Beacon technology has been generating buzz since Apple introduced Bluetooth beacons to the market in 2013. This year, they’re expected to drive over $44 billion in retail sales and continue to climb. Yet, despite the initial excitement from tech industry insiders and early retail adopters, beacons have still been slow to catch on.
Beacons are small, battery-operated wireless devices that transmit Bluetooth signals to nearby smartphones. In the context of retail, beacons reach out to customers that have Bluetooth enabled and the right retail apps downloaded onto their phones.
Beacon technology is already used by some of North America’s top retailers, including Macy’s, Target, Urban Outfitters, and CVS. Its continual rise in popularity is expected to help reinvigorate brick-and-mortar retailers, offering customizable shopping experiences to customers that can’t be replicated online.
Here, we’ll explain how beacon technology works, discuss its benefits to retailers, and offer tips on how to implement it in order to drive customers to your business.
Table of Contents
How Beacon Technologys Works
Image Credit: Business Insider
Beacon technology allows mobile apps to listen for signals from beacons in the physical world using Bluetooth technology and act accordingly. They deliver hyper-contextualized content to users based on their location.
Beacon communication mainly consists of advertisements sent through small packets of data. The communication is one-way only, meaning retailers can connect with customers, but those receiving beacon messages on their smartphones cannot reply.
A 2014 consumer study conducted by beacon technology platform Swirl found that over 70% of shoppers who received beacon-triggered content and offers on their smartphone said it increased their likelihood to make a purchase during a store visit. More than 60% of respondents said they’d do more holiday shopping at brick-and-mortar stores that delivered mobile content and offers while they shopped, and 61% of people said they’d simply visit a store more often if they offered beacon marketing campaigns.
“Proximity marketing has the power to transform the customer experience, increase brand affinity, and drive sales uplift. Early adopters are seeing remarkable results and generating highly valuable learnings that they are using to optimize future campaigns,” said Hilmi Ozguc, the founder and CEO of Swirl. “For retailers who haven’t yet deployed beacon marketing programs, it should be a top priority.”
Modern shoppers enjoy customized experiences and personalized recommendations. Just look at how large online retailers like Amazon drive sales through product suggestions for an idea of how brick-and-mortar retailers might be left behind. However, beacon technology has the power to change that, and all signs point towards high customer adoption.
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Uses for Beacon Technology
Beacon technology has proven to be effective as the bridge between brick-and-mortar retailers and customers glued to their phones. It’s a new way to engage with consumers and provide incentives for shoppers to enter a particular store, stay for a while, and hopefully make purchases.
A 2016 article in the Huffington Post argued that beacon technology could help retailers recapture current customers rather than draw in new customers or bring back ones who were already lost. It’s all about personalized engagement combined with strategic in-store experiences. For example, retailers might offer shoppers personalized discounts, rewards, and even recommendations sent directly to their smartphones.
Beacon technology can also help guide shoppers around a store. Confused customers can lean on this tech to help them find that sought-after widget tucked away on an obscure aisle. And in the future, it may even be used to provide augmented reality experiences, enabling customers to “try” merchandise on without ever having to enter a dressing room.
What Beacon Technology in Retail Looks Like
Right before the 2014 holiday season, Macy’s rolled out retail’s largest beacon installation at the time. After some successful testing at their New York City and San Francisco flagships, the department store chain decided to implement the use of beacon technology in all of its stores nationwide. Macy’s worked with shopkick to install 4,000 shopBeacons, and as shoppers entered Macy’s, they were reminded to open their Macy’s apps in order to receive notifications, promotions, deals, and discounts.
In 2016, Rite Aid beat Macy’s record by deploying beacon technology at more than 4,500 of its U.S. stores. The pharmacy chain partnered with mobile shopper marketing firm inMarket. By doing so, Rite Aid not only set up the infrastructure for a connected, in-store environment, but also gained access to inMarket’s more than 42 million monthly active users in its beacon program.
