Beacons Beckon, But Are Retail Marketers Heeding The Call?
Like a lighthouse beacon, beacon technology should serve as a guiding light and help customers navigate to the products and services they desire. The payoff? Transformation of marketing and redefinition of the customer experience.
Geolocation tools have moved into the mainstream of retailing, banking, entertainment, travel, restaurants, and many other fields. For marketers, the ability to identify a person’s precise location and deliver a relevant message, promotion, or product at the right time to a smartphone or other mobile device is nothing less than transformative.
At the center of this quiet revolution: beacons. With these hardware- or software-based devices, which relay signals via Bluetooth and tie in to geofencing and other geolocation systems, it’s possible to take digital marketing to an entirely different—and far more granular—level. A business can identify a consumer and, by overlaying other data—from social media and weather to inventory and POS—venture beyond the flat earth of generic and one-size-fits-all content and promotions. It’s possible to achieve true active engagement.
As Michael Klein, director of industry strategy and marketing at Adobe (CMO.com’s parent company), said: “[Beacons] deliver enhanced data sets as well as more sophisticated push marketing.”
Many believe that beacons represent the future of retailing and have value for other industries. “Beacons are the most powerful weapon in the marketing arsenal for understanding consumers in the physical world. They should be in every marketing leader’s toolkit,” stated Tony Fross, vice president of the Digital Advisory Service at Capgemini Consulting. Nevertheless, some organizations have stumbled or failed with early attempts to deploy the technology.
“They have either blanketed stores and discovered that beacons don’t always scale well or implemented systems that aren’t fully thought through,” Fross told CMO.com. Not surprisingly, these subpar results have made some business leaders, including CMOs, more skittish about using the technology.
To be sure, beacons present both opportunities and challenges. While they can fundamentally revamp and rewire connection points between an organization and individuals—there’s even evidence that they deliver better returns than loyalty programs—putting systems in place and collecting data is only a start. In order to reap the full benefits, an enterprise must connect beacon data with other types of data, run analytics in real time, and hit the consumer with offers that have perceived value.
“The item delivered to an individual must be accurate and relevant,” said Eli Rosner, chief technology officer for software solutions at NCR. “The goal is to achieve quality over quantity.”
Beacon technology is still in its infancy. Apple introduced the first platform in 2013 and installed it in more than 250 retail stores the same year. Since then, a growing list of retailers have turned to the technology. The list includes American Eagle, Macy’s, Lord & Taylor, Barneys New York, and FinishLine. In most cases, these stores send alerts or notifications to an app on a customer’s smartphone when he or she enters the store or a particular department. These offers may be tied to past purchases or current inventory.
“It’s a way to get to one-on-one and increase sales,” said Stephanie Bleymaier, director of digital personalization for FinishLine, which relies on beacons to push coupons and recommendations to shoppers—in some cases using predictive models to upsell and cross-sell.
Yet the technology delivers benefits that extend beyond more personalized coupons and promotions. “Beacons can serve as useful notification tools for restaurants that want to inform a guest that their table is ready or for a large store that wants to let a shopper know that an item is ready for pickup and send them to the right place to pick it up,” Fross said.
Beacons also can be used to assess who is standing in line at a grocery store or bank and deliver dynamic and contextually relevant content via digital signage. This might mean displaying an ad for men’s shaving cream when there are mostly men in line or showing a lipstick when more women are present.
Beacons already have been used successfully at the Super Bowl, U.S. Open Tennis, Tribeca Film Festival, and many other arenas, stadiums, museums, theaters, and venues. They’ve also been deployed in airports. For instance, New York’s JFK Airport uses beacon technology at its International Air Terminal to provide travelers with real-time information about wait times for security lines and help the airport manage staffing more effectively.
“This system provides valuable information that helps everyone manage expectations, especially when lines get long,” said Daryl Jameson, vice president at JFK International Air Terminal (JFKIAT), the company that operates Terminal 4 and built out the technology.
Meanwhile, Starwood Resorts began using beacons in 2014 for keyless entry using the hotel’s app. Other hotels are now using beacons for automated check-in and checkout, room service functions, and food and beverage promotions at dining rooms and restaurants. Finally, a number of fast-food chains are now taking mobile orders and then identifying when to pack the order by using beacons to detect when the customer has entered the parking lot. And a few sports venues have introduced mobile food ordering that allows an individual to place an order and have the items delivered to his or her seat.
In fact, NCR’s Rosner said that the possibilities are limited only by creativity. “Beacons, geolocation, and apps are a game changer,” he told CMO.com.
In the near future, beacons could usher in far more advanced shopping capabilities. For example, Adobe and others are experimenting with the use of beacons to introduce IoT-enabled shopping bags in stores. A consumer simply places a bag filled with RFID-tagged items on a checkout counter and the system tallies the items instantly. With this technology in place, it’s also possible to connect to consumers in a deeper and more engaged way—and better connect marketing with sales. “Beacons, NRC connectivity, and RFID will take grocery stores and retailers into the digital age,” Adobe’s Klein said.
