BEACON TECHNOLOGY: WHAT’S IN IT FOR...

Beacon Technology: What’s in it for Retailers · 1

BEACON TECHNOLOGY: WHAT’S IN IT FOR YOU?


INTRODUCTION

As companies embrace omnichannel engagement with consumers, the line between online and offline experiences is blurring. Today’s always on, always connected consumers want real-time, engaging, relevant experiences with your brand at home, online, on the go and in your store or other venue—everywhere, on any device. Beacons are one of the ways leading companies are looking to enhance in-person experiences by connecting with customers through their mobile devices.

Apple has already launched its own beacon technology —called iBeacon—to send push notifications to customers as they walk around its 254 U.S. Apple stores1. Shopkick deployed the beacon technology in 100 American Eagle locations and two Macy’s locations2. Major League Baseball is also planning to introduce the iBeacon technology to 20 ballparks across the country to tailor fans’ experiences by delivering personalized content to them in stadiums3.

Beacon technology has the potential to revolutionize customer experiences. But it’s new, it can be complicated, and it raises some significant security and privacy concerns. This paper is an introduction to the technology, its uses, risks, and rewards.


1 · http://www.retailtouchpoints.com/news-brief/3159-apple-rolls-out-ibeacon-in-all-stores

2 · http://www.retailtouchpoints.com/mobile/3335-trend-watch-bringing-the-mobile-retailing-experience-in-store-with-beacon-technology

3 · http://www.engagemobile.com/beacons-ibeacons-and-the-future-of-indoor-location-services-facilities-managements-retail-and-mobile-coupons-cool-and-creepy/

Source: Pew, January 2013


WHAT IS A BEACON?

HOW DOES IT WORK?

A beacon is a small transmitter that’s designed to exchange data with mobile devices that come within its range. It’s essentially an electronic tripwire that sets up a connection between a customer’s mobile device and a backend server of some kind. Once the connection is made, you can accurately determine the customer’s location in the store, and present personalized information or offers. Integration with payment systems can make it possible for customers to do self-checkout—authorizing payment for items through their own mobile devices.

Most beacons transmit signals using Wifi, Bluetooth Low Energy (BLE) or RFID. When a customer comes within range of a beacon, their mobile device can detect the beacon’s signal and send a query. The beacon responds by sending back an invitation to the mobile device to establish communication. In a retail setting, the beacon might ask if the user wants to receive “in-store notifications.” In a museum, the beacon might ask if the visitor would like to know more about the exhibit they’re standing next to. If the user accepts, an app is installed that can be used to send special offers, information, or offer other services. The beacon uses signal strength to determine location, so offers can be relevant to visitors’ exact locations.

Most new Android and Windows phones support BLE. Apple first put a BLE radio in the iPhone 4S, and has since added the capability to the iPad, iPad mini, and iPod Touch4.

4 · https://www.redant.com/articles/5-ways-ibeacons-can-change-retail/


BEACON USES...

MOBILE PROXIMITY MARKETINGAs shoppers browse through stores, they can be sent messages from the beacons that are closest to them. For example, as a shopper enters the footwear section of a store, the local beacon could share shoe-related special offers, interesting facts, targeted promotions and more.

As the customer moves to a different location, a new beacon in the area will alert the customer to offers on products they’re now close to. Using mobile beacon technology, customers can be contacted and kept informed while in-store to enrich their experience.

Over 45 Australian shopping centers and retail precincts are set to beef up their proximity marketing with Apple’s iBeacon system5. inMarket, an in-store marketing platform, deployed iBeacon Proximity Beacons in more than 200 grocery stores including Safeway and Giant Eagle locations in Seattle, San Francisco, and Cleveland under the Mobile-to-Mortar program.

MICRO-LOCATION & USER TARGETING

Companies can use micro-location information in a variety of ways. Understanding traffic patterns—knowing when a visitor enters, knowing how many turn left and how many turn right. The information can be used to determine the best placement for displays and promotions.

Knowing a customer’s exact location makes it possible to deliver information which is relevant to them at that precise moment and context. This targeting can go well beyond simple proximity marketing. By tracking a consumer’s behavior, interests and location patterns within a store or other venue, we can obtain a clearer picture of the individual. Not only do we know what they purchase, but we know what interests them judging by how long they stay in a section, and can identify the factors triggering a purchase. The information collected can then be analyzed for a truly personalized, relevant, and engaging experience.

INDOOR MAPPINGWith micro-location targeting, you can help customers navigate big stores and shopping centers. A beacon at the entrance to a large department store could welcome the customer, direct them to the department they’re interested in, and then help them find a register when it’s time to check out. In a shopping mall, beacons and mobile apps could be a huge improvement over the few, scattered, hard-to-find mall maps, and give retailers opportunities to push special offers and notifications. Airports or other transit hubs, sporting arenas, museums, hotels and conference centers can also be great venues for indoor mapping.

Walmart recently found that, on average, its customers spend more than 20 minutes in its stores each time they visit. This is great. But the study also revealed that most of the time they leave without getting all the items on their shopping lists—because they can’t find them6. Walmart now has a mobile app that provides indoor search and navigation to help recoup those lost sales. Macy’s, Walgreens, and Home Depot have introduced similar solutions.

5 · http://www.insideretail.com.au/2014/04/08/proximity-marketing-boost/

6 · http://pando.com/2013/12/23/will-privacy-concerns-keep-indoor-mapping-from-being-the-next-big-thing/


BEACON USES...(CONTINUED)

MOBILE TOUR GUIDES

Particularly interesting for museums and cities, a user could be guided through the points of interest as well as providing further information on their visit. With their mobile device enabled to receive beacon communications, the user could forgo city guidebooks and focus on exploring the city. Receiving valuable and relevant information at key attractions as well as the best routes to take within the city would add an element of flexibility and freedom to the user experience. Guided museum tours would operate in a similar fashion but on a smaller scale.

