Are Retailers Ready to Adopt Beacon Technology?

Kate has a retail app downloaded on her mobile device. Soon after, she forgets about the app and never opens it. She walks by the retail store and receives a welcome message with a promotional offer on her device from the app. How did this happen? The retailer used beacon technology in their brick and mortar store to wake up the app on her mobile device to encourage the customer to walk into the store and shop.

From lighthouses at sea to signal transmitters, beacons are now used to transmit location and identifiers using Bluetooth low energy, or BLE. Bluetooth Low Energy uses the same 2.4 GHz radio frequencies as Classic Bluetooth. Anybody with the capability to listen to these identifiers in the beacon’s range gets notified for further actions. A beacon is an intentionally conspicuous device designed to attract attention at a specific location.

The following picture illustrates a high-level interaction between a beacon and an app on a device:

Screen Shot 2015-08-26 at 9.08.34 AM

How Beacons Work:

1. Beacons continuously transmit signal.
2. Device with the app loaded within range detects the transmitted unique identifier and location.
3. The unique identifier is sent for further decision flows – coupons and analytics.

The ability to connect with users using proximity is more evident in the brick and mortar space, opening up many new business opportunities to connect with customers on a personal basis. As the technology evolves, beacons are much more than welcome messages and discount coupons.

Are retailers ready to adopt beacon technology?

If a piece of $5 hardware is helping retailers and their shoppers with better experiences, why are retailers not ready to adopt this technology?

Beacons are expensive to implement and retailers must invest in the hardware and software to work in tandem for the desired effect. In addition, internal teams must continuously update the system with the latest discounts and information and manage the hardware in stores, requiring extra time and budget.

Managing beacons in multiple stores gets complicated as they scale. Retailers are not seeing the return on investment when only delivering coupons to customers. It takes more than just coupons to entice customers to shop and purchase in store.

While customers are constantly browsing and shopping on their mobile devices, enabling location services and setting Bluetooth to “on” causes battery drain.  In order to save battery life, customers want to keep their location services off.

Consumers are generally not willing to share their personal shopping habits or personal information with retailers.  Receiving constant pop-ups and notifications can be an annoyance and may cause brand disloyalty. They will either keep their location services off and therefore miss out on promotions, or perhaps just delete the app altogether.

How does this help retailers?

The goal of course, is data that can be used to send notifications that influence consumer behavior. This changes how and when customers interact with retailers and gives retailers insight into what drives customers to a particular store. This can help retailers fine-tune their sales promotions to better target their audience.

In a typical retail store deployment, beacons are spread out around the store at entries, exits, and aisles. After Kate receives a welcome message and walks around the store, the retailer captures her location data to track down which aisle she’s shopping in. This data is used to understand the shopping habits and behavior of the customer. To further personalize her shopping experience, she receives targeted coupons on items located in that aisle.

A second way of using beacons is calling for customer assistance in-store. When Kate needs help and finds no store associate around, she can turn on the store’s app, which turns into an in-store device and is able to call for assistance with a tap of a button. The associate gets notification on their associate device, prompting them to find her location and provide immediate customer service. After receiving assistance, Kate can also rate the customer service and add reviews.

A Return on Investment

98.5% of customers who receive a personal notification continued to use the app afterward, and their context-aware notifications achieved a click-through rate of 85%, according to Kontakti.io.

And 30% of customers who claimed the offer once used it again, demonstrating that context and proximity can change consumer behavior in real time for long-term value.

Canadian mobile parking payment solution, HotSpot has found success in proximity marketing by reaching customers at the right place and the right time.  HotSpot creates opportunities for retailers to drive shoppers in-store when a customer is parked nearby by offering perks like free parking and ticket validation. According to Kontakti.io, “HotSpots stores can bring 30% of users who are parked nearby into their shops.”

Beacon technology will improve and increase sales with personalized shopping experiences. The key to beacon technology is to not become stagnant. Customers quickly get tired of seeing the same thing and are always looking for something more appealing. The wave of the future is personalizing mobile content and keeping it fresh.

How does your favorite store use beacons?  Tell us about your experience.

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