The Credit CARD Act took effect last week and will have variety of effects on retailers, mostly financial. A less hyped stipulation of this law is that it limits certain fees on gift cards and requires these cards remain valid for at least five years. From a consumer standpoint this is great news. How many times have you found a forgotten gift card only to discover that it expired or that fees have eaten away at most of the balance?

I wonder, though, if Congress realizes the logistical nightmare and potential profitability damage this small clause will have on retailers. For instance, Target comes out with four or five new card designs with different photos or seasonal themes every few months. That’s roughly 20-30 different gift cards a year, meaning that at any given point the Target now must honor 100 different styles of gift cards. With a lot more gift cards in circulation, we may see an increase in scams. Retailers need to review their current gift card sales policies and boost employee training and compliance checks or face a decrease in profitability due to scams, fraudulent cards or simple processing mistakes. This is especially true for retailers with frequent employee turnover, where protocols need to be reinforced frequently. An easy way to accomplish this is with managed video with exception reporting and alerting. Start by reviewing how employees are processing gift cards today. As you watch the video, you’ll start to notice some best practices and common errors. Use the video and apply the insight into your operations to refine your gift card procedures and also to train employees on the right way to process gift cards. You’ll be amazed how reviewing this video with employees can prompt an open dialogue with employees about what is not working in your current gift card policy.

Now let’s get shopping.

Over the last couple weeks you may have seen press on restaurants and small businesses pushing back against credit card ‘swipe fees’ (which can be as high as 5%) and only accepting cash. It seems that all the talk of a cashless society may have to wait at least a bit. See link. Apparently a growing number of trendy, successful establishments in major metros across the country are saying ‘cash only’. I can certainly understand why retail establishments aren’t excited to drop a handful of points off their top line to the credit card processing giants. And while I won’t use real-estate here to comment on financial reforms I will say this, restaurant and retail operators should dial up their loss prevention efforts and tighten cash handling policies or risk losing their swipe fee savings to internal loss.
While internal loss occurs in all environments, plentiful cash transactions can provide a degree of temptation and fungibility that can add risk. As an example, in a restaurant environment small cash transactions, and high relative ratios of these transactions, can be a red flag.  A cashier may be ringing in only a sub-set of customer ordered items and ‘banking’ the remainder. But certainly a robust loss prevention capability can mitigate any added risk that can come from increased cash transactions. Some keys are strong and effective policies/processes around cash handling, combined video-data exception reporting and alerting, and strong on premises management. Feedback from our customers and loss prevention specialists who are familiar with tools available is that MVaaS solutions are an integral loss prevention component. Managed video extends management’s visibility, provides a tool to identify and investigate areas of concern, and puts management a step ahead. The ability to make video available to anyone, anywhere combined with the ability to integrate to POS data and provide actionable exception reports and alerts serves both to drive bad behaviors out and also serves as a strong deterrent to prevent it from happening in the first place.

Long live cash, just take advantage of the LP tools available to mitigate any added risks.

A recent article in the Economist observed both how most of QSR has recently weathered the economic storm while at the same time calling on them for additional innovation and change. Mostly the article spoke to menu changes – like the dollar menus we’ve all seen advertised by all the big players and now dominate their innovation. Dollar menus have been effective in retaining customers and perhaps even getting some new customers through ‘trade downs’ from other establishments they would have frequented. But the dark side of the dollar menu is margin risk. They are razor thin and some franchisees are even objecting and trying to fight corporate efforts to go dollar. Thinking about innovation at QSR then reminded me of a conversation we had with a CIO of a QSR concept who was attending NRF-LP. He said that QSR in general typically lagged retail (and many segments) in technology innovation. He gave a laundry list of reasons but a key one was limited IT staff and capability to assess and implement innovative technology solutions.

Call me crazy but it would seem that a great opportunity to innovate and perhaps de-risk some of the margin challenges presented by growing dollar menus is Managed Video. Managed Video as a Service targets operations and profit improvement and provides a rapid payback with no strain on IT and little to no overhead. We’ve delivered with a large (and growing) set of customers and can provide historical proof and pilot demonstration for new customers of 10-15% profit improvement.  Matter of fact just today we ran the numbers for a customer who is adopting our solution and predictably the results came in at 10%+ profit improvement. While I’d argue 10% profit improvement and under six month payback is always a good answer it seems to be even better when combined with the current dollar menu craze.  A one, two punch of innovation to drive revenue and sustain margin.

You had me at hello!

The National Retail Federation – Loss Prevention Conference was this past week in steamy Atlanta. I’m sure many of you are familiar with the show, it lasers in on how to reduce shrink, stop theft, control inventory etc.

One of the more interesting themes in my discussions (though I’m sure there was some selection bias in my sample) was the need for solution providers to be able to play and engage other functional areas of the retail enterprise customer to drive differentiated results. In discussion and demos that I saw, typically solution providers were pairing up Loss prevention with Security (theft deterrence and investigations as examples) or pairing Loss Prevention with Marketing (e.g. mystery shoppers and video based analytics companies). But overall it was a recurring theme and was even mentioned in my discussion with the trade press. 

