Neiman Marcus Know-It-All App May Require A Different Kind Of Associate

Neiman Marcus is testing a new iPhone loyalty app that the luxury chain hopes will finally turn a longstanding desire of retailers into reality: the ability to know when the chain's best customers walk through the door, and to match those customers up with the right sales associates.

Retailers have been trying to get that right for years, using a variety of technologies. But if Neiman Marcus' approach works, it may mean that associates and store managers will have to exercise much more discretion and discipline—and that chains will have to change the way they hire associates.

The "NM Service" app, which the chain announced on March 1, is being tested in four stores (Austin and Dallas, Texas, and San Francisco and Palo Alto, Calif.). It uses Wi-Fi triangulation and the iPhone's geofencing capabilities to identify when the customer walks in. Once the customer is identified, she receives information on new product arrivals, upcoming store events, fashion trends and—most significantly—whether the customer's preferred sales associates are currently in the store.

Meanwhile, those associates receive an alert that the customer has arrived, along with the customer's in-store and online purchase history, a Facebook photo of the customer and potentially other notes on the customer's preferences.

It's a nice use of technology to extend the memories of associates—they can't actually remember all customers, but thanks to CRM data it's easier for customers to pretend they do. The illusion isn't perfect—customers can select whether to automatically show up on the store's radar or to require that they opt-in every time they walk into a store. In that case, it's going to be hard for customers not to be aware that they've just announced themselves electronically.

There's another illusion-puncturing element to that CRM data: The associate knows not only what she sold the customer but also what the customer has bought from the chain's E-Commerce site, from other associates and from other Neiman Marcus stores.

That's where things get tricky. All that CRM data is necessary for the customer to feel like the associate really does know her, and it's that personal connection that results in customers buying up to ten times as much as from a random sales associate. But the same CRM data is available to other associates who may have never met the customer.

If one of those associates starts mentioning purchases that the associate has no obvious reason to know about, it could raise a customer's concern about her privacy. If—as a planned future feature would enable—a preferred associate has put notes about the customer's personal details or preferences into the system, and some other associate suddenly seems to know all those personal details, the shift from "friendly" to "creepy" can happen very suddenly.

That shift to creepy can happen even faster when the purchases in question were made online.That shift to creepy can happen even faster when the purchases in question were made online. There's a strange distortion in how customers think about E-Commerce and privacy. Because they're sitting at home when they order, even though "the computer" obviously knows everything the customer has ever bought and makes recommendations based on that, the experience feels more private.

Meanwhile, an associate—an actual human being—who appears to know that much can feel at best off-putting and at worst threatening to some customers.

Once associates are armed with large quantities of CRM information, will they need a workshop in "how not to be creepy?" It might be as simple as making sure that purchase history doesn't lead to an associate saying "I see you bought" but instead just using the purchases as background knowledge to advance the current sale.

However, that may not be enough. When a sales associate knows next to nothing about a customer, the most successful salespeople are often the most aggressive. Their suggestions may be scattershot, but it feels like a process of zeroing in on what the customer is looking for. Take that highly aggressive sales associate and add a detailed sales history—and maybe a few personal details—however, and there's nothing scattershot about the result. It can quickly become invasive.

Those highly aggressive, highly successful (ordinarily) associates may be exactly the people you don't want to hire once you've put this type of technology in their hands.

And what happens when a customer's preferred associate isn't available? In an interesting touch, the Neiman Marcus app enables customers to check the schedules of associates to see when they're working. (That potential for creepiness goes both ways.) But if the associate isn't working or is busy with another customer, another associate will have to pick up the slack.

In a simpler time, that substitute associate would have known nothing at all about the customer except her name. Now the sub knows far too much about the customer's purchase history but may not be able to instantly decipher any notes the preferred associate made about how to handle the customer.

That means the sub may have to exercise a very disciplined ignorance about the customer, letting her explain (again) what she prefers. In theory, that's unnecessary, and it will likely stretch out the time required to make the sale. Managers will have to get used to that—and exercise their own self-discipline to let a technology-enhanced sale feel more natural to the customer.

There's an irony to all this: The goal of all this CRM technology is to give a modern chain store the personal feel of a small shop where the proprietor knows every customer by name, face and history. That feel is a throwback to a time when customers had a lot less privacy, at least when it came to purchase histories. The irony is that reviving that atmosphere is going to take a lot more discretion and care when it comes to CRM and privacy.