Installing beacons and related technology is the easy part. The number of vendors selling hardware beacons and associated solutions now exceeds 50, and the price for these devices has, in some cases, dropped to below $10, thus making them affordable for even smaller companies. In addition, devices that use Bluetooth LE (BLE), such as iPhones and Android smartphones, can be programmed to act as beacons and interact with other devices and Wi-Fi networks.
The more difficult task? Putting these systems to work in ways that create value for both the customer and the business.
While the online world has made it fairly easy to understand consumers in a more detailed way and to deliver information, promotions, and content more precisely, this capability has been largely absent in the brick-and-mortar world. But as organizations look to go omnichannel, “Beacons can fill in the blind spots,” explained Brian Dunphy, senior vice president of business development and strategic partnerships at location-based solutions provider Gimbal. “Using geofencing and beacons, you can identify how often a person has stepped into a store, when they have walked past it, and where they go once they are inside.”
All of this data can help CMOs design marketing programs that are a far more effective but also aid in designing or revamping store layouts by better understanding shopping patterns and buying behavior, he told CMO.com.
One of the keys to navigating beacon technology is to think broadly, Fross said. It’s important to design a solution that relies on the right factors and data points to deliver deep insights. This means thinking beyond the four walls of the marketing department and tapping expertise and knowledge from across the organization—procurement, sales, customer support functions, the IT department, and others. It may mean tying in social media platforms, machine data, a CRM platform, ERP data, POS systems, and an analytics platform. Finally, it may be necessary to connect to partners in real time for visibility into the supply chain or at least internal inventory levels. This makes it possible to change promotions on the fly based on current inventory, availability, and other key factors.
Thinking through a beacon-based marketing program thoroughly before unveiling it also is critical, Dunphy said. Knowing that a person favors a certain coffee beverage or food item is one thing, but hitting the person with a coupon at the right place and time is another. For example, one retailer Gimbal worked with achieved an 8% open rate when it sent out a broad message through its mobile app. However, when the store created a geofence within a few hundred meters of the store, the rate shot up to nearly 30%.
“A coupon delivered at the wrong time of the day or in the wrong place winds up ignored or deleted. It’s just more noise. When it’s delivered at the right time and place, it’s viewed as something of value, and it enhances the relationship,” Dunphy said.
Beacons also fit nicely into a broader Internet of Things framework. For instance, after clothing manufacturer Levis placed beacons behind poster billboards on the street and sent individuals walking past with the Shop Advisor App a coupon for a store a few blocks away, 27% of the respondents opened the promotion and 12% walked into the store. A tight geofence, including beacons in the store, allowed marketers to closely gauge attribution and effectiveness, Dunphy said.
Another Japanese company significantly boosted conversions by tuning geofencing from 1,000 meters to 100 meters and microtargeting individuals with an app. “You have to do A/B testing and experiment with promotions, times, and other variables and understand if an offer is lucrative enough,” Dunphy added. “But those who get it right see significant gains.”
According to NCR’s Rosner, it’s wise to take heed of technical factors, such as positioning beacons optimally, identifying alternative power sources, and fine-tuning power and geofencing criteria. This extends beyond basic IT knowledge. However, there’s also the need to venture into prickly issues, such as data security and understanding data ownership—particularly when multiple companies are involved.
Businesses should think about how to positon themselves on the “edge of the transaction” rather than in the “midst of transactions,” Rosner noted. Ultimately, consumers must be in control of the experience for these types of promotions to work. “Data ownership and control of the experience is critical,” he said.
In an era of unparalleled digital disruption, the idea of fully embracing beacons may seem a bit intimidating for CMOs. “Many businesses are waiting to see how the big brands handle location-based marketing before they begin,” stated Ray Pun, strategic marketing lead for mobile solutions at Adobe. “But if they don’t step into the mix, there’s always the possibility that a competitor will provide an amazing experience, and they’ll be left behind. The right way to look at this situation is to say, ‘What is the opportunity cost of not participating?’”
Pun said it’s important to experiment, test, and use focus groups, surveys, and app store reviews to learn and move forward. The ultimate goal, he added, is to create greater engagement with the brand and introduce more meaningful and efficient interaction. To that end, reducing friction points is crucial. CMOs should ask a few key questions, including whether the technology helps customers find what they’re looking for faster, does what they’re attempting to do better, and saves them money in the process.
At the same time, beacons and geolocation systems should help an organization convert leads to to sales, improve marketing and business performance, and offer clues about how a business can design stores better or offer products and services that more closely match customer needs.
Like a lighthouse beacon, the technology should serve as a guiding light and help customers navigate to the products and services they desire—when and where they want them. Concluded Fross: “Beacons aren’t magic. With good planning and the right systems in place, it’s possible to transform marketing and redefine the customer experience.”
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