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Article by Sam Cinquegrani published in CPG Matters and Shopper Tech Institute
Beaconing: A New Way to Connect with Customers

Walking down a crowded street is different now than it used to be. What has changed? Shoppers on promenade are still purposeful and engaged, and look happy. But they’re not looking up or catching your eye anymore. Now they all have their eyes down, looking at…their phones. In 2017, for the first time, better than half all consumers in the U.S. – more than 95 million Americans – will make a purchase on their smartphones. Grocery retailers know as well as anyone how pervasive smartphone use is, and those without an online presence are feeling woefully left behind. There’s a new in-store technology, however, that can help brick-and-mortar retailers connect the brands they carry with shoppers in-store, via their phones. It’s called beaconing.

What is Beaconing?

Beacons are precise geolocators. Think of the GPS unit in your car, but a far more accurate version. They can connect to devices such as smartphones from up to 150 feet away, and determine where a customer is (via their phone) to within about three feet.

By placing these devices throughout a store, a retailer can connect with their customers where they are, taking in how long people stop and look at a product and how they compare different items. Beacons can then send targeted promotions based on a person’s location in an aisle. For example, let’s say a shopper enters a grocery store and stops in front of a display of paper plates and other picnic supplies. If that customer has consented to receiving messages ahead of time on the store brand’s app, she might receive a discount code for 10 percent off all disposable dinnerware, encouraging her to make the purchase.

Ideally, beaconing mirrors the personalization and specificity of the online brand experience, providing relevant and personalized messages a customer is likely to find useful. However, it’s of utmost importance for the retailer to ensure that shoppers are glad to receive every message that pops up on their phone. With this powerful technology at their disposal, retailers are often tempted to notify shoppers of every single promotion and offer they are currently running. However, this usually leads to crossing the fine line between convenience and annoyance. Shoppers whose phones buzz too frequently with irrelevant messages are more likely to disable notifications than they are to take advantage of the service.

Why Beaconing?

Beaconing is the technology that crosses from the online channel to brick and mortar. Indeed, it enables the combining of these two channels. It offers the ability to give consumers choices that go beyond what they find in the store, without losing sales. For the brick-and-mortar retailer, beaconing is a way to bring digital capabilities such as customer preferences into the physical store.

Beacons allow interactive capability with the customer while she shop. They can enhance her experience to the level of having a palm-sized personal shopping assistant. Let’s say as she enters a store and walks down an aisle, a digital sales associate falls into step with her, seems to know who she is, how she likes to shop, and what she’s looking for. This digital helper tells her about new products she may like to try, knows to avoid the items she already has, and can guide her toward things she was planning to buy. Seems magical, doesn’t it?

Going one step further, the beacon’s messages can steer her toward items that complement those already in her basket, but that are out of sight at the moment. Additionally, the digital helper is an inexhaustible source of brand information about products, their manufacturers, ingredients, provenance and nutritional component. At its best, beaconing can give the in-store shopper as much information as she’d find in an online search, and more than she’d find on a label. Possibly more relevant. And she’s right there, in the store, to act on it.

Why Aren’t Beacons Widespread?

Though beacons have been around for several years – since Apple launched its iBeacon in 2013 – not many companies have employed this technology as part of their overall digital strategy. The main reason is that the software applications to support beacon technology hardware are still far from being fully developed. Once these apps catch up, this could be the technology that helps drive customers from online back to physical stores.

Another issue was the way retailers initially started using them. Too many beaconing pilot tests have failed because retailers have taken the “carpet bombing” approach to sending out brand messages and offers to in-store customers, rather than narrowcasting or targeting specific offers paired with known individual preferences. Most of the beaconing applications we have seen so far deliver non-personalized information to the user, such as the distribution of coupons. At best, this doesn’t help much with conversion rates; but at worst it can turn off customers to the point where they turn off their phones – the main way brands and retailers can reach them through this method.

How Retailers and Brands Can Best Use Beaconing

Retailers and brands that are able to keep a large amount of data on their customers have the greatest advantage when it comes to using beacon technology. This is one area where online retailers are ahead. Their applications know all about the shopper. They know when the shopper last visited, what products she’s interested in, her order history, and what she’s likely to buy. And they make suggestions and incentives accordingly.

Once the data is in place and the right apps have been developed for beacons, this same personalized digital experience that many customers rely on could be duplicated in a physical store. It will be possible to adapt these instantaneous offers to an individual’s likes, dislikes and behaviors. Therefore, the goal is to tie the customer’s online information to the in-store point of sale system.

As new channels are developed and old ones upgraded, beaconing will soon become as commonly accepted as texting. The customer will have more choice than ever, along with an enhanced experience. Through merging the computing capability in their customers’ mobile devices and the communications capability of technologies like beacons, brick-and-mortar retailers and brands may finally have a way to compete with the online giants.

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ObjectWave is a full-service provider of digital commerce solutions. He can be reached at samc@objectwave.com.


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