November 15, 2019
Table of contents
Beacon technology got its name for a reason. Similar to lighthouses, beacon devices send a one-way signal to users of smart devices to communicate a message from a certain location.
The technology turned out to be an asset for brick-and-mortar stores—now offline can converge with online to provide personalized and enhanced customer experiences. Retail giants, such as Urban Outfitters, Macy’s, and Target, are already on board. The global beacon technology market is predicted to grow from $1.17 billion in 2018 to $10.2 billion in 2024.
Let’s explore how beacons help in retail and look closer at their advantages and associated risks. But first…
Beacons are small wireless battery-run sensors that send Bluetooth low energy (BLE) signals to nearby mobile devices. The signals are picked up by the store app if installed on those devices. When the app detects the beacon, it sends location-specific information to the store’s server, such as products or the department the customer has just passed by. This data, paired with other details in the customer’s profile, triggers specific actions, for example, sending highly personalized promotions prompting visitors to make a purchase.
The technology was first released by Apple in 2013 and further installed in multiple Apple stores. Since then, its proliferation in many industries has been ever-increasing. Beacons are placed in public transport, airports, hotels, museums, hospitals, and billboards.
Although BLE is not the only proximity solution used in retail software development, it is by far the most popular. Its short-distance range of operation has developed into an advantage. While cell towers, Wi-Fi, and geospatial tech like GPS can accurately detect device location up to 5 meters, beacons can detect users’ locations precisely, down to centimeters. They use little energy and work well indoors, unlike GPS. Another advantage of the beacon technology is that it is devoid of typical telecom security concerns.
By now, there are quite a few platforms that give developers all the tools and resources they need to build their own beacon-based solutions tailored to retail IoT use cases.
Take Google, for example. The company launched its own beacon technology, Google Beacon Platform, and the open-source Eddystone, which solved many beacon development and implementation problems. It changed a ‘one-beacon-one-action’ formula to ‘one-beacon-multiple-actions’. Plus, thanks to the compatibility of Eddystone with Android, iOS, and other BLE platforms, as well as different types of broadcast packets and APIs, many beacon manufacturers develop devices around the Eddystone functionality.
Beacons have enjoyed a roller-coaster popularity in retail. First, the technology was all the rage, and many stores prioritized its application. However, the hype soon subsided due to a number of complications.
Each technology, even the simplest one, should be mapped to its implementation strategy. Retailers need to understand what they intend to solve with it. As businesses rushed to try the new beacon technology, many failed to deploy it efficiently or understand how to properly use the data they generated. As a result, customers didn’t get how beacons can be helpful and switched to other sources of information, which led to a low ROI for businesses.
For sure, beacons haven’t started a retail revolution. However, with the world shifting to being mobile-first, the beacon technology now plays a significant role as a customer experience technology for brick-and-mortar businesses—while people rely heavily on the notifications coming from their devices, retailers use beacons as a bridge between the offline and online realms.
Beacons provide businesses with the unique ways to learn more about their customers and engage with them on a whole different level.
As a link between mobile devices, applications, and back-office systems, the diminutive beacon can play a pivotal role in retail business intelligence.
Beacons let you gather the following types of data:
Using this diverse data, you can enhance the usability of your store premises by improving stalls and merchandizing layouts and decreasing wait times at checkouts and other touchpoints. What’s more, you can enrich shopper profiles and use them for customer segmentation and in your retargeting campaigns.
Large supermarkets and department stores are often overwhelming for shoppers. They can’t find what they came for, wander aimlessly among the aisles, and end up buying something they don’t really need, potentially increasing product return rates. Beacons can solve this logistical issue by guiding customers around the shopping premises. For this, customers could just open the store app and immediately see where they are located, search for a particular item’s location, and ask for a direction.
Some store apps, like Target’s, feature a GPS-connected digital shopping cart. Shoppers can create shopping lists in the app, and once they are in-store, they are able to see where those items are located and how close they are to those products. The app guides customers in real time, and can also cross-sell items that go well with the products in a digital shopping cart.
Amazon has gone much further than that. They first disrupted the brick-and-mortar ecosystem by making ecommerce the king of shopping. Then they decided they also want to be offline and opened cashierless stores to kill the concept of queues. There, customers can take what they want and then just walk out of the store—their Amazon account will be billed after they leave. Among many other proximity technologies, beacons are an important ingredient in this experience.
