Business Strategy

3 questions retailers need to ask about beacons, a technology that will drive over $40 billion in sales by 2016

3 questions retailers need to ask about beacons, a technology that will drive over $40 billion in sales by 2016

Retailers need to make in-store shopping relevant again. Customers, now accustomed to hunting for bargains online, have less incentive to buy from brick-and-mortar stores. And when they do enter a store, they can easily compare prices on their phones and decide to shop somewhere else.

In their efforts to attract shoppers, retailers are turning to new technologies. One of those technologies is beacons, low-cost, battery-friendly technology that uses Bluetooth connections to transmit messages to mobile devices. Dubbed the future of retail, beacons are essentially ‘GPS for indoors’, allowing retailers to send personalized notifications and alerts to customers. For example, retailers could welcome shoppers as they enter a store, or they could provide information about a product that a customer is looking at.

Several big brands, recognizing the technology has enormous potential to improve the customer experience, are already experimenting with beacons, including House of Fraser and Waitrose in the UK and Urban Outfitters and Macy’s in the U.S. It shouldn’t be a surprise that these companies are trying to gain first-move advantage when it comes to beacons: according to Business Insider, beacons could directly influence more than $4 billion of U.S. retail sales in 2014—a number that will climb tenfold in 2016.

Beacons addressable market size

Tweet this!Beacons could influence up to $40 billion in sales by 2016. (CLICK TO TWEET)

While it’s easy to see the potential of beacons to transform the shopping experience, retailers need to answer some crucial issues about this technology in order to maximize its potential. When thinking about where beacons fit in your marketing strategy, consider these three questions about your customers.

  1. Who is most likely to be irked by the use of beacons?

Beacons are designed to track the in-store behavior of shoppers—a functionality that may leave some customers uncomfortable. A 2014 study found that 77 percent of customers find in-store tracking “unacceptable,” while 81 percent indicated concerns that retailers wouldn’t be able to keep data collected from beacons safe and secure.

To avoid alienating shoppers, companies need to figure out which segments of their customer base are most likely to raise privacy concerns. Identifying the concerns of these customers can help marketers craft a more thoughtful strategy. Beacons can potentially make the shopping experience more convenient and more enjoyable, but companies should keep customers’ needs in mind in order to fulfill this promise.

  1. What type of messaging are customers looking for?

One of the biggest opportunities beacon technology provides is to increase in-store purchases. Beacons allow companies to send notifications to their customers’ smartphones—messages which should convince customers to visit stores or buy more.

Pushing time-sensitive and relevant alerts sounds great in theory, but marketers need to make sure that customers will actually pay attention. Given the amount of notifications and alerts that smartphone users receive, it’s critical that your message resonate. Some customers might be looking for discounts. Some may be more inclined to come in when you push other content types like helpful videos or interesting tips. A few customers may not be looking for discounts at all: they may simply want information on your latest offerings.

  1. How do my customers shop, and how is their shopping experience changing?

Customers today require a seamless experience regardless of how they shop. The companies that have perfected omnichannel retailing gain a significant competitive advantage. Retailers can’t look at the use of beacons and mobile phones in isolation from the entire customer experience.

New technologies such as beacons could create a competitive advantage only if they’re rooted in a deep understanding of changing customer habits. Only by engaging with customers on a regular basis can retailers build a deeper understanding of their customers to drive innovation that results in loyalty.

Conclusion

Beacons have the potential to help make brick-and-mortar stores relevant again for the modern customer. For many retailers, beacons are another opportunity to grab the attention of the increasingly distracted customer, offering relevant information and deals and driving sales. But just like many technologies that were born out of the rise of mobile, beacons can provide significant competitive advantage only when they are used with a customer-centric mindset. For beacons to delight—not creep out—shoppers, retailers need to put customer needs first.

The Consumer Goods Intelligence Suite

 



  • Devika Girish

    Great post Brian. Thanks for sharing. I totally agree with you how important it is for retailers to ensure that their messaging resonates with the needs of their customers. Being location aware is not being contextually aware. This can often result in lack of contextualization, as just because you know that a shopper is in your store, doesn’t necessarily mean that you know the context of what they are looking for. However, though beacons are quite popular even today many retailers still aren’t sure about where to begin or the kind of campaigns they can implement with beacons. We’ve discussed a few proximity marketing campaign mistakes that marketers should watch out for here:http://blog.mobstac.com/2015/01/3-mistakes-to-avoid-in-your-proximity-marketing-campaigns/

  • Carl Miller

    Absolutely agree, this is why was have created beaconwriter, beaconserve and beaconstats which allow retailers to not only program their beacons on the fly when fitted in any location but capture live realtime stats and serve ads in realtime as well.

    We dropped a few beacons around london a few weeks ago and i can tell you now the stats coming back from those beacons are staggering. Beacons are going to be absolutely massive!

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