Another department store exploring beacon technology is Target. However, unlike Macy’s widespread deployment, Target only launched beacons in 50 locations in the U.S. When customers are near one of the 50 stores, they are prompted to “opt in” to share their location and receive push notifications. Target promises that they’ll only send two notifications per shopping trip, so customers aren’t annoyed and overwhelmed. These will includes special deals and discounts.
With all this experimentation happening across the industry, it’s no wonder Urban Outfitters adopted beacon technology early. The hip fashion and housewares retailer is most popular with millennial shoppers, who we know are likely to spend the most time on their phones than any other segment of the population. When launched in 2014 at 15 of their U.S. stores, Urban Outfitters focused on in-store experiences rather than aggressive advertising promotions. The Urban On loyalty program gave shoppers rewards and access to special in-store events. Focus was placed on using beacon technology in three specific areas in store: the entrance, fitting rooms, and checkout lines.
Image Credit: DAC Group
How Beacon Technology Benefits Retailers
There are numerous benefits to adopting beacon technology. Ultimately, it enables retailers to create more tailored experiences for customers, thereby deepening their relationships. In this section, we’ll break down a few more benefits to using beacons in retail.
Gone are the days when retailers could only rely on print, TV, and radio advertisements to drive customers into their stores. Now, shoppers expect more tailored messaging, with personalization that makes sense. Not only can beacon technology provide that, it can trigger the ad based on a customer’s proximity to the store. This helps troubleshoot some of the physical limitations of brick-and-mortar stores. Now, shoppers can be marketed to at the right time and in the right place.
The Power of Personalization
Just as ecommerce businesses like Amazon offer customers personal shopping recommendations based on previous purchases, beacon technology can do this in the context of brick-and-mortar stores. Everything from coupons, deals, and product recommendations can be tailored to individual customer preferences and shopping habits. This not only helps develop long-term customers loyalty, but a more engaging shopping experience as well. While you employ sales associates, they can’t always be available to help every customer. Personalized shopping through beacon technology helps bridge that gap.
Image Credit: beaconstac
Tracking shopping habits and preferences allows retailers to access insightful consumer data. For example, retailers can analyze what day of the week and time of day shoppers are more likely to download and use certain coupons. From there, they can take a look at demographics, and other connecting points, such as what other items are purchased on the same shopping trip.
Compared to some other tech hardware and software, beacon technology is affordable to adopt. According to Product Mavens, a set of three or four iBeacon transmitters linked to an app and content management system costs around $100. The tech is also relatively easy to set up, install, and start using, making it a low-risk and worthwhile product to try out.
Increase in Mobile App Use
Shoppers often download apps to their smartphones and forget they exist. Beacon-triggered notifications not only act as a reminder, but increase interest in using the app. According to Product Mavens, French retailer Carrefour saw a 400% increase in mobile application engagement following the implementation of beacons. By leveraging beacon technology, apps can become even more useful and engaging tools for shoppers.
How To Start Using Beacons
Now that we’ve covered examples of beacon technology in retail and how to benefits business owners, you’re likely dying to know how to get started. The first thing you’re going to want to do is purchase a set of beacons and a beacon plan. There are numerous beacon manufacturers and platforms to choose from, including:
After you’ve set up your in-store beacon technology, you’ll want to inform customers, encouraging them to download your store’s mobile app for special deals and discounts. Accomplish this with signage around your store, emails to your subscribers, and/or a social media campaign to explain the benefits to current and potential customers.
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Then, start brainstorming a great beacon campaign, which may be the hardest part. For some ideas, here are five great beacon campaigns that were effective and captured industry attention in 2016.
Of course, as your shoppers get accustomed to receiving beacon-triggered notifications and exploring the store with the aid of beacons, you’ll want to periodically change up the campaign to keep your content fresh and encourage returning customers.
Moving Forward With Beacon Technology
Beacon technology has the potential to revolutionize customer communications for brick-and-mortar retailers. Shoppers can enjoy more engaging, seamless, and personalized experiences, and retailers can gain insights into their consumers, ultimately making it easier to achieve a number of business goals using a single piece of retail technology.
Beacon technology FAQ
What is beacon technology in retail?
What industries use beacon technology?
- Travel and Tourism
- Cafes and restaurants
- Digital advertising