Beacons are a mobile marketing technology poised to transform the way consumers shop in stores and the ways stores market to and interact with their customers.
Push notifications triggered by beacons — tiny store-based transmitters that communicate with retailers’ mobile apps on consumers’ smartphones via Bluetooth Low Energy wireless technology — will influence $4.1 billion in U.S. retail sales at the top 100 retailers in 2015, mobile technology research firm BI Intelligence estimates. The firm predicts that number will soar to $44.4 billion in 2016 as use of beacons increases and merchants begin to formulate actual mobile in-store strategies.
Web-only retailers and TV retailers (think Amazon.com, eBay, Groupon, QVC, HSN) pioneered the first wave of mobile commerce. These digital merchants understood fairly quickly that smartphones and tablets would change the way they do business. So they changed.
Chain retailers, however, with some exceptions, have been behind in embracing mobile commerce and mobile marketing technologies, especially where it can help them most — in stores. Digital sales (including mobile) accounted for 7 percent of total retail sales in the U.S. in this year's first quarter, according to fresh data from the U.S. Census Bureau and U.S. Commerce Department. In other words, the gigantic majority of shopping still occurs in-store.
However, at the same time, consumers have grown accustomed to the wonders of shopping online — e.g., customer reviews, “people who bought this also bought that” product recommendations, endless aisles, product demonstration videos, sharing pictures with or asking for help from friends, search, sort or filter results, compare prices. And then, of course, consumers have adopted mobile devices faster than any technology in human history. In January, for example, 76 percent of U.S. mobile phone users owned a smartphone, found digital measurement firm comScore.
Smartphones bridge the gap between in-store shopping and web shopping, and beacons quite literally bridge the gap between stores and smartphones. A retailer can use beacons to connect with store shoppers who have smartphones armed with that retailer’s mobile app, thus steering shoppers to favorite web shopping tools (recreated for mobile) and new mobile-specific shopping tools (e.g., barcode scanners and location-based offers). A retailer can actually use beacons and mobile apps to change customers’ shopping behaviors to the benefit of both the retailer and the shopper.
There are four fundamentals for retailers when it comes to beacons: promotion, enticement, enhancement and location.
Beacons are like The Invisible Man — you can’t see ‘em. Therefore, retailers need to let customers know these little magical devices exist, and that the devices can help customers in stores. Merchants should promote the presence of beacons on their websites, apps and, most importantly, in-store signage, clearly explaining that only shoppers with the retailer's app on their smartphone who have opted in to push notifications will be able to experience the benefits of beacon-assisted shopping. And, of course, merchants must also describe the benefits of beacon-assisted shopping, which depending on the strategy and implementation can include additional savings, location-specific offers or assistance, streamlined in-store shopping, or, conversely, more robust in-store experiences that include all sorts of digital tools.
Merchants must also let customers with Android smartphones know to turn Bluetooth wireless network connectivity on, if they haven't already. Apple’s iPhones ship with Bluetooth defaulted on, while Android smartphones ship in the off mode.
While retailers promote beacons, they also must entice shoppers to download their mobile apps and opt in to push notifications. Even if a retailer’s branding doesn't include discounts or deals, it needs to pony up something of value for shoppers to agree to accept push notifications and connect via Bluetooth. Promising a welcome location-based push message that earns a one-time, 15 percent off in-store purchase will push shoppers (who already are far more mobile than retailers) to get onboard. If saving money is so anathema to a brand, then promising a huge number of loyalty points or a complimentary product of some kind the first time a beacon senses a consumer in-store is a very convincing incentive.
Once customers have found out a retailer has beacons and have opted in to this very new mobile marketing tool, it’s up to the retailer to wow in-store shoppers. Customers with smartphones expect to be wowed because of their everyday experiences with any number of spectacular mobile apps, such as Uber, Facebook, Amazon, Google, YouTube and others.
Beacons should be used to enhance store shopping. For example, when a beacon detects a customer has just walked into a specialty foods department or appliances department, it can trigger a push notification with a link to a video of a chef whipping up a dish or using an appliance. Or it can trigger a push notification promoting today’s special offers and where they can be found in-store.
While it seems obvious, one of the key fundamentals to beacon-assisted marketing is location. Precise location is wholly unique to the mobile realm. GPS enables retailers to locate shoppers with smartphones; beacons enable retailers to just about pinpoint shoppers with smartphones (to within about three feet). To date, retailers have yet to fully exploit mobile’s unique location element. And now, beacons have upped the location ante.
If a consumer has opted in to a clearly explained beacon-based push notification program, they’re not going to get weirded out by unusually location-specific messages from a retailer in-store. For an increasing number of consumers, the convenience and additional opportunities for savings mobile offers trump any diminishing concerns over privacy in the post-Edward Snowden era. The government already has a record of every one of your calls, texts, emails, Google searches and smoke signals; does it really matter that a retailer knows when you’re in its shoe department? Especially if the retailer sends you an offer based on you being in the shoe department?
So retailers should do just that: If a shopper is within 10 feet of a cologne display case, push him a note offering 10 percent off all cologne purchases today-only in-store. Or send a push advising consumers browsing Blu-ray players to stop by the movies section up front and pick up the latest blockbusters on Blu-ray.
Beacons are yet another great mobile tool brick-and-mortar retailers can use to appeal to consumers who are armed with smartphones and itching for new, fun and useful ways to use their devices. Following fundamentals can get a beacon marketing program off the ground. From there, retailers can use data and imagination to take location-based messaging to the next level.