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Beacon Adoption? The Best Is Yet to Come!

Since its launch, the beacon technology has garnered considerable market interest. Curious minds across many industry segments have been asking themselves…What might we imagine if we could?

  • Make any physical space down to 2 inches, digitally aware
  • Identify prospects or customers and get better insight into their offline behavior
  • Intelligently predict what their interests or needs are
  • Send just-in time information and offers to them in real-time, or at a moment of your choosing

What opportunities might we imagine for?

  • Way-finding, loyalty programs, scavenger hunts, frictionless registrations, and payments
  • In-store traffic, sections customers visit, products they return to view
  • Customer, partner, and employee interactions and engagement
  • Customer service, surveys, and employee feedback

While brands have recognized beacons as an exciting opportunity to engage customers, they have understandably taken a methodical approach to test devices, use cases, and customer behavior. Over the last several years, many high-profile brands including retailers like Macy’s, Walmart, and Lord & Taylor have been conducting beacon trials. It barely caused a ripple when in mid 2014, an executive from one of the beacon providers claimed that they have over half of the Fortune 500 developing trials with them.

While brands have been keeping beacon trial results close to their vest, some of the reported results have been promising. Recently, McDonald’s conducted a 4-week iBeacon trial at 26 Columbus, GA franchise locations with compelling results. With beacons promoting special deals for Chicken McNuggets and McChicken sandwiches, the stores saw between a 7.5% to 8% increase for the respective product lines during that trial period. In a study commissioned by Swirl, a beacon platform provider, it found that “nearly 75% of shoppers who have received a beacon-triggered message on their smartphone say it increased their likelihood of purchasing in a store”.

Why have we not seen greater industry adoption?
Despite the industry buzz about beacons, why have we not seen greater industry adoption? In the past, there have been several barriers to beacon adoption, which include…

  • Support by major mobile operating systems? Google has increased beacon functionality in the latest versions of Android.
  • Yet another store device? GE Lighting (GE) has formed a partnership with ByteLight to develop lightbulbs that can also help track shoppers via iBeacon.
  • Need to download an additional app? Beacons can now be activated from within Passbook, negating the need for yet another brand app
  • Beacon mis-use resulting in spamfests? Opt-in required by consumers

As with most emerging technology, brands are taking the time to evaluate how beacons can be used to add value to the customer journey in a contextually relevant way. They are learning to look beyond discounts and offers, to provide in-store experiences that facilitate, guide, serve, inform, and even entertain. They are experimenting with both the use cases and frequency of engagement. They recognize that unless they are adding value to customer experiences, their customers will label the experience intrusive and rapidly opt-out.

The best is yet to come
While beacon technology isn’t mainstream, adoption rates are increasing. Indeed, Adobe’s recent digital index report finds that 18% of mobile marketers are already using Apple iBeacons–a figure expected to reach 36% during 2015. The report also points out that 49% of marketers use device positioning to deliver content, while 48.8% plan to add these capabilities over the next 12 months. As for consumer adoption, 33% of mobile users take advantage of mobile assisted in-store shopping.

And we believe the best is yet to come. Apple has always taken a design thinking approach to the products and services they create. They look at the holistic ecosystem, the various audience needs, and orchestrate value added experiences that ultimately remove friction from the experience. Remember Steve Jobs saying: “It just works”?

Female electronic payment close-up cell phone hand shop electronic reader

We see iBeacons as the cornerstone of an integrated Apple retail strategy that includes Passbook, Apple Pay, and Apple Watch. With over 800 million credit cards on file, we anticipate Apple will round out Passbook’s value proposition to include more robust loyalty program support. With that in place, all offers and loyalty cards saved in Passbook can be triggered/engaged with by iBeacons. A compelling loyalty platform, coupled with Apple Pay (40% of large retailers are estimated to accept Apple Pay by 2016), and Apple releasing their own iBeacon hardware, the future of Apple’s retail onslaught seems exceptionally promising.

Apple Watch appears to be the icing on the cake. Is it? Apple Watch has the potential to significantly improve the retail experience. A casual glance at an alert sent to the Apple Watch has less friction than one sent to a phone in a back pocket or at the bottom of a handbag. In anticipation, Marsh Supermarkets has installed beacons in all of its 75 stores. Using Apple Watch, Marsh Supermarkets plan to send beacon-triggered reminders straight to shoppers’ wrists. It’s easy to imagine a shopping experience where you enter the store, your Apple Watch app pulls up your shopping list, guides you through the aisles, automatically applies coupons, intelligently suggests items not on your list based on past consumption patterns, facilitates the checkout process, etc.

In 2015, BI Intelligence predicts $4.1 billion worth of in-store sales for the top-100 US retailers will be influenced by beacon-triggered messages. BI Intelligence estimates that number to rise in 2016 to nearly $44.1 billion (or 1% of total US store sales).

At Macquarium, we remain bullish on the role beacons can play with in-store customer experience. We have explored and shared several re-imagined customer journey experiences using beacons in the financial services, travel & hospitality, and retail sectors. With beacon use still in its infancy, we are continuing to inspire, and be inspired by, the varied and innovative industry use cases we come across.

Want to learn more about iBeacon? Business Intelligence has an easy-to-read primer on iBeacons.

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