Retailers find their sea legs with beacons for mobile engagement
When retailers and technology providers gather Sunday at the Jacob Javits Convention Center in New York City for the National Retail Federation's annual Big Show, there will be endless discussions about the best ways to enhance the overall customer experience.
Mobile engagement will dominate many conversations at this gabfest as consumers' affinity for smartphones, tablets and wearables forces retailers to rethink their brand strategy. One topic that is sure to come up again and again is the role beacon technology plays in the customer's in-store experience.
Near the end of 2015, many mainstream publications rushed to declare Apple's iBeacon technology a dud — even though it's been on the market only since mid-2013. But some industry insiders believe it's too early to pass judgment.
"There's been a lot of hype and a lot of buzz around beacons," Margot Langsdorf, vice president of client services for shopkick, told Mobile Payments Today in a recent interview. "Any time you have a new technology like beacons ... there's going to be some chatter about it living up to the hype. I think it's a little early to make a full call on this."
Before we take a deeper dive into this topic, it's probably best to revisit what Mobile Payments Today wrote last year about how beacon technology works with smartphones:
- beacons are battery-powered devices that use Bluetooth low energy signals to connect with other devices;
- when a Bluetooth-enabled device such as a smartphone comes within 100–130 feet of a beacon, the two devices can communicate;
- customers must have downloaded an app that is capable of communicating with the beacon signal, and they must enable Bluetooth, location services and push notifications on their devices for data to transmit; and
- when the app on a powered-up smartphone comes into proximity with a beacon it's programmed to recognize, the app can trigger customized user messages to deliver highly relevant one-on-one communication.
Langsdorf and shopkick are in a good position to determine beacons' effectiveness and what works and doesn't work for consumers and retailers.
The Silicon Valley-based company introduced its shopping companion mobile app in 2010 with retailers that included Macy's, Best Buy, Sports Authority and American Eagle Outfitters. Initially, Shopkick rewarded users with "kicks" when they walked into participating retailer's store. Users could redeem kicks for gift cards to use at various retailers. Later, the company added other ways for consumers to earn kicks — either by scanning the UPC on certain products or by purchasing specified products.
The company at first used ultrasonic audio technology that communicated with a smartphone to capture a shopper's location when the individual entered the store. Shopkick pivoted to beacons in 2013 with Macy's as its first partner, but still relies on the ultrasonic technology.
As time passed, shopkick refined its approach about when it pinged consumers and started to reward them as they moved throughout the store, Langsdorf said.
For example, Target, another partner, might ping customers with kicks only if they visit the shoe department. Guests who hadn't intended to shop for shoes might then visit that department to pick up kicks — and might end up leaving the store with a new pair of pumps or sneakers.
"We're taking that original iteration of what we're using that technology for and now what we're taking that a level deeper into the store so that we can actually influence the shopper's footpath and give them incentives via kicks or [other] offers that are specific to that department," Langsdorf said.
Shopkick worked with American Eagle Outfitters on one campaign that rewarded customers for visiting a fitting room to try on clothing.
"American Eagle knows that as soon as someone tries on their jeans or another piece of clothing, their conversion rate triples," Langsdorf said. "Their challenge was, how do we get someone to try something on? We thought, why don't we reward people with kicks for going into the fitting room? What we found was we were able to get double the number of people to try something on."
But while the idea that increased in-store mobile engagement might lead to more revenue for retailers is the stuff of dreams, the execution of such a plan is not simple — which might be why some retailers soured on beacon technology.
"You read all these articles about whether beacons were more hype than substance and I think the truth of it is that there's a ton of substance in terms of what beacons can unlock from an advertising perspective," Jim Meckley, CMO of Mobiquity Networks, told Mobile Payments Today in an interview. "The trick is that it was much more complex to implement that than everyone initially gave it credit for."
Mobiquity Networks is a Garden City, New York-based mobile advertising network that helps brands and retailers connect with consumers who shop at malls nationwide. The company has partnerships with the three largest operators of U.S. malls: General Growth Properties; Simon Property Group; and Westfield Group.
Mobiquity Networks' pitch to retailers is different from shopkick's in that it has beacons present in common areas at malls. Retailers work with Mobiquity Networks to reach consumers in those common areas, either through their branded mobile app or via third-party apps such as Shopular.
But retailers face some potential shortcomings with this approach.
"The retailers that have any kind of scale with their apps you can probably count on one of your hands," he said. "It drops off quickly."
Meckley believes that third-party apps such as Shopular help to close that gap and he believes we'll see more of them in the future.
"The more diverse the range of mobile apps you have in your publishing network, the better targeting you'll receive," he said. "We'll get to a point where the retailer can be selective as to which [third-party] app publishers they want to use to get closer to that ideal target audience."
But how do brands and retailers measure success when they reach the ideal target audience? It varies.
"I don't know if anyone out there has proven the value proposition, so no one is a 100 percent sure,” Meckley said. “How do I compare this to other advertising methods?"
Mobiquity Networks can measure whether a notification can entice someone to enter a store even if they don't click on the offer. Meckley claims that this happens more often than not. The company is in the process of creating proprietary metrics to measure the success of the advertising campaigns it offers retailers.
Shopkick's Langsdorf said the company measures success with retailers by incremental store traffic and incremental sales. "We've been able to keep our existing partners and drive new ones, and they are seeing incremental sales," she said.
Ultimately, the consumer determines how effective beacons can be for retailers.
As mentioned earlier, the consumer must have both Bluetooth and push notifications turned on. They must also find value in being pinged multiple times within one store.
"I think a lot of companies have struggled with [beacon deployments] because they haven't been upfront with consumers about the reasons to keep Bluetooth turned on and if consumers don't see the value of it, they'll see it as a nuisance," Langsdorf said.
Meckley believes the best approach for retailers is to show consumers how beacon technology enhances the shopping experience.
"I think we've been successful in nailing down these partnerships with the mall operators because the mall operator's primary objective is to improve the shopping experience," he said.
Meckley added that once retailers convey the proper message to consumers about this type of mobile engagement, the industry can stop discussing the shortcomings of beacon technology.
"We'll know this is successful when people stop talking about it," he said.
Will Hernandez / Will Hernandez has 14 years of experience ranging from newspapers to wire services and trade publications. Before becoming Editor of MobilePaymentsToday.com, he spent two years as the content manager for PaymentsJournal.com, a leading payments industry news aggregator and information hub published by Mercator Advisory Group. Will spent four years covering the payments industry as an associate editor for multiple publications in SourceMedia's Payments Group based in Chicago.