Tuesday, December 23, 2014

Alfidi Capital Attends Location and Context World 2014

San Francisco is my usual location, in the context of finding material for some provocative blogging.  That's all the reason I needed to attend Location and Context World this December.  I couldn't go wrong with exposure to three days of expertise that blended real-time data, geographic information systems, and mobile apps.  I expect location based services to emerge as a subset of the data sector.  Pioneering a new sector means launching a new conference series like this one to cover it.

The pre-conference CIO workshop had a bunch of us overachievers generating ideas for retail use cases, enterprise cultural approaches to user privacy, and deployment methods for location tracking.  The 14 of us generated and critiqued 287 ideas in three hours.  That was about 20 ideas per participant, and I'm pretty sure my ideas were the most articulate.  My suggestions:  CX by location; loss prevention risk factors; Big Data analytics linking back-end streams.  I don't know if any of my CIO-related comments will end up in a Gartner or Forrester report, so I'll share them below.

Linking opt-in protocols to customer rewards and loyalty programs is always a compelling incentive to get users past that first data input hurdle.  Enterprises should specify in their privacy policies that they own location data for a user who enters their store.  User data can be abused if taken out of context, and accusations of racial profiling come to mind as a potential liability.  Cross-referenced data for demographic elements other than race can counter those charges.  Opting out in an environment of ubiquitous computing is hard, so the only way of doing so completely may be to just turn off one's smartphone when entering a store.  Opting out of anything after completing a transaction is probably impossible because a user's data history is so easily monetized.  Some CXs can cross the line between convenience and invasiveness.  Only a Chief Privacy Officer can draw that line where outliers of use case data won't cross it.  Life cycle management (LCM) needs more attention; LCM will accelerate, become more complex, and incorporate Cloudonomics.  Finally, I don't know whether retailers have though about how the WiFi spectrum may get crowded indoors with POS terminals, multiple smartphones, and in-store surveillance competing for airwaves.

The first day's analyst roundtable on transforming customer and employee interaction made me wonder whether developers in mobile, enterprise, and Big Data truly work together on integrated products.  The app sector needs consolidation.  I want "data sector" enterprise players to look seriously at vertical integration with data merchants.  Where is the evidence that mobile apps successfully manage workflows?  Mobile displays need simple dashboards, but handling workflows means tapping through several layers of deep dives.  Furthermore, mobile use in field services will need customizable dashboards that make workflows take a back seat to troubleshooting.  I can already see mobile power users getting heavy volumes of push notifications from the enterprise as a workflow method.  The difficulty is that responding to those notices forces mobile field reps to be reactive instead of proactive problem-solvers.  There goes mobile empowerment, thanks to workflow requirements.  Enterprise systems must inevitably be dumbed down for mobile users.  It's sad that field reps won't have much autonomy once some combination of push notices and simple dashboards constrict mobile use.

I suspect the difference between "proximity marketing" and "location marketing" is negligible.  One of those terms will win out when the tech media start hyping one.  Beacons are a hot item in enabling infrastructure and their makers don't care which term wins.  I don't know whether beacons really eliminate the need to spam mobile users by allowing consumers' digital lives to follow them into the physical world.  Many users consider ads on their Facebook news feeds to be spam.  Cueing up those ads based on social media actions means beacons are still in the spam chain by enabling proximity marketing pushes.  Here's my suggested critical path for beacon adoption:  100 CustDev use cases . . . improvements in conversion rate and shopping basket size . . . Cloudonomics ROI of proposed beacon solution.  Inserting hyperlocal data into a customer journey map will define the CustDev segment that makes this adoption work.

Enterprises have discovered telematics and it's not just for automobiles.  Ambient energy sources for IoT devices must have a sufficient power budget for edge computing.  Geospatial precision matters for remote devices and lidar sensors have found a market.  Context doesn't matter so much for remote IoT devices but it is very important in defining a retail UX.  Little Data is really Big Data sliced into location and context.

Jonah Berger's STEPPS concept helps location marketers reverse engineer a successful word-of-mouth campaign template.  Pre-store engagement metrics work backwards from the POS, not just from social media channels.  The "near-store" effort requires geo-targeting.  Proximity triggers (geo-fences, beacons) lead to higher conversion rates.  This quantifies the value of marketing campaigns incorporating location because a customer's actions at each gateway (pre-store, near-store, in-store) are tracked.  Forrester advises us to measure "mobile moments."  The thought leaders at this conference proposed using measuring media actions in pre-store moments, mobile app actions in near-store moments, and beacon cues in the in-store moments.

A couple of panel participants discussed how their enterprises tested in-store apps before a national rollout.  The biggest retail chains devote DevOps to internal labs and make acqui-hires for IT talent.  One IT mercenary claimed that data mining could generate frictionless growth by reducing subscriber churn in membership services.  That is an efficient tactic for SMBs who do not have the funds to deploy beacons and sensor farms.  The SMBs that know the total cost of ownership (TCO) of a plug-and-play location-based solution can easily figure the ROI of a full deployment, just like that mercenary IT dude.

I sat through one startup pitch from a solution in search of a problem.  They had a calendar-based app but were so stupid that they had not thought of a monetization strategy before launching.  Every failed '90s dot-com made that mistake.  Business models like these suffer from the cold start problem because they have not attracted a large enough user base to offer generalizable AI output.  Solving it forces founders to address a chicken or the egg problem with a choice between going for user traction with a basic product or deploying a more advanced product after more AI tweaking.  All of the software thought leaders I've seen in the past three years advocate iterative deployments through constant CustDev and A/B testing to get through these two related problems.  Startups that haven't figured this out are not worth my time.