One of the major beacon use cases is sending promotional notifications to passing-by customers to prompt them to visit the store and make a purchase.
Such notifications can be general and serve as an ad, or be highly personalized, relying on the customer’s previous shopping history and matching it to the current visit. For example, if a customer has some items in their online shopping cart, the beacon can send a notification about a personal discount for one of the items.
The same tactic works for in-store shoppers. Beacons can trigger notifications about promotions when a customer passes by a particular department or product section.
Beacons can also be used to notify passers-by about in-store events, such as food sampling or a makeup tutorial. People are more likely to visit such an event when they are nearby rather than when learning about it at home.
Most people use their smartphones in-store to find out additional information about products. You can leverage this behavior and use beacons to push promotions as a part of your loyalty program.
When customers feel they belong to a community, they develop trust toward the brand and get more inclined to select it over the competitors. Plus, loyalty programs are a great incentive for customers to download the store’s app and use it in-store to get a discount, learn about matching products, or participate in a contest.
Some retailers, like ASOS or Urban Outfitters, go as far as creating mobile-first loyalty programs, that is, providing their users with access to the loyalty rewards only via the brand’s mobile apps.
This works well if you connect your beacon data to your brand’s Google Ads account. It will make your marketers’ wish come true—to understand how your online advertising efforts influence offline activities and customer attribution. In other words, you can find out who clicked your online ad and who then came to the store. By supercharging this data with Google Analytics metrics, it’s possible to test and tweak your paid advertising strategy.
With the Google Ads account, you can also try Google’s beacons. Maybe you even received a beacon when Google launched its Project Beacon and was sending beacons for free to businesses with physical locations.
When you activate Google’s beacons, besides the benefits we’ve already covered, you get access to a number of preprogrammed features that:
Beacons are simple devices, but their implementation can be tricky. Consider the following beacon limitations prior to incorporating the technology into your proximity marketing strategy.
While beacons can pinpoint the exact location of the device, there are still some challenges to this technology.
Beacon signals can be easily reflected or absorbed depending on the surrounding materials or proximity of other beacons. This can turn some parts of your store into blind spots. As a result, beacons can push irrelevant notifications.
One more issue is the timing of notifications. Due to fluctuations in Bluetooth signal strength as well as intermittent work of cell phone antennas and beacon signals, some notifications can come with a delay, which kills their relevance and the overall concept of continuous experience.
Users turn out to be more loyal to targeted messages transmitted by beacons—the open rates show as much higher comparing to standard push notifications. However, before you can send any message via a beacon, you need to make sure that people have your app as well as Bluetooth on. But even if these conditions are met, users can still think of your efforts as too pushy and mute your notifications for good.
While you are trying to find a perfect balance between being engaging and enforcing unwanted information, users may start to have concerns about their data security. Most people don’t mind exchanging their data for highly personal experience. However, in most cases they try to cut the effect of ‘the Big Brother’ to the minimum and protect their personal data.
Beacon technologies are rather capable of making customer experiences creepy. Retailers want to track their customers in general, not just the ones who downloaded their apps. This demand on retailers’ side has brought to life a number of software development toolkits incorporating beacon-tracking code. Developers of popular apps, like weather or news, can cooperate with these toolkit vendors and insert the code into their apps in exchange for money or other benefits.
In their defense, companies say that users are prompted to give their informed consent, and they can opt out of location services. However, the practice of informed consent is not fully about user privacy. When people are asked about their consent to processing their personal information, they usually see incomplete and misleading explanations. Plus, when it comes to beacons, in order to give any permission people need to know first that there are any beacons in place. Even if they scan the space and detect any devices, it will be hard to know if those belong to the business in question.
Beacon technology has the potential to save brick-and-mortar as a business model, while connecting it to the online world. Beacons let you understand your customers via their data and provide them with enhanced personalized experiences, both online through personal promotions and loyalty benefits, and offline through in-store usability. At the same time, beacons provide insights into the correlation between your advertising efforts and offline conversions.
Of course, beacons are not a silver bullet, and they do raise some security concerns. To mediate them, retailers should try to avoid looking pushy or creepy with their personalization strategies. As for customers, once they opt for using the perks of a connected world, they need to be conscious about the apps they install and the consents they give.
Nevertheless, beacons are here to stay. They will be expanding to various verticals as they are highly capable of making people’s lives easier and more convenient. As a retailer, you just need to be savvy about your beacon use policies in order to sustain your customer relationships both online and offline.
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