Beacons are paving the way for hyper-contextualised marketing messages. OLIVER Digital Strategist, Mark Fitzgerald, discusses the opportunities and the challenges that come with the new tech.

The exponential growth of smartphone ownership has had a great impact on the way we communicate with each other, including the way marketers communicate with consumers. Smartphones have allowed marketers the ability of gathering immense amounts of data and provide consumers with hyper-local contextualised offers. And beacons are now taking this a step further.

What are beacons?

One of the challenges marketers have been facing is that modern consumers spend a huge amount of time indoors on their smartphones – with potentially blocked cell signals and location services.

Beacons and Apple’s iBeacon are a solution to this challenge. They are one of the latest technologies that will help marketers provide consumers with targeted, relevant and local offerings in retail outlets, airports and sports stadiums, to name a few.

Beacons enable targeting based on a person’s precise location (to within a few centimetres). This means that a sports store could alert a shopper to the new range of Nike running shoes while browsing the men’s running section. A supermarket could send a washing up liquid coupon to customers passing by the cleaning products aisle.

The precise location data beacons provide has also resulted in beacons becoming popular in the leisure industry. They’re proving very popular in hotels and sports stadiums as well.

How are brands currently using beacons?

Below, we look at a few examples of how beacons can be used to enhance the customer experience and up-sell to customers with hyper-local offerings.

Retailers

Macy’s in the USA have started to experiment with iBeacons. Shoppers who enter a Macy’s store with their Shopkick app installed are alerted to deals that may be of interest to them.

The iBeacons are used to offer customers location-specific deals, loyalty points, discounts and recommendations. In the video below, the shopper is alerted about handbag deals at the exact moment that she is at the handbag section. This precision marketing can be extremely effective when used correctly.

Tesco recently trialled iBeacons at their Chelmsford store.  They used beacons to enhance the customers experience. Tesco are using the technology, for example, to send a customer a message when they arrive in-store about where they need to go to pick up their pre-ordered goods. Many of Tesco’s large stores have hundreds of product lines and they can be confusing for customers to navigate. However,with iBeacons, the Chelmsford store is able to guide customers precisely to any part of the store via the app.

Airports

The majority of the 50 busiest airports in the world are planning to experiment with beacons by 2018.

Miami International Airport has already incorporated beacons at all their entrances, including their check in counters, gates and parking zones.  As a result of the beacons being installed throughout the airport, travellers receive hyper-relevant updates whilst checking in baggage, approaching the boarding gate etc.

For example, when a passenger checks in their luggage, they will automatically receive a terminal map on their smartphone which will show them exactly where their boarding gate is and how long it will take them to get there based on their location.

Sports Venues

Many Major League Baseball teams are using iBeacons in their stadiums to enhance their customers’ experience and increase their average revenue per visitor. When a fan who has installed the “At the Ballpark” app approaches the stadium gate, they are greeted with a “Welcome” notification before their tickets automatically pop up on their phone.

After the fan has passed the ticket gate, the app then provides them with a seat mapper which gives them turn-by-turn directions to their seat. As the fan passes by the food stands, they receive customised discounts. Some teams even use the beacons to fill empty premium seats by offering upgrades to fans as they arrive at the stadium.

Obstacles to Adoption

Although the cases using beacons hugely compelling, there are a number of barriers that will prevent their universal adoption at the present time. Firstly, only 40% of phones in the UK are compatible with beacons, compared to over 75% for wifi and GPS. However, the number of beacon-compatible phones is likely to rise rapidly within the next few years.

A greater barrier to widespread adoption is the multiple levels of permission needed to make beacons work. For a beacon to be used, the following criteria need to be met:

1. The customer needs to have downloaded the app
2. Bluetooth needs to be switched on
3. The customer needs to accept a request to use Location Services with the app
4. The customer needs to accept a request to receive Notifications from the app

This indicates that marketers need to invest a significant amount of resources into educating consumers about the benefits of opting in to beacons. Marketers will also need to make it easy for customers to complete the installation process.

The biggest stumbling block to beacons is that they could end up becoming a nuisance, particularly in a retail environment. Imagine a scenario where you are walking down the street and your phone is bombarded with constant alerts and offers. The average consumer would become alert fatigued very quickly and valuable offers will be lost in the noise.

The future of beacons

Beacons offer an exciting new way of communicating with customers and offering them more tailored ways of shopping. However, with a ways to go before consumers have properly adopted the new technology, is it worth the investment? It’s a powerful platform but it could certainly go ignored, or worse, damage your brand and sales if not used in an optimal way.

As evidenced above, there are several big brands that are very excited about the potential of beacons. And Tesco have just announced launching their biggest iBeacon trial, offering discounts on Unilever’s “Pink and Black” Magnum ice creams. Other retailers like House of Fraser and John Lewis are also seeing beacons as an opportunity to offer customers an improved shopping experience. With big brands adopting the tech at rapid pace, is it a technology others can afford to ignore?

If you’re interested in discussing the future of beacons and how you might use them in your business, why not get in touch with our team.