sees it, consumers could pay for groceries with a touch of a finger at an in-store kiosk and, at the same time, receive offers based on their personal preferences and previous shopping behavior.
There still appears to be a long way to go before Mr. Costello’s future vision has the opportunity to be realized. Pay By Touch is still in the early stages of development, testing its system in 2,400 stores.
Discussion Question: What do you see as the potential of biometric technology in retail operations?
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One-to-one relationships began with Adam and Eve, Mr. Costello. Nothing new. All of us were created during one-to-one relationships.
Biometrics is a wonderful and burgeoning science which holds great promise. But like the overblown, overpromised Segway personal transport, it has no legs. Fingers and wheels, perhaps, but no legs. Identification obfuscation runs rampant despite PINs, passwords, photo IDs, credit card verification numbers, magstripes, retinal scans, voiceprints, DNA tests, and the urinalysis and blood tests administered to professional athletes.
I do not look forward to a world in which my purchase might be denied because I have corndog residue on my fingers.
While biometric systems aren’t fraud-proof (someone recently demonstrated that it was pretty simple to fool a fingerprint system if you have an imprint to work with), they certainly make it dramatically harder to pretend to be someone else. If it is presented to consumers properly — it doesn’t reveal anything more about you than before, but you can be pretty sure someone isn’t walking around with your fingerprint pretending to be you — it should succeed.
From a marketing standpoint, it doesn’t bring anything new to the table other than the potential to have more complete databases on more people. But that is the name of the game, and the bigger the database, the more likely it is that retailers and others will find the ROI irresistible.
Mark and Charles are right. It’s still too early in the game to be certain of biometric’s future, but there are grounds to be guardedly optimistic. Caveats include privacy, etc. but we have to see what happens — maybe people will value security more than privacy.
Biometric checkout technology, such as Pay By Touch, can be the identity theft silver bullet for credit cards and check approval. Fraud reduction is the clear return on investment. Proving a bottom line marketing profit will be harder. Not that it won’t be there, but every retailer, bank, and credit card processor already knows their fraud losses every day to the penny. More effective marketing gains will only be estimates and conjecture until testing proof.
What a braver new world. I am afraid. Very afraid.
Oh, yes. Nothing says “close relationships” like fingerprinting someone or doing a retina scan.
When Pay by Touch and their top competitor, Bio Pay first came onto the scene, their proposition to the customer was speed and convenience, while helping the retailer to transfer a significant amount of transactions from the more expensive “credit card” transactions to some lesser expensive form of cash transaction.
To the extent that Pay by Touch wins over shoppers with their biometric option, their marketing programs to achieve “critical mass” participation from shoppers will dictate the financial success of the core product, on the premise of less expensive transactions fueling the ROI.
But in my view, what John Costello understood when he came on board as CEO of PBT was that the core business proposition had to change from a “payment system” alternative, to a “customer recognition system.” The latter, broader vision of the role of biometrics enables PBT to begin to partner with other one-to-one, CRM solutions. This synergy, plus the acquisition of Bio Pay, has propelled PBT into a position of market leadership. Now the outstanding question is whether or not the propositions to both retailer, brand, and end customer are compelling enough to drive acceptance and usage.
My bet is yes; with time and the right engagement programs, biometrics and PBT has a real chance of becoming a real alternative to credit card transactions and frequent shopper card swiping.
It’s a bit early to be predicting with certainty how dramatically biometrics will affect retailers, suppliers or consumers.
Biometrics have the potential to speed checkout at both bricks and clicks & mortar. It certainly has the potential to provide a great deal of data about individual preferences and purchasing predictability. It further opens the door for the development of technology which supports biometrics and biometric safety and fraud detection.
There seems to be little question that technology will overcome the barriers to making it mainstream and that it will certainly add some speed and convenience to the checkout. The big question which remains in my mind is how effectively the information gathered on individual preferences can be used to anyone’s advantage.
Many retailers today are able to collect reams of data on a macro and micro scale concerning purchases on the whole, and to some degree through utilization of their own credit cards can track gender specific data on purchasing habits. Collecting this data is one thing, using it effectively, if at all, is another.
