Beacons Beckon Early Brand Adopters
Beacons are defined as guiding signals. Historically these objects dispelled their light to lead people to safety, whereas today Beacons are becoming the new bridge to relevant brand messaging.
In this age of showrooming, retailers have to combat shifting shopping behaviors. No longer are customers’ attention spans solely devoted to the products in specific stores, now, thanks to smartphones, customers are essentially shopping from multiple retailers all the time. After seeing an item we’re interested in within a store, we now instinctively call up competitive items on our mobile devices to compare price, aesthetics, shipping policies and brand incentives. Today, every brand’s in-store shopping experience is seeping into its competitors. But rather than resisting this cultural shift, bricks-and-mortar retailers have acquiesced to this widespread dependence on iPhones and androids, and are beginning to enlist beacon devices to embrace a completely connected era of shopping.
Essentially, beacon hardware is a small, easily disguisable device that retailers implant within their walls to communicate directly with shoppers via their mobile devices. Using Bluetooth Low Energy (BLE), beacon technology enables the hardware to transmit signals to shoppers’ BLE devices within the radius (usually 70 meters). These signals enable retailers to send real-time push notifications for deals, brand promotions and new products. While iBeacon and Beacon are referred to as though they’re mutually transferrable, iBeacon is Apple’s proprietary Beacon technology which runs on iOS7 and later software. Apple has yet to release its own Beacon and with that impending launch, the sophistication of Beacon messaging will likely increase. PayPal also has its own branded version of Beacon technology. Within the PayPal system, once users have turned on their Bluetooth signal and opted in to the PayPal app, they not only receive push notifications but they can also initiate ‘hands-free’ checkout.
While Beacon technology seems simple enough to implement, the challenge lies within convincing customers to accept beacon technology into their shopping experiences. First and foremost, smartphone owners must enable their Bluetooth setting, which is not necessarily a top of mind functionality for many consumers. Additionally, users must opt-in to location services and be willing to run affiliate brand or third-party apps to receive the messaging. To convince consumers to put this much work into retail communications technology, brands must offer messaging that is highly relevant and targeted.
Brands and Beacons
While beacon technology has yet to infiltrate the wide spectrum of retail, some brands, Macys, Hillshire Farms and American Eagle have already found success in their Beacon trial runs.
This past summer, Hillshire brands released a Beacon case study after testing the technology in select cities from April-June. The experimental mobile campaign intended to launch the brand’s new American Craft Link sausages by serving specific messages and banner ads in-store. The promotion was directed at the top ten grocery markets (New York, LA, Chicago etc.) and targeted grocery shoppers who had already downloaded an app from inMarket’s network – including epicurious, key ring and shop savvy.
Shoppers with these apps were served brand push notifications in store, and served banner ads within their apps all specifically promoting the brand’s new Craft Link Sausages. Hillshire found that these location based offers lifted purchase intent by 20% and brand awareness by 36% during the trial test run. It is especially hard to get on grocery shoppers’ radars when they are bombarded with thousands of product offerings and new brand deals during every shopping trip. Beacon tech enabled Hillshire Farms to speak directly to relevant consumers at the right time and place, thus boosting the product launch within the select test markets.
Aligning with mobile application and platform, Shopkick, Macys recently announced a large scale beacon rollout. Shopkick is a platform that awards its users’ points just by entering store. The brand recently announced the creation of ShopBeacon which runs in tandem with iBeacon – Apple’s Beacon technology solution. The points are redeemable at partnering retailers. In Macy’s first experimentation with Shopkick during Holiday 2013, the department store saw exponentially higher conversion rates.
The technology will allow Macys (and Bloomingdales) to send personalized department deals and recommendations. For the targeted technology to work, shoppers must opt-in, and once they do Macy’s will serve them a push notification reminding them to open their Shopkick app to take advantage of these customized messages.
American Eagle knows its target customers well. Catering largely to app-obsessed teens and tweens, American Eagle saw beacon technology as a means of engaging with these customers when their faces are buried in their phones. Like Macys, American Eagle has established a partnership with Shopkick to initiate real-time notifications for their in-store shoppers. 100 American Eagle and Aerie stores were selected for the initial rollout in early 2014. The brand plans to continue this rollout to include more stores, and more Beacons within stores helping them target customers on a more granular level.
The brands that have been among the first to take the Beacon plunge have seen increased interaction. A recent inMarket survey reported that Beacons can elicit a 45% response rate compared to a 9% rate from non-Beacon driven messaging. However, there must be a delicate balance with Beacon technology- inMarket has found that oversaturation turns shoppers off. While a 45% engagement rate is impressive enough to excite any retailer, Beacons come with a considerable caveat: use sparingly. Excessive Beacon notifications run the risk of becoming too big-brotherish and frankly, annoying. The same inMarket study, as referenced by Digiday, also reported a 313% engagement drop-off rate when brands sent more than one notification per individual shopping visit. For Beacons to implement long-term retail results, brands must follow consumers’ leads and respect their reactions to brand engagement attempts. However, despite the inherent challenges that accompany Beacon strategies, retailers have much to gain from this level of targeted messaging. ABI estimates BLEs will create a 60 million unit market by 2019 and 2015 is shaping up to be a crucial year for brands to get on board with Beacons.