Buzz continues to build around beacon technology worldwide, an innovation with the potential to transform real-time marketing for nearly every industry, especially retail, events, entertainment and travel. But, to date, there’s been little conversation about the implications of the technology, its uses and ultimately its game-changing potential, despite its rapidly growing presence within offline establishments including all Apple stores, select Walmarts, MLB and NFL stadiums, London’s Heathrow Airport and music festivals like Snowball, SXSW and Bonnaroo to name a few.
For these innovative brands, the benefits of beacons are two-fold: increase conversion and purchases with right-time marketing, and collect first-party customer data.
Right-Time vs. Real-Time Marketing
Discount shoppers in New York City saved a lot more green by shopping at Duane Reade. The Walgreens-owned chain drugstore based in NYC is rolling out an iBeacon offering that will push coupons and discounts to customer smartphones when they are shopping in-store. The idea here is simple: offer the right discounts at the right time and you’ll increase purchase conversions (all while saving trees).
Of course, Duane Reade isn’t the only retailer looking to pursue right-time marketing. Most Apple stores have been outfitted with iBeacon tech, as well as select Walmarts across the country.
Via beacons, brands can push notifications about products including specs, stock and prices, as well as discounts and coupons. The only push-back thus far for retailers is this: you need a popular app.
Beacons utilize Bluetooth Low Energy (BLE) technology, a more energy-efficient variant of other Bluetooth tech that allows two-way communication between devices, triangulating the location of each within a set perimeter. Beacons do this in the background of a smartphone without needing WiFi, 3G/4G data or GPS, and BLE supports any Android or iOS application on a smart device equipped with a camera and/or Bluetooth Smart technology.
However, a beacon is only activated when an in-store customer who has Bluetooth enabled and has downloaded the store app – and agreed to the terms and conditions – is in proximity. Without the app or Bluetooth turned on, beacon technology does not work.
Thankfully, and likely in anticipation of an uptick in iBeacon users, Apple’s latest iOS update automatically turns Bluetooth on for users. As beacon tech becomes a mainstay, it is likely that all mobile operating systems will keep Bluetooth enabled, as long as it is BLE tech, so that phone battery isn’t run down.
This still leaves the necessity for a popular mobile app, not so much a problem for the Walmarts and Duane Reades of the world. For smaller shops, though, a mobile app – and the tech resources and cost to create one – may be asking for a lot. Yet, beacon tech isn’t only about push notifications and increasing point-of-purchase conversions. There’s a much bigger benefit to beacons than simply that.
The Real Beacon Benefit
Arguably the biggest benefit of beacons is the ability to simultaneously collect first-party data at scale with location-based data. Essentially, beacons are an indoor mapping technology allowing brands to track in-store or at-event behavioral data of individuals. Personal or first-party data – retrieved through the mobile app necessary for beacon use, either manually input by the user or via social authentication – may be collected by brands to add lifestyle data on top of behavioral data for increased marketing insight.
To break that down: the real beacon benefit is ultimate, ethical customer data collection at scale that can then be used to improve both real-time and right-time marketing, in-store and online.
Beacons can collect (though don’t necessarily do so on their own) data points such as name, email, birthday, location, city, brand affinities, social network influence, and demographics. However, this list is neither exhaustive nor representative of any all-inclusive data beacons receive. Beacons on their own only collect location data. Via a mobile app, especially one that asks for social authentication, the amount of data a beacon can collect is exponentially increased.
With proper social data collection via brand mobile apps (and typically social authentication), beacons can communicate both behavioral data and social data, allowing companies to leverage customer brand affinities and demographics to pull in premium sponsors, provide a better customer experience using customer-preferred brands, and build an overall trusted, high-quality customer experience that increases customer lifetime value time and time again.
Check out how these four brands are already using beacon technology to optimize the customer experience today, and collect data to continue to build on excellent customer understanding tomorrow.
SXSW: The official SXSW 2014 mobile app was powered by iBeacon technology and made the registration process easier for badge holders.
MLB: The MLB is outfitting stadiums with iBeacon technology in order to track which concessions, areas of the stadiums and sponsors are most popular with fans in the stadium. The overall goal is to better the in-stadium experience and bring fans back to the game rather than always watching at home, thereby increasing ticket sales.
Kenneth Cole: The retail outlets are using beacon technology to offer context, personalization, insight, efficiency and differentiation to better the in-store experience. Kenneth Cole refers to this as the “age of the customer.”
London’s Heathrow Airport: Virgin Atlantic chose the Heathrow Airport as the first trial location for beacon technology, attempting to create a more customized and convenient traveller experience by helping them find shorter lines, access electronic boarding passes without command, offer currency exchange information and more, all contextually.
The Final Word
Users will need to be educated on beacon use, but the process for doing so is easier than WiFi scanning, given that users must download apps, have Bluetooth turned on and activate Location Services in order to have a beacon communicate with them. This lowers concerns over privacy and security, though it does not erase them entirely. Best practices must be set and followed, ideally those of transparency in data collection and use. For loyal customers though, the ability to utilize real-time notifications for deals, easy check out and a more convenient and personally relevant experience overall is ideal. Oversaturation may cause backlash as well, though it will be up to users to pick and choose preferred brand mobile apps, increasing competition among brands likely to the benefit of the customer.
For brands, beacon technology provides the final degrees to holistic customer understanding, allowing brands to analyze online and offline behavioral data in combination with first-party mobile app social or identity data that often includes brand affinities, in-app purchases and more.
In all, beacon technology promises to bring the concept of native advertising to the offline world, finally connecting the dots between customers’ digital doppelgangers and their in-store habits, preferences and, ultimately, their potential lifetime value.
H.O. Maycotte is CEO and Founder of Umbel.
This article was originally posted in 2014 and is frequently updated.