Beacons and Retail

By Vladimir Collak

Let’s face it. The Internet and mobile phones have forever changed the future of retail. Consumers have product information at their fingertips. They can comparison shop with ease and quickly find deals online. With so many great options, sometimes there is little reason to trudge oneself to a physical store. Conversely, consumers can also easily check out products in brick and mortar stores, only to buy them online at lower prices. In that kind of environment, many retailers should seriously consider innovating their marketing models. What they need is to find a better way to engage their customers by creating targeted marketing messages that understand their shoppers’ contexts. Not surprisingly, one way to do this could be leveraging technologies that expand on existing marketing and loyalty programs.

Technologies like beacons, when combined with mobile apps and digital content can easily improve customer loyalty and engagement. First, all retailers should fundamentally assume that most of their customers walk around with smartphones in their hands, pockets and purses. Having these devices, shops could easily leverage users’ location to send them targeted messages. For instance, as the customer enters a store, he or she could receive a notification with specific deals and coupons. These would be received at the right time as opposed to blasting them to anyone and everyone online. Further, beacons could help retailers better understand which individual customers entered their stores, which areas of the stores they spend the most time in and potentially even what products they have been looking at and actually purchased. Similarly, convenience stores could show deals while consumers are at the pump, driving them inside the store.

In fact, studies have already shown that beacon-based marketing is actually effective in engaging shoppers. According to a recent article in Engadget, 60% of shoppers “open and engage beacon-triggered content” with 30% actually redeeming beacon offers when making a purchase.(3) Also, 73% of shoppers polled said that offers delivered at the store increased their likelihood of making a purchase.

So what exactly are beacons and how do they differ from something like GPS (Global Positioning System)? Today, to get users’ location, most apps rely on GPS. However, this technology has trouble working indoors, easily drains the phone battery and can only identify device location down to 13 feet or so.(1) On the other hand, beacons don’t suffer from any of these issues. Unlike GPS, beacons do not provide users’ exact location, but only show a proximity to a beacon. They are battery efficient and provide a more granular proximity down to inches. A typical beacon implementation includes one or more physical beacon(s) placed inside a store. They are inexpensive physical devices often powered by coin batteries, AA batteries, or a regular power source. They emit Bluetooth signals that range 30–500 feet and can be “picked up” by smartphones or tablets.(2,7) The signals themselves are not the garden-variety classic Bluetooth, but Bluetooth Smart, also known as Bluetooth LE (BLE). They are designed to conserve the beacon battery, allowing them to run for months or even years. For beacons to be useful, users must typically have an app that recognizes them. Once an app detects their presence, it can perform some kind of predefined action.

Even though beacons represent a fairly new technology, it has already captured the attention of some big brands. Apple popularized it by adding BLE (Bluetooth LE) to its phones staring with the iPhone 4S and later creating an SDK (Software Development Kit) that makes it easy for developers to build apps for them. They also trademarked the word iBeacon and created a technical specification enabling the ecosystem to grow.

At the same time, some hardware manufacturers including Estimote and Gimbal started to sell their inexpensive beacons and further popularized the technology. Brands followed and today organizations including Macy’s, the MLB (Major League Baseball), Duane Reade, and even Apple itself leverage the technology in their stores and locations. For instance, MLB uses beacons to present offers or seat upgrades in many of the leagues’ baseball parks with announced installs including the Target Field in Minneapolis, Petco Park, Dodger Stadium, and stadiums of Cardinals, Giants, Mets, Rangers and others.(4) Similarly, Macy’s uses an app called ShopKick “allowing customers to access locationspecific deals, discounts, and recommendations while in a Macy’s retail store.”(5) Likewise, Apple has been using iBeacons in their stores. Specifically, when users enter a store, the app can present them with an EasyPay screen that allows shoppers to scan an item and pay for it right then and there. The process is nothing short of magical where customers could pick up an Apple accessory from a shelf, quickly pay for it and simply walk out of the store without ever talking to a clerk or an Apple sales person.

Traditional retail stores are not the only companies interested in beacons. Even Facebook recently announced its plans to use beacons in their Place Tips service. The service will essentially show users information about shops and landmarks they are nearby. With 1.3 billon members, Facebook has a serious potential to really popularize the technology and push it to mainstream adoption.

In fact, “Beacon programs are already quickly moving out of beta phase and becoming an integral part of the retail industry,” said Cooper Smith with Business Insider.(6) Today, 80% of iOS devices, which represent 600 million, could already support iBeacons. Likewise, 24% of Android devices, or 250 million worldwide can support beacons as well. For those who want to get involved, this should already represent a sufficient ecosystem that could deliver substantial benefits. Organizations that desire to implement beacons in their environments have plenty of vendors to choose from. Beacon manufacturers like Estimote (estimote.com), Gimbal (gimbal.com), and Kontakt.io (kontakt.io) could provide hardware. Companies including Swirl (swirl.com) and InMarket (inmarket.com) could provide their marketing platforms. Alternatively, many organizations can choose to create their own custom in-house solutions, or simply leverage software development firms like Ignite Media (ignitemediallc.com), the company I am part of.

While beacons could represent a wonderful new game changing technology, anyone who is deploying them should also be cautious. Like anything new, beacon deployments could be great for end users if implemented well, and frustrating if not. First, companies should focus on user privacy. Make sure your customers are opting-in to receive targeted messages and likewise, that they can easily opt-out. Also, make sure that messages sent to users are relevant and timely. Consumers probably don’t want to see a stream of notifications while moving around a store. Getting too many, repetitive, or out-of-date messages would likely be annoying. Further, ensure that implementation is planned and managed properly.

Beacons use radio frequency to transmit signals. These can often be blocked by walls and other obstructions, so ensure that the density of beacons is sufficient to cover your given area. One should consider not only deployment of beacons, but also their ongoing maintenance. Ask yourself questions such as: Who is managing my beacons on an ongoing basis? If applicable, who is changing the batteries periodically? Are my beacons still working and how do we know when they stop? Lastly, depending on a beacon type and their deployment specifics, these devices could potentially be moved. Ensure that your very customers, competitors or some pranksters are not moving them around or away from your location. In short, plan your beacon functionality, deployment and maintenance well, and you may just have a wonderful new marketing tool for engaging your customers.

Vladimir Collak Vlad currently serves as president and CEO of Ignite Media. Ignite builds mobile and web solutions primarily for the Oil & Gas industry that includes clients such as Mansfield Oil, Enbridge, Total Safety, Universal Plant Services and others. Vladimir holds a BS degree in Information Technology and an MBA from the University of Texas at Tyler. He can be found on his blog at www.collak.net and at vlad@collak.net
References

Also published on Fuel Marketer News

  1. www.gps.gov/systems/gps/performance/accuracy/
  2. www.bluetooth.com/Pages/low-energy-tech-info.aspx
  3. www.engadget.com/2014/11/25/beacon-marketingcampaigns- working-well-for-retailers/
  4. www.slideshare.net/DrewGiovannoli/casestudieswhitepaper? qid=0fa06037-f98e-4080–9dc6- 0f1b77ffee81&v=default&b=&from_search=3
  5. www.macrumors.com/2014/09/15/macysshopkick- apple-pay/
  6. www.businessinsider.com/beacons-market-andretail- opportunities-2015–2#ixzz3V3SWUpfE\
  7. blogs.wsj.com/digits/2015/01/29/facebooktests- bluetooth-beacons-to-feed-users-localcontent/? mod=evernote
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