Imagine you walk into a retail fashion store and start searching for Denim Jeans, and suddenly your smartphone buzzes. The Denim Jeans by Levis that you’ve been eyeing online for a while are now available at a limited time discount of 30%…and, just for you!
Wouldn’t this personalised, location-specific offer grab your attention and consider a purchase decision at the physical store?
Such real-time communication is facilitated through the power of beacon technology.
Beacons have been on the periphery of the marketing radar since 2013 when Apple first introduced its Bluetooth iBeacon device. When Google entered this race, use of beacon technology in marketing was expected to transform the shopping experience and drive more than $44 billion in retail sales.
Unfortunately, over the years, proximity marketing did not reach the level of popularity that most anticipated it to scale.
But, with a growing mass of customers now using mobile apps, proximity marketing is becoming once again rising in popularity with mobile marketers, spearheading their efforts in retail using cutting-edge beacon technology.
What is Proximity Marketing?
Proximity marketing a.k.a. Hyperlocal Marketing is all about reaching the right potential customers at the right place and at just the right time. It involves using location-based technology to target potential customers with hyper-personalised ads or communication based on their proximity with and within the retail store, enabling them to make a purchasing decision immediately.
A host of technologies are used in proximity marketing such as:
- Bluetooth Low Energy (BLE) Beacons
- QR Codes
Each of these technologies have their own set of advantages and disadvantages. But, the two technologies that have found great resonance with marketers include Beacons and Geo-fencing.
For a marketer to do proximity marketing using beacon technology, these are the must-haves:
- Customers with Bluetooth enabled smart devices
- A beacon, which will be deployed within the store
- Relevant mobile app installed on the customers’ smart device
What is a Beacon and How does it Work?
Beacons are small Bluetooth radio transmitters, that rely on rechargeable batteries. They transmit signals that are received and displayed on the Bluetooth-enabled smartphones when they enter into the beacons proximity.
Beacons can be deployed at retail stores, restaurants, real estate properties, amusement parks, cinemas, and other commercial locations to broadcast personalised and contextually relevant ads and push notifications.
BLE (Bluetooth Low Energy) beacons are deployed within the store in areas with poor mobile reception. Using the beacon, retailers can collect relevant information about their customer’s movements within the store and optimise the in-store and overall shopping experience.
Here’s an illustration on how beacon technology works:
What are the Benefits of Proximity Marketing?
Beacons are simple, versatile and easy to use. Proximity marketing brings numerous benefits to your business:
- More engaged users – Users are already looking at their mobile phones. In fact, 75% of consumers user their mobile phones while they are shopping.
- Advanced customer insights – Proximity marketing creates huge amounts of user data. You’re basically getting an entire purchase map from the consumers in your store. You can now see what exactly drives your consumers to buy – whether it’s an offer, informational videos, or interactive campaigns. These insights will allow you to device your future strategies accordingly.
- Hyper-personalisation – Based on the data that you derive off of a consumer, you can use them to hyper-personalise your communications. You can send communications with much higher intent that are will be drive higher engagement rates.
- Higher conversion rates – It is estimated that over 57% of consumers are likely to engage with location-based communications. Since this kind of marketing focuses entirely on consumers, you’re notifying your target audience who are already motivated to buy.
How are Leading Brands Leveraging Beacon Technology?
Beacon technology market has generated a whopping $519.6 million in the year 2016 and is expected to be worth $52.46 billion by 2022 as businesses pay more attention to delivering differentiated customer experiences.
Here are top 5 brands that are acing their retail marketing strategies with beacon technology-enabled proximity marketing:
1. Amazon Go Store
In January 2018, the retail giant Amazon started a new convenience store in Seattle. Amazon Go is an 1800 sq. ft. mini-market stocked with food and technology items. This store was well equipped with beacons and proximity sensors with the aim to deliver the ultimate user experience.
Amazon’s proprietary “Just Walkout Technology” is the USP of this store where users don’t have to stand in long queues for billing and checkout. Beacons are placed all over the store to monitor the products picked up and improve customer engagement.
While Amazon has started the fire, Nike and Walmart are catching up by revamping their store strategies to match the new Amazon Go stores!
Carrefour is a multi-national retailer that has placed extensive networks of iBeacon in all of its 28 hypermarkets in Romania. Using this technology the retail giant offers its consumers a seamless customer experience with a simple, intuitive, and fun mobile app.
Carrefour’s beacon-enabled app automates the advertising content delivery and collects essential data about the in-store consumer purchase behaviour.
Using personalised and contextual proximity marketing campaigns, they keep their customers informed about new products and services, special offers, and discounts across product categories.
With beacons, Carrefour has observed an incredible rise in its app’s user engagement rates which went up by 400% and the total number of app users grew by almost 600% in only 7 months!
McDonald’s in its pursuit to launch and promote a new line of coffee-flavored beverages, sought to strengthen customer relationships by leveraging a new beacon-enabled proximity marketing strategy at 15 cafés in Istanbul, Turkey.
As a part of this strategy, it also leveraged the popular Turkish loyalty app – Shopping Genie – to target customers when they were in the physical vicinity of any of these local McDonald Cafés. Customers received discount coupons, via the app, which nudged them to purchase a coffee and taste the beverage from the new line of beverages for free.
This campaign helped McDonald’s achieve a 20% conversion rate with just 30% of users that actually received this promotional campaign!
IKEA the Swiss largest furniture retailer introduced an innovative first approach to the market with their ready-to-assemble furniture. They are not only modern architectural designs but can also be bought at a very affordable price. We all know how active and disruptive they are on their social media and when they introduced the Augmented Reality (AR) feature to their app to improve customer experiences, their sales skyrocketed.
By adding Beacon technology to their store in Graz, Austria they wanted to further improve their in-store customer shopping experience with relevant and contextual proximity marketing campaigns.
For this reason, beacons were placed throughout the store. Customers who had the IKEA family app received in-store push notifications triggered by beacons. A welcome message, free coffee offers, and frequent reminders to use their rewards card were some of the campaigns they ran in order to achieve a new level of customer engagement.
Higher the customer engagement, higher the chances of conversions!
Target, the 2nd largest general merchandise retailer in the USA, started testing beacon technology in 50 of its stores nationwide in 2018 to bolster their marketing. They have limited the number of beacon notifications to two push notifications per shopper per shopping trip, so that the customer doesn’t get overwhelmed with constant alerts.
The communication appears both as push notifications and in-app messages on the Target app’s “Target Run” page that resembles a social media news feed offering deals, discounts, most pinned items on Pinterest, and more.
Proximity Marketing: A Win-Win Marketing Strategy for all Seasons!
Proximity marketing is the way forward for retail brands. As it continues to gain greater momentum, we will see brands using beacon technology to collect critical customer behavioural data, which in turn will enable them to engage better with their customers resulting in a positive impact on the bottom line.
Proximity marketing can’t be completely strategised based on just one popular technology. Marketers need to identify the most relevant proximity technologies that work for them in an attempt to bridge the gap between both offline and online customer user experiences at scale.