7B the migo IQ blog

September 14, 2016

5 (BIG) reasons you should be paying attention to beacons

By Annie Mueller

Beacons are small devices that work wirelessly and communicate via Bluetooth with nearby electronics. Apple released the first iBeacon in 2013. There was a lot of hype and a little continued interest, but no one was quite sure how beacons would really, effectively, and easily be used in business environments.

Well, now we know. Or, at least, we’re starting to see the true potential of these unobtrusive, unassuming little devices.

Take a look at the reality of what beacons can actually do for brick-and-mortar retailers and entertainment venues. Honestly, this is just the beginning.

Beacons engage your customers with precise, location-specific messaging.

Basic beacon platforms work like this: some number of beacons is layered onto the physical environment. Each beacon is programmed to promote the inventory or offers within its particular “area” or footprint. When a customer walks by, the beacon sends a message and the customer receives it as they’re actually near the product or experience being offered.

Location-specific offers, or “geo-targeting,” gets great results from customers. Online geotargeting can increase conversion rates dramatically, up to 400%. Location-based ads on mobile devices result in conversion rate increases of 70% up to 200%.

How about in the real world? Well, geo-fencing, a less specific version of what the location-precise beacons can do, has had great results. Whole Foods used geo-fencing and increased their conversion rates to over three times the national average, from 1.43% to 4.69% post-click conversion rate. That’s a huge jump, a 227% increase in conversion rates!

Want another example? Charlotte Russe saw a 42% average increase in sales when using proximity-based marketing.

Takeaway: location-specific offers get more conversions because they come to your customer at the moment of opportunity, at the precise encounter with the product or service. Timing is everything, and beacons make your timing perfect.

Beacons can bring more customers into your stores.

Declining footfall is a big problem for brick-and-mortar stores.  Online shopping provides constant availability; in-store shopping just isn’t the only option anymore.

But beacons can be the catalyst that brings shoppers back to your store.

Consider Elle’s unique partnership with retailers who carried recommended products. Using beacons to recognize location, Elle’s app would ping customers when they were near a participating retailer, reminding them of the magazine’s fashion recommendation and including an offer for the nearby item.

In-store visits for those participating retailers was 100 times higher than normal during the 5-week campaign, resulting in an increase of 500,000 in-store visits.

Takeaway: beacons get attention from potential shoppers while they're actually near your store, available, and interested. Because of this at-the-moment beacon engagement, response is higher and in-store traffic increases.

Beacons will bring in $44 billion in retail sales.

Beacons are expected to produce $44.1 billion in in-store sales for the top 100 U.S. retailers.

There are two things to note about this figure. First, $44 billion is a huge jump from the 2015 impact of beacons on retail sales, which was only around $4 billion. This jump indicates that retailers have just begun to truly adopt and effectively use beacons in their stores, which further indicates that the data we have now — the data showing how effectively and consistently beacons can influence customer behavior - is the very tip of the iceberg.

Second, $44 billion is about 1% of total U.S. store retail sales. Let’s rewind for a moment: the iBeacon was first introduced in 2013, a mere three years ago. And nobody really did much with beacons at first. Yet somehow, in this tiny period of time, beacons are already influencing consumer purchasing patterns enough to instigate 1% of total U.S. store retail sales. The potential here is staggering. And retailers are catching on. By 2018, an expected 4.5 million beacons will be in use, with 3.5 million of those being active in retail environments.

Takeaway: within a very short time, beacons have become a major influence on retail sales. As they are adopted more widely by retailers, beacons will become a dominant influence on retail shopper behavior. Stores without beacons will be missing out on billions in sales.  

Beacons provide a way to have ongoing interaction with your customers.

Customers want information, they want help, they want personalization, and then… they want to be left alone. Too much assistance is a turn off. Too many offers become obtrusive. Too much customization gets creepy.

With beacons installed in your location, you can interact with your customers in the way they want: personalized, but not pushy. At the right time, but not all the time. Intelligent beacon platforms allow you to provide interaction as your customers move through the store. This interaction creates an ongoing, unique experience for each customer, one which they can control. Ongoing interaction trumps a collection of single contact points, because it provides the cohesive experience that customers want. Retailers who provide multiple, connected methods of interaction - both digital and physical - have happier, more loyal customers with a 30% higher lifetime value.

Takeaway: creating an omnichannel brand is necessary for happy, loyal, purchasing customers. Beacon technology is the missing piece of the puzzle that provides seamless interaction, bringing the digital and physical together as customers shop. 

Beacons make your brand app appealing to your customers at the moment of decision.

Any app developer can tell you that it's not really about the number of downloads an app receives; instead, the metric that matters is how many engaged users an app actually has. If your brand app is unseen and unused on a shopper's phone, it's doing your brand no good: beacons can help users remember your app, open it, use it, and like it.

  • Example one: multinational retailer Carrefour tied its brand app to in-store beacons and saw a 400% increase in mobile app engagement.
  • Example two: when London transport services tried out beacons, click-through rates increased: 9 to 15% engagement for beacon-served advertisements, versus 1-2% rate for non-beacon served offers.
  • Example three: American Craft Link Sausages, a product of Hillshire Farms, saw a 36% increase in brand awareness when it used a beacon-based campaign.

A sample study of 25,000 shoppers over a 30-day period showed that

  • users interacted 19 times as much with advertised products when they received a beacon message,
  • in-store app usage was up 16.6 times more than average for users who received a beacon message, and
  • shoppers who received a beacon message were 6.4 times more likely to keep an app on their phone.

Takeaway: to get the most out of that thoughtful, strategic, expensive brand app, tie it to a strategic beacon platform. The location-based "ping" from beacons will bring the app back to mind, and the usefulness of app interaction at the right moment will make your brand app invaluable to your customers.