In 2010, Rudd Davis helped start a business that developed a technology platform to let hotels deliver personalized content to guest phones. At the same time this was happening, Mr. Davis and his parents bought a century-old country store in their small Vermont town.
“I helped my parents buy the store and realized there were many of the same issues and customer dynamics at play in their little store as there were in the largest hotels,” he said. “I wanted to understand how many people came into the store, where they went when they were there, what they bought. How could we figure out how to get more of the things they liked so that they would come back more frequently? I wound up looking for a very inexpensive people counter and other tools to understand that.”
Mr. Davis found there were no such tools specifically for small businesses. Those available, he believed, were aimed at businesses of all sizes and were too expensive for small companies. So in 2012, he created his own. He and Ryan Denehy, a close friend who had worked with Mr. Davis in previous ventures, started Swarm in San Francisco. Its newest product is the Swarm Portal, a battery-powered device that employs an infrared beam to measure foot traffic and iBeacon technology to integrate with loyalty apps and send recommendations or coupons to smartphone users in a store (if they have signed up for the service).
The device is about the size of a coffee cup lid and is attached right above a store’s door jam, where it shoots an infrared beam that detects shoppers entering and leaving. It works with both iOS and Android platforms and lets retailers know precisely how many customers walk in and out on an hourly basis.
Owners can track the variations in foot traffic from week to week, month to month and year to year, and they can predict how much traffic to expect on a given day — allowing them to staff appropriately. Swarm can also be connected to whatever point-of-sale method a business uses and with that information, give a business its conversion rate – the percentage of customers who actually buy something.
The information is presented to business owners through Swarm’s dashboard. “We don’t just give raw data back, we give insights,” Mr. Davis said. For example, Swarm might indicate that a store’s conversion rate is low, by comparing its performance to benchmark data for similar stores. (The company never shares an individual store’s data, but provides insights based on aggregated data, Mr. Davis said).
If a clothing store’s conversion rate is 12 percent, but the trend for clothing stores with a similar profile is 15 percent, Swarm might recommend staff scheduling changes, based on the data. “This is very different from saying, ‘I know generally when I’m busy and generally when I’m slow,’” he said. “It’s about data. It’s about being able to make precise and controlled decisions.” For example, Mr. Davis said his parents knew generally that Friday was their busiest day of the week, so they would schedule several people for full shifts.
With Swarm, they saw that Fridays were indeed busy, but at certain points rather than all day — the morning rush and then a rush at night. During the middle of day, it turned out there weren’t many customers. “That meant they could stagger schedules so they didn’t have people there for a full shift with nothing to do,” he said.
Mr. Davis said he and his parents lost a lot of money in their first year owning the country store. When they examined the books, they found the biggest expense was employees. About 18 months into the business, they began using Swarm. They now know customer traffic on an hourly basis and can predict what traffic will be like throughout the day for each day of the week. Because of that, staffing is far more efficient, Mr. Davis said, and total employee expense has been reduced by 20 percent.
In-store analytics technology isn’t new. For example, RetailNext, which started in 2007, was one of the first companies to offer it. While its technology can be used by small businesses, the company is known for serving large companies. ShopperTrak is another such service.
Kazu Matsuba, the manager of store operations for Taylor Stitch on Valencia Street in San Francisco, has used Swarm over the past year. The store sells custom shirts and suits, as well as off-the-rack suits and jeans, and Mr. Matsuba said Swarm has helped him track foot traffic and conversions.
“Since we’re still a new company, we are forecasting and trying to figure out traffic trends seasonally and daily,” he said. “During wedding season, for instance, we were getting a lot of people in for custom shirting after work hours, between 5 p.m. and 7 p.m., so I try to have at least two people available then that know custom shirting. We could see the pattern and track it, so I wasn’t just guessing.”
Swarm, according to Mr. Davis, has raised $3.5 million in investment capital and is “borderline profitable.” Since the company started selling the Swarm Portal in June, it has received more than 8,000 orders. The device costs $79.99, which includes the companion app.
If retailers want to integrate with their point-of-sale system, that’s an additional monthly subscription fee of $39.99, and it allows Swarm to provide the store’s conversion rate, as well as transaction data, like the average transaction size, number of items per transaction and the most popular items by hour, day and week