Smartphone apps have long used location data to try to improve the mobile experience; however, there have always been limitations to what they can do. It’s no reach to suggest that modern smartphone-toting humans spend a great deal of time indoors. Unfortunately, indoor spaces sometimes block cell signals and can make it difficult to locate devices using GPS.
Beacons provide a solution to this problem by using Bluetooth Low Energy (BLE) to allow sensors to detect – within inches – how close a smartphone is. Small enough to attach to a countertop or wall, beacons rely on battery-friendly, low-energy Bluetooth connections to transmit prompts or messages directly to a tablet or smartphone. This leaves them poised to transform how enterprises, transit systems, educational institutions, event organizers and retailers communicate with people. It’s a big step ahead that could open the door for groundbreaking services, which could enhance people’s lives. Likewise, it may also create a new market for retailers who could use the technology to better target consumers.
The lingering question remains on whether or not consumers will adapt to this new trend, as it teeters on the edge of “cool versus creepy.” Right now, beacon technology is still relatively new, leaving people to guess about its actual impact on both the marketing world and payments landscape. Many seem to think it could revolutionize consumerism. On the other hand, others predict big headaches along the way. But one thing is certain, mobile ads (or targeted offers and communications) are effective. Facebook just reported soaring revenue and profit results with 53% of 4th Quarter revenue associated with mobile advertisements. BLE seems like a natural extension in leveraging the mobile delivery channel with even more effective advertisements of any degree.
Using BLE-powered beacons, merchants could instantly become notified of your presence, pull up your profile, greet you by name and provide a personalized shopping experience. According to Bluetooth.com, by 2018, nine out of ten Bluetooth-enabled smartphones are expected to be Smart Ready devices. While consumer acceptance is still untested, a recent study commissioned by Swirl and ResearchNow found that 77 percent of consumers would be willing to share their smartphone location data (a prerequisite for beacon-triggered campaigns) as long as they received enough value in return. That research also found that 65 percent of consumers are much more likely to entrust their location information to their favorite retailers than to shopping/deals apps, Google or Facebook.
That said, if Bluetooth Low Energy is the future of mobile payments and mobile marketing, merchants will need to be very cautious about their approach to avoid creeping out consumers, as customers are already bombarded by irrelevant offers and a vast number of other communication types. The best way for merchants to accommodate this is by leveraging big data such as the retailer’s CRM database and inventory management system, which will enable a merchant to analyze past spend patterns to make targeted offers based on product availability or inventory in a real-time manner. Although a more complex approach, this is the best way to drive incremental sales.
For example, a very large national big box retailer presently sends all consumers the same flier with the same discount on a recurring basis. In one instance, the retailer doesn’t require the consumer to bring in the coupon, as the cashier will just scan one already on-hand at the point-of-sale. If a retailer truly desires to drive incremental sales, the approach taken should be to provide product-specific discounts at the individual level that aren’t advertised to the masses. If retailers don’t take such a targeted approach, the retailer risks “over-couponing” for something that didn’t need to be discounted, which could actually cut into revenues, not increase them. Furthermore, consumers may quickly shy away from such an approach due to the potentially invasive nature, especially if the customer considers the “ads” to be spam, or not relevant.
As retailers and others enter a trial-and-error phase of development and implementation, each faces numerous complications centered on compatibility issues, consumer education, higher fraud risk and simple over-eagerness. Most consumers don’t know about or understand beacon technology yet, so merchants have to contend and understand with consumer attitudes. In regards to compatibility, the two biggest players in the Bluetooth Low Energy game are Apple and PayPal, who have each introduced beacon technology that doesn’t play well with one another. Apple’s iBeacon also only works with IOS, leaving Android using-consumers out of reach and limiting full market penetration. PayPal’s beacon has no such restrictions; however, consumers have to go through a litany of setup and configuration procedures to take full advantage of it.
With this newer technology comes great responsibility, and over-use could turn consumers away. Although the technology could enable a seamless and quicker check-out experience through use of mobile payments, this will most likely not be heavily emphasized upon initial use. Could you imagine people just walking past the registers and right outside of the store at your large super retailers? It may seem unlikely now, but it probably will not be so uncommon in the future. Therefore, retailers may want to initially focus on relevant messaging to drive larger shopping baskets and more time spent inside of the store. One thing remains unclear – companies may only have one shot to get it right at launch, so a solid plan is a must.
It’s a new world out there with exciting product innovations coming about, some of which will work, while others fail. However, one thing remains certain in that there are a lot of reasons to be excited about the potential associated with BLE-powered beacon technology. The next several years should yield some interesting experiences for marketing analysts, merchants, mobile wallet providers and consumers alike.