While cross-functional value seems intuitive and isn’t a complete shocker of an observation, it was a Loss Prevention specific show so I thought it was interesting. It also resonated with me given that a key piece of the MVaaS value proposition is to provide easily accessible video insight to the masses (across functions). Loss prevention is definitely a key value area and application for MVaaS and we pair with marketing, security, human resources like many of the solutions I saw and discussed.  However, the two differences for MVaaS from what I heard was that no one was talking about reaching out to all of those areas and no one was talking about pairing Loss Prevention with operations. Analogous to Human Resources, if you can get every store operator and retail field employee thinking about loss prevention you are going to be more successful than if it’s a small team focused on LP (10’s of people vs. potentially 1000’s). Empower the masses with something that is easy to use and you can become part of the culture/DNA and drive exponential results.

And for the record, my 6+ years in Colorado have officially killed my ability to deal with Atlanta heat.  Amen to 11% humidity and 82 sunny degrees!

As adoption grows for SaaS (and MVaaS) we are starting to see ripple effects, adjustments, and observations, that impact how business is conducted and what we view as best practice. Great recent article in Sand Hill highlight a top five tips for delivering value to customers.

I think all 5 are spot on but I wanted to expand a bit on #3 – Know How You Will Measure Success. For readers of this blog, and those of you familiar with Envysion, you know that we are laser focused on delivering bottom line profit improvement for our customers. Because of that focus we are actively involved both in defining metrics but also the measuring.

For this to resonate and be valuable for customers its critical that the metrics and the measurement be in terms familiar and selected by the customers. Specifically, what are their KPI’s? What matters to them? How do they calculate it? Once value and success metrics are defined with the customer the next question is how do you measure it. Here again it is critical to align with the customer on the data, method, periods etc. At Envysion we typically conduct a pilot with our customers at the beginning of which we align on success metrics and at the end we run the numbers together with the customers finance team. While we are happy to do the math and run the numbers on behalf of our customers we make sure that they completely buy in up front and the results at the end.

The net here is that not only do you need to measure success for customers – in our view you should also align with your customer on what those metrics are and how you calculate them.

There has been quite a bit of debate on the challenges of POS-Video integration, but today I read an article on what’s required to translate integration to business results. Point being that effective integration is tough but once you integrate there are some additional things required to translate the opportunity to real dollars. Can I get an Amen? Here is the link, it’s a quick read. Overall, some good points in there. I’d add a couple expansions/modifications.

#1 on the list of to-do’s is to ensure that the video provider offers text overlay. I’d suggest that what you really want is effective time synchronization and ability to see full receipts next to & together with the appropriate video. I’m actually not a huge fan of obstructing the video and picture with transactional data. What you want is effective synchronization and visibility. An additional challenge is that overlay with some providers is an indicator that the really don’t have the data – meaning the customer can’t leverage/manipulate data (more on value of this shortly) and/or that the camera-overlay text is hard coded so you can’t view the video with out it and you can’t switch to different camera angles with the same data viewed. Probably easy to see the challenges here.

#2 on the list is to ensure you get ‘abnormal event alerting’. I completely agree that you need exception alerting but what about reporting as well? Customers benefit tremendously from being able to do ad hoc and pre-determined reporting across POS data and then pulling up video from any of the transactions that make up those reports. It can provide the ‘second layer of the onion’ that goes beyond a warning signal and validates if there is really a problem.

In the close the author also suggest that customers ‘work with an experienced integrator who can ensure your system is properly functioning, provide technical support and can remotely monitor the system to ensure it is fully functional.’ So buy in other words buy a hardware solution and then pay a 3rd party to watch after it…as you might guess I’d suggest the logical alternative is to get a managed video provider who does both. A good managed video service provider will not only perform the integration but also will monitor your solution to make sure its working and train you to ensure it delivers the value you need.

Lastly, a customer should consider not only POS system integration but selecting a video platform that will integrate to other business systems. How about Access Control? Or Alarming? Intrusion Detection? Similar value from video integration can be realized in these areas.

All that said, I agree that the moral of the story here is that integration is just step 1. To unlock the value there some additional components a customer needs…and managed video as a service seems to fit the bill well.

A big thank you to our Envysion Customer Product Advisory members. Yesterday we had a group of our power users join us in our downtown Louisville offices to provide feedback on Envysion’s service, input on the product development we have in the works, and share best practices with us, and with one another, on how they use our application.

One of the great aspects of our Software as a Service model is the incredible depth of usage feedback we have access to. How often do customers log in, how long are they on, what tools are they using, the list goes on. As our product management lead, this usage information is good stuff. But as helpful as all that is, for me nothing tops hearing the real skinny straight from a customer’s mouth.

Net was we got great input (what works, what we can improve, new opportunity areas) and we are now incredibly fired up to execute and roll out our next wave of capabilities. It was truly invigorating to have customers willing to take their time to come in and spend a day with us going through their wish list and providing feedback.  In these sessions you invite tough talk and you want to really understand how you can improve but it was great to hear our customers unprompted say great things about our service and application with one even saying that ‘Envysion was one of the best things to ever happen to their company’.

