In-Store Beacons Mature, Make Shopping Personal

May 25, 2015

Article ImageA recent poll found that smartphone users are increasingly using shopping applications. In 2013, overall app usage grew by 115%, but the rate of growth slowed in 2014 to 76%. However, the opposite was true for shopping and lifestyle apps. Usage grew by 77% in 2013 and jumped in 2014 with a 174% increase, according to data from Flurry. With in-store beacons becoming more prevalent and engaging shoppers in new ways, this mobile growth trend seems set to continue in 2015.

Beacons will continue to power in-store engagement, according to another report, by Forrester Research. Younger shoppers--those between the ages of 18 and 48--are ready and willing to give up information about their locations in exchange for in-store offers. However, retailers must be mindful of the privacy concerns of older shoppers, according to Forrester.

If smartphone users feel as though they're being spammed with too many marketing messages, then they may uninstall a retailer's app or disable Bluetooth and location services on their phones. With that in mind, beacons may present an avenue for marketers to communicate their messages. Beacons and shopping apps could offer marketers the opportunity "to get the right thing to the right person at the right time," according to Peggy Anne Salz, an analyst focused on mobile search, contextual marketing, and business transformation at MobileGroove.

"The most important thing companies need to be aware of is that beacons are worthless without a solid marketing strategy," says Rebecca Schuette, director of marketing for Swirl. Swirl provides an enterprise-level marketing platform. Beacon technology is "just technology" without "a clear, defined set of goals" for the data collected, she says.

Salz offers marketers similar advice. She points out that beacons "are dumb technology. Their value comes in when you implement it in a smart way." Having beacons is not the same as having a location-based strategy, Salz says. The use of beacons must be a part of a much larger strategy to extend and deepen a company's conversations with customers. The correct strategy is not solely focused on promotion-offering coupons and product discounts-but more on customer engagement, she says.

A large part of that engagement involves "reducing the friction in the shopping experience," Salz says. Offering shopping assistance is much more highly valued by customers than promotions. "At one level, beacons offer utility. ... At another level, they become a nuisance.  Then you're trying to second-guess what the customer wants," Salz says.

The beacon market at the moment is very fragmented. Some hardware manufacturers only produce the hardware, leaving marketers to figure out the rest. However, some vendors such as Swirl now supply beacons as part of an enterprise-level marketing platform or SaaS. These product and service offerings include some mix of beacon management systems, advertising exchanges, software development kits (SDKs), and CMSs.

Companies need to make the shopping experience as simple as possible, Salz says. Engaging with customers in a smart way involves analyzing all the data signals marketers have, not just beacon location data, she adds. Companies already have a huge amount of data about their customers. Such data can be combined with the information collected through a beacon system.

Marketing efforts also have to engage customers on all their screens: laptops, smartphones, and tablets, Salz says. The strategy must be a multichannel one, she says. "Nothing replaces anything." To make matters more complicated-although they are engaging with customers over multiple channels-marketers must avoid repeating anything.

Beacons must be part of the larger marketing strategy, one that is very information-intensive, according to Salz. CMOs now have an involvement in and need for data capacity and information resources equivalent to that of CIOs. No one else occupying the C-suite needs as much information-processing power.

Such heavy use of resources is more than justified by the results it can produce, Salz mentions. "We're as close to one-to-one marketing as we can ever be." Companies need to sequence their interactions with customers. They also must be mindful of customers' favorite means of connection. Some prefer voice, others prefer text, and still others prefer email.

Societal changes have altered the relationship between companies and consumers. "We are a truly mobile society, meaning we're always on our smartphones," Salz says. "The question is, ‘How can we use them to deepen companies' relationships with customers?'"

Beacons can give companies valuable feedback, such as where most customers go a lot of the time. Knowing the paths most customers travel in a store is useful knowledge to have, according to Salz. Such knowledge enables a company to offer certain products in high-traffic areas or plan more compelling store layouts, she says.

Erik McMillan (CEO and founder of Shelfbucks, another beacon services vendor) sees the technology becoming pervasive in 5 to 10 years. He predicts consumers will encounter beacons and location-based apps throughout the grocery store and pharmacy sectors.

McMillan believes the technology most certainly will change. The important thing is not any specific technology but what it can allow companies to do. Retailers will be able to personalize the in-store experience for shoppers, he says. Such technology will offer retailers the ability to reproduce an old-school retail experience, in which the local pharmacist knew everyone's name and his particular needs.

McMillan points out that retail chains can't replicate that kind of service on a large scale with their sales associates. The data collected from beacons could help, he says. In coming years, analytical data from them will give retailers a fuller picture of who their shoppers are and how they interact with the physical store, McMillan  says. With that information in hand, a retailer can offer an unprecedented level of customer service.

Swirl's Schuette says the application of beacon technology is ready to leave the testing phase and move on to implementation. "2014 was all about stores experimenting with beacons, and that will continue to some extent into 2015," she says. The pilot programs of 2014 demonstrated that beacon systems do work. Schuette predicts that this year, more companies will embrace the use of beacons.