If greater information about consumer purchasing habits is so useful, why hasn’t it been sucessful at reducing retailer inventories and driving up their ROI over the last 10 years? Biometrics certainly will deliver benefits, but it won’t be the panacea anymore than the much ballyhooed “Just-In-Time” supply chain strategies were to Auto Makers back in the early 90s.
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One-to-one relationships began with Adam and Eve, Mr. Costello. Nothing new. All of us were created during one-to-one relationships.
Biometrics is a wonderful and burgeoning science which holds great promise. But like the overblown, overpromised Segway personal transport, it has no legs. Fingers and wheels, perhaps, but no legs. Identification obfuscation runs rampant despite PINs, passwords, photo IDs, credit card verification numbers, magstripes, retinal scans, voiceprints, DNA tests, and the urinalysis and blood tests administered to professional athletes.
I do not look forward to a world in which my purchase might be denied because I have corndog residue on my fingers.
While biometric systems aren’t fraud-proof (someone recently demonstrated that it was pretty simple to fool a fingerprint system if you have an imprint to work with), they certainly make it dramatically harder to pretend to be someone else. If it is presented to consumers properly — it doesn’t reveal anything more about you than before, but you can be pretty sure someone isn’t walking around with your fingerprint pretending to be you — it should succeed.
From a marketing standpoint, it doesn’t bring anything new to the table other than the potential to have more complete databases on more people. But that is the name of the game, and the bigger the database, the more likely it is that retailers and others will find the ROI irresistible.
Mark and Charles are right. It’s still too early in the game to be certain of biometric’s future, but there are grounds to be guardedly optimistic. Caveats include privacy, etc. but we have to see what happens — maybe people will value security more than privacy.
Biometric checkout technology, such as Pay By Touch, can be the identity theft silver bullet for credit cards and check approval. Fraud reduction is the clear return on investment. Proving a bottom line marketing profit will be harder. Not that it won’t be there, but every retailer, bank, and credit card processor already knows their fraud losses every day to the penny. More effective marketing gains will only be estimates and conjecture until testing proof.
What a braver new world. I am afraid. Very afraid.
Oh, yes. Nothing says “close relationships” like fingerprinting someone or doing a retina scan.
When Pay by Touch and their top competitor, Bio Pay first came onto the scene, their proposition to the customer was speed and convenience, while helping the retailer to transfer a significant amount of transactions from the more expensive “credit card” transactions to some lesser expensive form of cash transaction.
To the extent that Pay by Touch wins over shoppers with their biometric option, their marketing programs to achieve “critical mass” participation from shoppers will dictate the financial success of the core product, on the premise of less expensive transactions fueling the ROI.
But in my view, what John Costello understood when he came on board as CEO of PBT was that the core business proposition had to change from a “payment system” alternative, to a “customer recognition system.” The latter, broader vision of the role of biometrics enables PBT to begin to partner with other one-to-one, CRM solutions. This synergy, plus the acquisition of Bio Pay, has propelled PBT into a position of market leadership. Now the outstanding question is whether or not the propositions to both retailer, brand, and end customer are compelling enough to drive acceptance and usage.
My bet is yes; with time and the right engagement programs, biometrics and PBT has a real chance of becoming a real alternative to credit card transactions and frequent shopper card swiping.
It’s a bit early to be predicting with certainty how dramatically biometrics will affect retailers, suppliers or consumers.
Biometrics have the potential to speed checkout at both bricks and clicks & mortar. It certainly has the potential to provide a great deal of data about individual preferences and purchasing predictability. It further opens the door for the development of technology which supports biometrics and biometric safety and fraud detection.
There seems to be little question that technology will overcome the barriers to making it mainstream and that it will certainly add some speed and convenience to the checkout. The big question which remains in my mind is how effectively the information gathered on individual preferences can be used to anyone’s advantage.
Many retailers today are able to collect reams of data on a macro and micro scale concerning purchases on the whole, and to some degree through utilization of their own credit cards can track gender specific data on purchasing habits. Collecting this data is one thing, using it effectively, if at all, is another.
If greater information about consumer purchasing habits is so useful, why hasn’t it been sucessful at reducing retailer inventories and driving up their ROI over the last 10 years? Biometrics certainly will deliver benefits, but it won’t be the panacea anymore than the much ballyhooed “Just-In-Time” supply chain strategies were to Auto Makers back in the early 90s.