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Nick Kozak for the Toronto Star
Case Studies
Posted: January 14, 2014
by Ryan Starr

Turnstyle’s customer tracking raises privacy concerns

Name:
Turnstyle Solutions Inc.
Owners:
Devon Wright, Chris Gilpin, Matt Hunter, Nav Sangha
Address:
1087 Queen Street West
Contact:
contact@getturnstyle.com, getturnstyle.com
Employees:
10
Active:
8 months
Offering:
Hardware that quantifies customer presence and traffic patterns
Core customers:
Offline retailers

Turnstyle could be watching you.

 

More precisely, Turnstyle Solutions Inc., a Toronto-based location-analytics startup that launched in May, has developed a device that can monitor your behaviour in a store by detecting, via a WiFi network, the signal your smartphone transmits when you walk through the door.

 

This shouldn’t come as a shock. If you have a WiFi-enabled mobile phone, it’s in constant communication with routers anywhere it goes, sending out a ‘Media Access Control’ (MAC) address in search of networks to join.

 

By tracking this MAC address via monitoring hardware attached to routers, Turnstyle gives its clients — whether they’re small stores or big shopping malls — the ability to glean valuable insights into customer behaviour.

 

Using the Turnstyle dashboard, retailers can see which visitors are new and which are repeat, where in the store they’re going and how long they’re staying. They can also use historical performance metrics to decipher longer-term customer trends.

 

“It’s taking what we’ve learned over a decade or so in the online world — the ability to track an IP address or a cookie — and using it in the physical world to figure out what people do before the point of purchase,” explains one of Turnstyle’s co-founders, Devon Wright.

 

“Then you can optimize that experience for the consumer. You can understand better what the consumer is going through and wants out of you, and then cater to that.”

 

But the nature of Turnstyle’s tracking technology — specifically that most people aren’t aware they’re being tracked while visiting stores — has prompted privacy concerns.

 

“When you do something like this, people are naturally uncomfortable with change,” Wright says.

 

But the tracking Turnstyle does is anonymous, he points out — call it “advanced people counting.”

 

“It doesn’t pick up any personal information,” Wright says. For the moment.

 

Before long, however, he hopes to see customers opting to be identified personally and tracked, enabling Turnstyle’s clients to better target their buyers and enhance their in-store experience with notifications and customized offers sent via the Turnstyle dashboard.

 

“Why not allow the consumer, if they’re comfortable, to safely opt into this so they can be a part of the marketing campaign from that store,” Wright says. “If they’re coming 10 times a month, they’re likely going to be interested in having the store know who they are, because the store wants to reward them, to say, ‘Thanks so much for coming.’”

 

Wright recognizes the privacy concerns with Turnstyle’s tracking technology, and he makes clear that his company has been proactive in its efforts to address them.

 

Earlier this year Turnstyle joined with a number of other location-analytics companies for meetings with the Future of Privacy Forum, a Washington, D.C.-based think tank that promotes responsible data practices.

 

The tech firms worked with the forum to create a code of conduct that calls for, among other things, in-store posted signs that alert shoppers tracking technology is being used, with clear instructions on how to opt out.

 

“The goal (of the talks) was to educate the public on what we do and to set limitations on what we can do with the data, and to keep it as depersonalized or anonymous as we can, so that people who don’t want to be tracked can opt out in an easy and central way,” Wright explains.

 

North of the border, Turnstyle recently met with the Office of the Privacy Commissioner in Ottawa to discuss Canada’s similar concerns with tracking technology. “They want to make sure consumers here have enough awareness and that they have the chance to opt out if they’re not comfortable,” says Wright. “So the ability to opt out of this is very important.”

 

Fazila Nurani, a lawyer and privacy consultant with PrivaTech Consulting, believes ongoing transparency will be essential to Turnstyle’s success. “The key is for them to be really clear about what they’re doing, and telling people how to opt out if they want to,” she says.

 

But Turnstyle shouldn’t stop there. She recommends the firm carry out a comprehensive privacy impact assessment that examines, among other potential areas of privacy concern, how the collected information is safeguarded, who it’s shared with, how long it’ll be kept, and who’s accountable in the event of problems.

 

“Doing a full privacy review is critical for an organization introducing a new technology,” says Nurani. “Then they can identify and address gaps before they result in breaches.”

 

Wright is happy to take care of potential privacy concerns early on, lest they turn into big problems for his fledgling firm down the road.

 

“You don’t want to get off the ground in a way that’s going to offend the privacy commissioner,” he says. “As a startup you can’t afford a six-month hiatus because there’s a law that might pass that says (this technology) is illegal.”

EXPERT VIEWS

As Interviewed by: Rosemary Westwood

Turnstyle has expressed difficulty with the privacy component of their service offering. To address this they should conduct an impact assessment, be transparent about their use of shopper data and continue to strive for ethical treatment of such data. That said, shoppers with Wi-Fi enabled phones typically know very well that networks collect data from them. In our tech-friendly, social-media-mobilized world, this won’t likely be a permanent barrier to business for Turnstyle. Turnstyle should absolutely launch a shopper opt-in program to allow greater depth of understanding. Also, by repackaging the ‘big data’ they are able to collect, Turnstyle could become a retail consulting practice of sorts by selling specialized advice to other retailers about optimal store layouts, consumer response and spending patterns, and how to increase inventory turnover. This way Turnstyle has diversified lines of revenue, both well-within their core competency set, which will ultimately help ensure maximum data utilization and profitability.

by Brynn Winegard - Ryerson

With Turnstyle Solutions, clarity and transparency are the keys. They need to explain clearly to shoppers and clients how data will be collected, who the stakeholders are, and who will have access to this data. They should also share information around the issues of sharing data on shopping patterns, traffic flow and frequency. They also need to be clear about what the aims are, and they should also allow their clients and subjects to withdraw from research at anytime. Disclosure is also needed before any changes are implemented. I would recommend that it is set up as a membership, appealing to a sense of ownership and pride in customers. Shoppers would be rewarded for being part of the process, similar to what Loblaws is doing with their newly-released personal shopping strategy. This also allows customers to feel that they are valued and a significant part of the program. For retailers, it’s a great idea, giving them access to better information on how to maximize their space and best market their products.

by Brian Heasman - Ryerson

Turnstyle has two issues. One is definitely on the privacy side. It’s an interesting idea because it’s one more tool for retailers to try and get people to purchase. I like it from that perspective, and in terms of privacy, they’re doing all the right things. If they put out notices as they talk about doing, and they are seen as a very clean, transparent organization, that will help. But they are going to get a lot of flack, because it is very invasive. I think they really need to look at both reaching out to consumers through retail partners, and more generally. The other piece is how easy it is for the retailer to integrate this product into their systems and make it meaningful. It’s not clear how immediate and how valuable the information they collect will be to retailers. How does this integrate? And how easy will it be for the system to generate meaningful offers to say, 40 different people in a store? We’re already overloaded with email offers, and they stand to fail if they don’t offer me something of specific value, right away.

by Mark Simpson - GBC