5 Ways Retailers Are Using Beacons

January 4, 2016         By: Lucy Maher

By Lucy Maher

By the end of this year, beacon-driven in-store sales are expected to reach $4.1 billion for the top 100 U.S. retailers, and projected to grow to $44.1 billion in 2016, or one percent of total U.S. store sales.[1]

“With the proliferation of devices and wearables that have Bluetooth connections, those ‘always-on’ connections provide an opportunity for merchants to engage with consumers,” said Soumya Chakrabarty, Director of Research & Development at Discover. “It also allows merchants to integrate a multi-device strategy instead of a mobile-only strategy, which could drive a richer customer experience and loyalty, leading to greater sales.”

As retail brands adopt this evolved marketing strategy, consumers are also becoming more open to receiving messages on their smartphones via beacon technology if there’s a direct benefit to them. To support this sentiment, a 2015 Discover-sponsored Mercator Advisory Whitepaper survey found that of 1,000 credit cardholders who own smartphones, over half (53 percent) agree that they would like to receive special offers and discounts at selected merchants when shopping in or near their stores. Separately, nearly two thirds (65 percent) said they would be somewhat or much more likely to use a phone-based mobile wallet program, or use it more often, if they received special offers from selected merchants when near their stores.

With this in mind, how can merchants overcome any lingering consumer hesitation around agreeing to receive messages through their device? Opportunities include providing the right incentives and working with the right partners.

“Merchants can offer a range of incentives for consumers to download and use their app, which could drive more and more customers into the app environment,” said Chakrabarty. “Once customers are already engaging with the merchant through the app, they can deliver customized promotions via beacons located throughout their store.”

Chakrabarty added that another option is partnering with other app providers where there is existing consumer trust, and then delivering messages through the trusted partner’s app.

By relying on Bluetooth technology to find relevant apps on nearby phones and sending consumers highly targeted messaging and offers, beacons could help brands reach customers in ways that drive both traffic and sales. What’s more, beacons allow these brands to collect data on customers’ in-store behaviors, helping them deliver more specialized and personalized messaging down the road.

Here are five examples of how businesses could fold beacons into an overall marketing strategy:

Tailoring communication to a customer’s in-store location

One well-known superstore retailer is using beacon technology now in 50 stores nationwide. Walk into one of the stores with their app on your smartphone, and you could be served a stream of announcements depending on where you are in the store. Unlike other retailers that use beacons to push discounts and same-day offers, the strategy focuses on personalized information, including directions to their products that have been most-pinned on Pinterest, and products that are particularly well-reviewed. The more you interact with the app, the more it will learn about you, resulting in increasingly personalized messages. In-store maps guide users to the next item on their in-app shopping list, and the app can summon a sales associate to the exact spot the user is standing for quick, helpful service.[2]

Also, according to Chakrabarty, an evolution of this concept could be cross-selling with nearby partner merchants. For example, if a consumer stopped at one store for a shirt, a merchant with complementary items such as accessories could work with the partner merchant to attract that consumer into their store next for an additional purchase.

Focusing on an in-app loyalty program

A popular teen retailer’s beacon strategy focuses on its in-app loyalty program, which grants frequent shoppers with rewards and access to special events. When a user enters the store, they are prompted to check into social media feeds to unlock an offer, then, later in the purchase journey, beacons prompt them to take a selfie of their potential purchase to be entered to win a prize. At the checkout line, the customer can shake their phone to display the store’s loyalty card and earn a digital badge.[3]

Driving customer engagement in stores

In another example, one video game retailer is turning to beacons to engage customers that walk into its stores. To do that, it pushes special offers and promotions, as well as relevant content, tailored to where the user is in their store. One feature sets this strategy apart: Users are invited to actively seek messages at each beacon or “hot spot” by bringing their phone closer to it. The retailer’s customer base skews toward the Millennial generation, so this allows them to get messages as they want them, and the retailer’s notifications stand out, rather than get lost in the clutter this age group receives.[4]

Integrating with broader rewards programs

No worrying about clipping coupons or keeping track of circulars if you shop at this major department store. That’s because in every one of the retailer’s 4,000 stores, users with the Shopkick app will, upon entering the store, receive a prompt to open the app for current promotions, deals, or discounts. What’s new in this scenario? Instead of receiving alerts for specific products, users can be directed to different departments, where they can be rewarded points for purchases at both this retailer’s store and other stores.[5]

Announcing the latest promotions, and birthday offers

A major beauty retailer is using beacons to not only announce to in-store app users the latest promotions and offers, but to deliver personalized messaging as well, including birthday offers. The app also provides alerts for in-store events, like makeup demonstrations, and allows a user to scan a bar code to get product reviews and directions.[6]

“The best type of communication delivered to customers through a beacon is one that is immediate, relevant, and personalized to the customer when they are nearby,” added Chakrabarty. “Merchants can win with real-time discounts and offers, which reward customers for simply being nearby and walking into their store.”

[1] https://www.businessinsider.com/beacons-impact-billions-in-reail-sales-2015-2

[2] https://digiday.com/brands/target-beacons/

[3] https://www.adweek.com/news/technology/urban-outfitters-tries-pinging-your-phone-fitting-room-161205

[4] https://www.rfidjournal.com/articles/view?12792 ;https://www.internetretailer.com/2015/01/14/gamestop-will-pilot-geo-fencing-and-beacons-36-stores-q2

[5] https://www.mediapost.com/publications/article/234217/4000-beacons-coming-to-all-macys-stores.html

[6] https://www.prnewswire.com/news-releases/sephora-announces-innovation-lab-to-usher-in-the-future-of-retail-300046332.html