MOBILE HANDS-FREE PAYMENTS73% of shoppers think long checkout lines are the most annoying aspect of in-store shopping7 (Really? Only 73%?). PayPal’s Beacon is a Bluetooth Low Energy USB module for stores and other businesses that allows consumers to pay hands-free.

Users have to install the PayPal app on their mobile device, set up their preferences for automatic check-out and approve being charged for any goods they purchase or consume. Once the customer enters their preferred business, a vibration notifies them that they’ve been “checked in” and their photo appears on the merchant’s POS. Verbal confirmation of payment would complete the transaction, and a receipt is automatically sent by email.

TRACKING & BUSINESS INTELLIGENCEThe most controversial but also the most common use case of Wifi beacons today is using the data collected by the Wifi hotspots for business intelligence in retail. Without users giving permission, the owner of the Wifi nodes can use them to answer questions like:

• How many people walk by a given location each day?

• What are the busiest hours throughout the day/week?

• How long is the average person spending inside the venue/location?

• Where in the store are people spending most of their time?

This can be used for everything from choosing locations and planning store layouts to understanding who the customers are and using those insights to come up with new sales strategies. With user opt-in, the data becomes even more accurate and valuable.

Best Buy rewards its customers with points for walking into the store and then gives special deals to customers shopping via the ShopKick app. Each of its stores is verified by a unique beacon. As the customer scans the bar code at the store, as guided by the app, s/he earns points, which can be redeemed for real money rewards. Not only does this help in increasing the foot traffic within the store and gain higher ROI on the marketing spend, but also it helps the brand to track a shopper’s buying journey—from browsing and walk-ins to considerations and purchase8.

7 · http://blog.mobstac.com/2014/03/infographic-the-future-of-in-store-shopping/

8 · http://www.businessinsider.com/shopkick-growth-2011-1?IR=T


HOW DOES IBEACON COMPARE TO OTHER TECHNOLOGIES?

THE MAIN TECHNICAL APPROACHES

We’ve been comparing technologies for some time now and although we believe iBeacons have the potential to be great, we don’t think there is a clear winner yet.

There are three basic approaches independent of the technology (Wifi or BLE):

DEVICE BASED: This is the most common approach for an outdoor location (or to at least locate the building you’re in) as it can easily be implemented without permission/support from the network.

INFRASTRUCTURE BASED: This uses e.g. the existing Wifi infrastructure (if supported) or dedicated Wifi or Bluetooth nodes.

HYBRID (DEVICE & INFRASTRUCTURE): Combines all available location information (Wifi, Bluetooth, GPS, sensors, etc.).

There is no one size fits all. The requirements for indoor positioning and customer engagement need to be assessed in each case before a recommendation can be given. Even if BLE beacons are the hottest trend right now, Wifi can often fulfill the same requirements cheaper and more easily.

*Cisco, Navizon, Meridian, KAIST, WirelessWerx, GISi Indoors, Euclid


CHALLENGES & RISKS

SUPPLIERS OF BEACONS

COMPLEXITYRetailers should be careful not to think of this as a ‘stick it on the wall and it works’ scenario. Stores need to be surveyed. Beacons need to be installed—maybe a lot of them, depending on your store. Mobile apps need to be built to capture the right information and present offers. These must be integrated with back end systems. And to really be compelling, analytics need to be in place to understand captured data and drive personalized offers. It’s not a small investment. It’s best to proceed with caution. Consider starting with beacons to understand traffic patterns and shopping behavior first, and then move to proximity marketing.

PRIVACYCustomers have to really want to opt in before they’re tracked by beacons. They have to download an app, turn Bluetooth on, turn on location services, and give permission. And research seems to support the notion that consumers are willing to give up all sorts of private information if there’s a tangible benefit (finding your way in the mall or superstore, getting discounts, etc.). Still, privacy advocates raise legitimate questions about the fact that this is a new kind of data that’s being collected and there are no commonly accepted guidelines about how it’s used. We have yet to see what could be done with detailed location information in the wrong hands.

SECURITYRecent testing by Mobiquity Labs9 indicates that beacons are fairly easy to clone—meaning that unique identifiers can be linked to malicious hardware which could be used to collect users’ information or to accomplish other mischief. This is of particular concern when it comes to applications where payment information is being exchanged.

Since Apple announced iBeacon, hundreds of companies have positioned themselves as Beacon and indoor location and marketing providers. Here are just a few relevant industry players:

BLE BEACONS: Entimote, Qualcomm, Roximity and indoor.rs

WIFI POSITIONING AND TRACKING: Cisco, Ariba (Meridian), Navizon and Infsoft

PROPRIETARY WIFI NODES: knock.io

WIFI LOCATION DATABASES: Skyhook Wireless and AlterGeo

9 · http://www.mobiquityinc.com/mobiquity-finds-security-gaps-still-exist-enterprise-beaconibeacon-deployments


CONCLUSION

Beacons are emerging as useful tools that can be used to push relevant, targeted information and offers to consumers, and create more engaging experiences. But the technology is new, and not without its challenges and risks. By all means, experiment, but take care. If you set up a simple pilot for proximity marketing, for example, make sure you’re not pushing the same offer to a shopper each time they pass through the same

area. You don’t want your new experiment to annoy customers. Beacons can solve real problems: helping visitors find their way, providing useful information, helping shoppers find what they’re looking for, getting great offers, even self-checkout. As long as you’re delivering real value, customers can be pretty forgiving, and are likely to appreciate your efforts.



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BEACON TECHNOLOGY: WHAT’S IN IT FOR...

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