December 14, 2010, 3:24 PM

Increasing shopkick rewards kicks up foot traffic by 50% to 70% at Sports Authority

One retailer says the shopkick app is working.

Katie Evans

Managing Editor, International Research

Lead Photo

Jeff Schumacher, chief marketing officer at the sporting goods retailer.

Shopkick has stood out among a sea of location-based shopping rewards apps because of its big-name inaugural partners including Macy’s and Best Buy, not to mention technology that can determine when a shopper steps into a store—not just when she is in a parking lot or the general vicinity.

Now the app is standing out for another reason. A retailer is saying the app works.

Sporting goods retailer Sports Authority says shopkick is helping drive more foot traffic to its stores.

 

 

 

 

"We had 50% to 70% more shoppers walk into the store with shopkick when we increased the rewards for walking in,” says Jeff Schumacher, chief marketing officer of Sports Authority. “There is a direct and measurable correlation that shopkick's model works."

Sports Authority ran several tests in four months since it began using the service to see if offering more rewards points for walking into its stores would entice more shoppers to do just that. So Sports Authority doubled and tripled the number of kickbucks—the cross-retailer currency of shopkick—it awarded to shoppers for walking into participating stores. Sports Authority found that as it offered more kickbucks for entering a store, more consumers with the app walked in, in some cases up to 70% more.

The shopkick app, when open on a iPhone or a smartphone using Google Inc.’s Android operating system, can detect a signal, emitted from devices about the size of a brick located in participating stores. This location detection is more exact than geolocation technology which can only tell if a shopper is in the general vicinity of a store, shopkick says. The devices cost around $100 and only require an electrical outlet.

Shoppers who have the app and open it can see a list of nearby participating stores they can enter and how many kickbucks each offers for entering. Once a shopper with the app on her phone enters a store, a retailer can offer her more rewards for taking actions such as scanning a poster in a dressing room or a bar code on a product. They also can offer special discounts on products or promotions such as double kickbucks for walking in during a certain timeframe.  Kickbucks can be collected and redeemed for store gift cards at the stores of retailers working with shopkick, song downloads, movie tickets, hotel vouchers, Facebook Credits to play games online and donations to 30 causes and charities.

However, it can take a lot of kickbucks to get much. A song download is around 250 kickbucks, and a shopkick spokeswoman has confirmed a $5 gift card at American Eagle requires 1,250 kickbucks. However, she adds merchants can structure rewards however they wish. For example, she says one merchant offered a $25 gift card for 250 kickbucks. Merchants put caps on the amount of times per day shoppers can enter a store and complete tasks to earn kickbucks.

In addition to the price of the signal transmitter, retailers pay shopkick a small fee for each kickbuck they dole out. And if a consumer buys an item after using the app, shopkick gets a percentage of the purchase price.

More than 1,100 stores and 100 shopping malls are using shopkick's technology. Additionally, shopkick works with brands including Kraft Foods and Procter & Gamble to offer smaller rewards for checking in and scanning products at 230,000 retail locations.

Comments | 6 Responses

  • Hi Katie - Have you or anyone at Internet Retailer tried using the ShopKick app inside a participating store? I ask because I tried it and it is a mess! I tried it at Best Buy, at Target, and found both the experiences quite disorienting. I found myself bumping into people and getting lost both in the app and the store, not to mention not finding items to scan and redeem coupons/offers. E.g. in Best Buy, it was not clear to me how to scan and get the offers for HP items (and where they were in the first place). I haven't tried Sports Authority, but I suspect the experience will not be significantly different. In my opinion, the statistic that Jeff refers to "50% increase in traffic when ShopKick rewards are increased" .. doesn't provide any insight into how effective ShopKick is in driving traffic to the store. Say BestBuy announces a free computer give-away everyday for folks walking into a store with the BestBuy app, wouldn't that increase store traffic of users walking in with BestBuy app? Then why bother about ShopKick? A more meaningful number would be the % of consumers walking into Sports Authority with ShopKick App to redeem an offer, but would have gone elsewhere for buying the same product if not for that specific ShopKick offer. I bet that is much less than 1%. I do laud ShopKick for trying to solve a very tough problem with a fairly innovative solution, but I think their solution as it relates to driving traffic into the store leaves a lot to be desired. Besides the confusing experience inside the store and the cost of the device/maintenance, the kickbucks remind me of the 1999 party when every a "?-bucks" program on the web. And we all know how that ended. Full disclosure - I am a product manager at a competitor called Location Labs that offers a competing solution called Geofencing. This addresses what Sports Authority and Best Buy are trying to do with driving traffic to the store - and it does it cheaper (no gadget), in a more scalable fashion, and simpler for customer. Read my blog posting here: blog.location-labs.com. I would be happy to describe our solution in a post at Internet Retailer and why it is more simple and elegant than ShopKick. Best, -Prasanna @pvinjamuri