The second day's analyst roundtable introduced me to augmented reality shopping.  I don't spend enough time in stores to benefit from augmented reality but a couple of years ago I did see some POS concepts enabling consumer choices.  Every time someone in tech makes a bullish prediction on smartwatches, I remind myself of the challenges of the watch display's small form factor.  It can show one or two data points in large type and probably no more than three more in very small type (four are possible if the background color's shading conveys something substantial).  I did learn a couple of cool things.  First, retailers may encrypt beacons to work only with their branded apps.  Second, a closed-loop service app initiates user contact that will lead to a yes/no sales decision, much like a live sales rep's closed-end question driving a conversion.  Thanks, SNL Kagan, for sending a hot babe analyst to explain these things.

Newcomers to location-based services should know that "O2O" means online-to-offline commerce.  Tech media have hyped it for several years as a huge untapped opportunity.  If it were really so huge, there wouldn't be such a large ecosystem of e-commerce apps corralling consumers into staying online all the time.  Think about it.  The whole premise of beacons pushing location-based notices is that consumers are never offline.  A better approach to keeping customers engaged is "locationomics."  Do a Web search for that term.  Informa Telecoms and Media organized this conference and claims to have coined the term.  No one paid me anything to say that.  The Location Forum defines locationomics and LBx Journal covers it regularly.

Tech superstar Robert Scoble came to plug his book The Age of Context.  He revealed that smartphones now have installed beacons, which strikes me as redundant if physical stores have their own beacons to query smartphones.  A smartphone with its own beacon might be useful for querying a purely mobile vendor (like a food truck or a custom delivery service) but that's a very limited . . . context.  Come on, you knew I would deploy that one.

One presenter displayed Beecham Research`s Wearable Technology Application Chart.  I think it's the most mind-blowing corporate thing I have seen all month.  It reminds me of the rock band Journey's album covers from the early 1980s, the ones with the scarab launching into outer space and doing other trippy things.  Hunt down that groovy chart yourself, because I won't repost it here.  It's one of those things destined to live on in Web lore.

One irony of LBS I noticed is that virtual reality (VR) minimizes the need for physical movement.  VR devices that disrupt travel and commuting mean LBS growth won't be nearly as pronounced.  The race between LBS and VR will define which business models dominate the next generation of e-commerce.  Competing standards for M2M and IoT interfaces will hinder this dominance until one breakthrough product builds an ecosystem that forces other aspirants to fall in line behind one standard.

The IT people at this conference must be getting chewed out a lot by their CFOs, because some have finally realized that allocating DevOps budgets between incremental opex and capex affects project ROI.  CIOs who tie their SDLC and LCM to the enterprise's capital budget are winners in the C-suite.  One presenting CTO claimed that incremental changes, personalized workflows, and push notices create context.  Okay dude, that's an extremely insular focus that ignores customers and runs into the problems with workflows I described above.  Shoppers who "showroom" by comparing in-store prices before making online purchases go around such insular CTOs.

Leave it to Google to deliver a talk that makes sense.  The Google rep on hand said cost per visit is a good KPI measuring the cost effectiveness of omni-channel marketing.  I'll take that suggestion further along a roadmap to success.  Find the most-clicked item on a website (i.e., a retail shopping portal).  Maximize that link's visibility in social media and web searches.  Use rich media to enhance its details, especially if it has embedded images or video.   I suspect this tactic is more powerful than linkbait or figuring the number of positive product reviews needed to overcome a negative review.

The venture investors present did more than just talk their books.  They think LBS can multiply the network effect of a first-mover.  I had not thought of crowdsourcing as a way to rapidly populate an original dataset, so perhaps that can overcome the cold start problem I mentioned above.  Strategic acquirers may indeed want LBS in their data streams but that does not mean they will pay for large exit events from VC-backed LBS startups.  Note above how I discussed the tendency of retail chains to develop their own LBS capabilities internally or through acqui-hires.  The VCs who expect their startups to achieve billion-dollar exits need to lower their expectations.  They may find more success in hardware than software given the attractiveness of beacons.  They also need to quit harping on "proxies for growth" like downloads or media coverage.  There is no such thing as a proxy for growth.  Startups either grow their revenue or become worthless.

Location is easier to define than context.  I define context as any monetizable or actionable option nested within multiple data streams tied to identity.  This of course makes anonymity impossible but users won't mind giving up their privacy if they get value in return.  Combining context with location further precludes anonymity.  Go ahead and quote me.  I'm pretty sure I'm ahead of Gartner and Forrester.  My Google search for "digital context" brought up some Forrester commentary from a World Economic Forum panel on digital context; it offered little detail.  Context is a brand new term for thought leaders like yours truly to claim.  I generated more details in this one blog article here than most thought leaders on big-shot panels.

There were some really hot babes staffing this conference, especially the show's CEO.  Maybe next time the unattached babes in attendance can show me some location-based services up in their hotel rooms.  I could fit that into the context of my incredible manliness that women find irresistible.  Alfidi Capital is way ahead of other financial sector players thanks to Location and Context World 2014.