A Beginner’s Guide to Beacon Marketing

By David 'DJ' Oragui / 03 August 2018

This guide will show how beacon marketing can help a retailer drive traffic, increase conversion rates, and boost sales volume.

Beacon technology has been gaining attention from marketers since Apple introduced its Bluetooth iBeacon devices back in 2013. In 2015, when Google also entered the picture, beacon marketing was expected to drive more than $44 billion in retail sales

Unfortunately, beacon marketing did not reach that level of popularity that quickly.

But today, as more consumers use mobile apps, beacon marketing is becoming popular with mobile marketers. 

This article will guide you through the history of beacon marketing, its current state, and where the technology is headed.

A Brief History of Beacon Technology

Beacons are small devices that send Bluetooth Low Energy (BLE) signals to mobile devices nearby. The one-way signals then interact with a mobile application installed on the device and trigger specific actions, such as location-based notifications.

How beacon technology works graphic

The future of shopping was supposed to be transformed by Apple’s iBeacon, a tracking technology unveiled by the tech giant in 2013 and installed in 254 Apple Store locations. In 2015, Google announced Eddystone, its BLE beacon technology. 

Both iOS and Android users could receive messages sent via the iBeacon and Eddystone devices because they worked across the two platforms.

Marketers and analysts alike envisioned beacon technology being used in every retail outlet, from department stores to corner groceries to boutiques. 

The beacons would allow retailers to identify and track people as they visited the retail outlet, providing valuable information to marketers about past (and possibly future) purchases. 

The devices could even trigger a coupon to appear on the consumer’s device, turning a browser into a buyer.

Beacon technology promised to open the door to a truly personalized shopping experience, which was a “holy grail” for mobile marketers.

In the beginning, the technology proved to be successful. Shoppers who received location-based beacon messages were 19 times more likely to interact with an advertised product than those who did not receive a beacon message, according to 2014 research from digital advertising leader inMarket.

A Hot Start That Cooled Quickly

While beacons experienced quick popularity, the hype for the technology soon waned for a few reasons: 

  • Many retails struggled with deploying the technology, which led to a low return on investment.
  • Many marketers did not know how to properly use the data generated from beacon technology, or did not understand how the data could benefit their business.
  • Customers preferred alternative sources for information (e.g., product displays, signage, email marketing) that didn’t require them to monitor their mobile devices for push notifications. 

Bloomberg Businessweek was particularly harsh, stating that beacon technology was “practically left for dead after failing to deliver on its promise to revolutionize the retail industry.”

However, that was then, and this is now. Today’s mobile device users rely heavily on apps and people focus on the notifications coming from their phones, tablets, and watches. 

To that end, beacon marketing is poised to make the leap from a “kitschy” to a must-have proximity marketing technology.

Beacons Have Success Outside of Retail

By 2016, beacon technology began to make a comeback outside of the retail arena. Beacon marketing was quietly gaining popularity, being used in everything from bank branches and sports arenas to resorts, airports, and fast-food restaurants.

Marketers who relied on mobile apps to reach customers quickly learned the value that beacon technology could offer. Beacon marketing offered businesses unique and interesting ways to engage with customers, including wayfinding, customer service, and promotions. 

For example, at Levi’s Stadium, home of the San Francisco 49ers, the installation of 1,000 beacons made it easier for ticket-holders to find their seats and to have food and drinks delivered to them.

Within the first seven months of beacon marketing adoption, the stadium app was downloaded 183,000 times, which led to a 30% adoption rate and a $1.25 million increase in concession revenue.

Beacons Can Effectively Target Consumers

Consumers can receive a customized user experience through beacon marketing, including discounts, suggestions, and more. For example, Starbucks uses beacon technology with its mobile app for payments, rewards, and even to tell customers what music is playing in the store. The company then uses the data provided through beacon marketing for various purposes.

Retail brands, which were among the early adopters of beacon technology, continued to install beacons in their physical locations. Drugstore chain Rite Aid deployed beacons in more than 4,500 U.S. stores

How proximity marketing transforms the in-store experience

According to global accounting firm PwC, the time is right for beacon marketing’s comprehensive consumer engagement strategy. Statistics show that consumers are more than willing to use mobile devices to integrate technology with their shopping experiences.

According to leading industry research firms, most retailers that have tried beacons are satisfied with them. More than 70% said they were able to track and understand how consumers moved through the store and selected items for purchase because of beacons. Around 66% of adopters said beacon technology let them track customers down to the aisle level.

The Advantages of Beacon Marketing

The proximity data received from beacon technology can provide brick-and-mortar retailers and other organizations with some of the same physical personalization and targeting advantages experienced by online retailers.

For instance, beacons can help marketers gain detailed customer insights, such as how long customers spend on average in a store, as well as which product sections are being visited. This data can provide the information marketers need to enact more precise customer advertising through a mobile app.

Beacon marketing can give a business the attention it wants for their marketing messages. The geo-targeted messages beacons transmit can significantly increase the open rate of mobile marketing offers. Research shows that people open standard push notifications about 14% of the time, but they open messages transmitted by a beacon more than 50% of the time because those messages appear more relevant.

Beacon technology is affordable to adopt for most businesses. A set of 3-4 iBeacon transmitters linked to a mobile app and content management system costs around $100. The technology is also relatively easy to set up, install, and implement, making it a low-risk and worthwhile endeavor.

Finally, beacon marketing can increase interest in using a business’ mobile app. Consumers often download apps and forget they exist, but beacon-triggered notifications can act as a reminder. Some retailers have seen as much as 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.

Downsides of Using Beacon Technology

Learning about your consumers through advanced mobile technology can offer key insights in the evolution of beacon marketing. These efforts, however, can sometimes lead to problems.

A report by Accenture Technology Labs examined how consumer reactions change as a marketing push gets more personalized. The marketing journey begins at the low end with mass emails, followed by social media demographic ads, followed by specific suggestions that are based on prior viewing or purchase history. As the retailer gets more information, the pitch gets more specific.

The point where it goes from “cool” to “creepy,” according to Accenture, is when a clerk greets you by your college nickname and suggests that you may be running low on intimate personal care products.

Consumers are not necessarily put off by companies using personalized data. More than 70% of consumers say they are willing to allow in-store tracking and push notifications if retailers provide the right incentive. The tricky part for businesses adopting beacon marketing is figuring out the sweet spot for a shopper—if a store is going to use a customer’s personal data and interrupt his or her shopping trip, it must be for a good reason.

According to research conducted by the University of North Carolina Kenan-Flagler Business School, younger consumers are even more sensitive to this type of intrusion because they understand the value of their attention. Consumers don’t want to be bombarded with messages or made too aware of what a company knows.

One contact via push notification might be useful, but eight is probably too many. If you over communicate through beacon marketing, you risk your app getting deleted or your push notifications getting muted.

Finally, as consumers get accustomed to receiving beacon-triggered notifications and exploring a location with the aid of beacons, the business should periodically change up any campaign messaging to keep the content fresh and encourage the consumers to return more frequently.

Beacon Technology Provides a Path Forward

Beacon technology has the potential to revolutionize customer communications for brick-and-mortar businesses. Consumers can enjoy more engaging, seamless, and personalized experiences through their ever-present mobile devices. 

Meanwhile, businesses and marketers can gain valuable insights into consumers, ultimately achieving a number of business goals through a single piece of technology.

By properly adopting, implementing, and managing a beacon marketing platform, a business can reach customers in a personalized and exciting way.

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