12/22/2017
Beacon technology has been generating buzz since Apple introduced Bluetooth beacons to the market in 2014.
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.
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.
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.
What Beacon Technology in Retail Looks Like
Right before the 2015 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. With all this experimentation happening across the industry, it's no wonder Urban Outfitters adopted beacon technology early.
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 technology.