  • Hi Prasanna, Thanks for the feedback. We here at Internet Retailer recently had a similar experience in a holiday field test with bar code scanning apps. While we received news from several vendors about how great their apps worked and were being received, we had difficulty using them when we tried them while out holiday shopping. This specific news didn't come only from shopkick but from the retailer as well, which makes it more credible in my eyes. But, considering our experiences with bar code scanning apps, I don't doubt that you had some troubles. I'll plan on trying out the app myself over the holidays. Regarding your other point, I believe the tests did show that shopkick was driving store traffic. It was an incentive that worked. Your example of a laptop giveaway also may have worked, but that doesn't discredit that offering more shopkick rewards drove more shoppers to stores. I only have general info on the fee structure of shopkick, so I'm not sure which would be a more cost effective—giving away a laptop a day or using shopkick. I suppose that's for the Sports Authority's CFO to determine. Another point is that shopkick is designed to continue to offer rewards and promotions to shoppers once they get inside a store for taking actions that could lead to a sale, such as trying on a pair of jeans, etc. With the laptop example, I'd venture to say many shoppers would walk right and then walk right out. Still, if the in-store incentives are difficult to use, understand and redeem, what's the point? In general, I'd venture to say most of the new marketing apps and technologies—from bar code scanning to geolocation to shopkick—show promise and interesting potential for the future, so they are worth reporting. But at the same time I'd fully support the argument that there are many kinks still being worked out.

    • Thanks Katie! If you get a chance, please also check out our iphone app called Mayor Maker - it demonstrates auto-checkin & check-out from configurable geofences created by a user around venues (/shopping areas) of interest. It was recently covered in WSJ here : http://on.wsj.com/ebWQ2Ba-mayor.

  • Good article with interesting info. However, the way the press release is claiming the benefits of shopkick is laughable. The caption makes it look like shopkick increased SA's foot traffic by 70%. Not so. What increasing shopkick points seems to have increased is only whatever shopkick user numbers were before. This obviously would have been a pathetically low number to begin with. Without the base number being disclosed, and with titles like 'It works', the press release is highly misleading and seems like some in the press have fallen for it. The device that they use to detect the user in the store violates existing patents and will be in serious trouble once it is deployed in larger numbers. Not to mention the poor user experience of having to walk in to the store with a open app on the phone in hand. I personally found the app very difficult to use - it practically never worked in my local Target store. Store employees told me that they use the app to try and get freebies. May be that's the number increasing the rewards helped. What do retailers think about handing over their loyalty program to a 3rd party promoting cross retailer redemption? Or are they so desperate, they are willing to do anything? Once the novelty of collecting points with promises of iTunes card etc wears off, they will see a dramatic drop in usage. But they won't be disclosing that in a press release, will they?

  • This app seems to attract a very unattractive target segment. Just check out the comments on this app on iTunes. It is full of people begging others to use their codes so they get measly extra points. Not sure if that's the kind of consumers these retailers are hoping to attract.

  • Shopkick has an interesting technology but as much as it is innovative there are rising concerns about the effects of the “audio signal” on service animals. As you know Shopkick’s technology uses high frequency audio signals from little white boxes at the entrance and in various departments of partner stores. The boxes produce a constant 20 kHz-22 kHz frequency audio signal that the “shopkick” mobile application can hear. The app listens for these audio signals via a mobile devices microphone and uses it to determine when and where you are inside a “shopkick” partner store. The sound produced is just outside human hearing range (20-20kHz), but is apparently well within the audible range of dogs and other service animals (65-30 kHz). This has raised concerns from disability rights activists that the audio signal produced is potential harmful to service animals. The audio signal is persistent throughout the store and because the average shopper stays in the store for 15 minutes or more, the animals hearing can potentially suffer harm. Retroactively this can keep disabled customers from shopping in partner stores.

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