I spent the latter part of last week at one of the year’s most significant gatherings of restaurant technology executives. The keynote, delivered by Pizza Hut CIO Baron Concors, focused on their popular iPhone app. He shared some impactful stats on the explosion of web traffic originated from handheld devices, all in the past couple of years.

We’ve seen a paradigm shift in the way consumers access and conduct business on the Internet. Companies selling everyday products leveraged mobile technology in this current economic environment to create a value edge in the marketplace. Pizza Hut has over 1.5M downloads to date and likely 10x+ that amount in revenue through their iPhone app.

Following Baron’s speech, I reflected on the past year and how Envysion has leveraged technology and the current economy to reshape our own industry. What I witnessed over the next 48 hours proved that many others had taken notice too. Large enterprise executives stopped by to introduce themselves, key partners walked their clients into our booth for demonstrations and curious vendors stopped by to see what the buzz was all about. My favorite was from the VP of a fellow MURTEC sponsor who said “You guys are all the rage. There’s one every year and word on the street is – you’re it.”

Kudos to every member of the Envysion team. We are beginning to feed on the fruits of our labor in 2009. Bring your appetites, it’s going to be a great 2010!

When it comes to video surveillance, customers face a dizzying array of options and performance claims. From traditional hardware suppliers (cameras and DVR’s) and security integrators to resellers and consultant and of course managed and hosted video providers – each has a value prop and a performance claim. The challenge for a customer as it considers alternatives is how to test these claims, make sure the service works for them, and quantify results so that a rationale business decision can be made.

Wouldn’t it be nice if instead of these claims solution providers were willing to work with the customer to determine what to measure, how to quantify improvement, and educate on how to use the solution effectively? What if this solution provider also took the extra step to actually work with your finance team to quantify and align on the return on investment? Sound like just what the doctor ordered? At Envysion we do just that.

Envysion’s managed video value proposition is to deliver rapid and significant profitability improvement (10-15%) for multi-unit operators. We do this by making video easy to use, putting it in the hands of more people across departments, and focusing operators on actionable business insight. The other half of the value equation is what we don’t do – we don’t strain your IT organization and network so there isn’t the support and overhead cost that can come with technology solutions. The install and set up is plug and play, upgrades happen by just logging in, management or administration resource requirements are non-existent.

For a customer looking at our solution the return on investment equation is pretty straight forward. It is the net change in profit driven by our application less any incremental IT support required (zero in this case) divided by the investment. While the calculation is pretty straightforward we’ve seen tremendous value from rolling out a prescribed pilot process and ROI methodology that both trains customers how to use our solution and then analyzes profit improvement and calculates ROI.

Most innovative solutions face a similar scenario –demos, decks and traditional selling are good, but customers want quantified proof of savings and proof that it works for them. So Envysion decided the best thing was to develop and author an eight week pilot process that literally walks a customer through how to implement our managed video solution and how to use it in day-to-day operations to drive profit improvement. While many companies provide training in the mechanics of a solution (functional how to), our pilot focuses on operational usage. Specifically how an operator would use the service on a day-to-day basis to improve operations and profitability. Along the way we identify any specific customization that would benefit a customer for a full roll-out.

The last bit is the quantification of ROI. While every vendor talks about ROI measurement we’ve learned that few actually calculate it. While the math is not rocket science it helps to have experience collecting and analyzing data and of course in packaging results so they make sense and are digestible. At Envysion we leverage the fact that we’ve got some management consulting experience on our roster and we burn the midnight oil to crank these out.

Its probably not a surprise that customers have responded very favorably to our prescribed pilot and quantified ROI approach. In fact, we have heard nothing but positive feedback from customers. More than a few have said that they have been waiting for years for suppliers to put in the extra effort to do this. Of course what our customers are most excited about are the results that our Envysion managed video service delivers. Typically it’s between 150 – 250 basis points of profit improvement and 300-500% ROI. With those results, we are more than happy to do the  work to make this black and white and show the incredible value we deliver.

The one last area I wanted to report back on from FS-TEC was the Video Surveillance breakout session from Day 1. I wanted to highlight Greg May’s presentation Let Me Show You the $ – The why, what, and how to a successful surveillance system.  Greg is the CTO of Paradigm Investment Group.  Greg’s presentation was a great playbook for multi-unit operators from a customer/operator perspective.  It hit on need, selection, installation, tips and most importantly value delivery.  Full disclosure here, he is an Envysion customer. 

I thought I’d share a couple quotes from his presentation that would be valuable for anyone considering a managed video solution:

Why do I need a surveillance system?
1. To monitor external influences:
• Hold ups; Robberies; Slip and Falls
2. To monitor Staff:
• Employee theft , harassment, worker’s comp issues
• Verify that employees follow operational guidelines
3. To provide assistance for remote technicians
4. Source of training video for best and worst case examples

How you see the $
When video surveillance systems are combined with business intelligence and a consistent monitoring solution, these systems can and will pay for themselves through loss prevention, staff performance and overall operational efficiency.

Great insight Greg, thanks for sharing!