6 things marketers need to know about beacons

Bluetooth 'beacons' are a simple way for marketers to communicate with customers in physical locations, but the platforms and infrastructure behind the tiny wireless sensors can be quite complex. Here's a quick guide to the basics of beacons.

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4. Why should marketing and sales use beacons?

Proximity data from beacons can provide brick-and-mortar retailers and other organizations with the some of the same physical personalization and targeting advantages they already have online.

Beacons can also help marketers gain more detailed customer insights. For example, retailers can get a better sense of how long customers spend on average in their stores, and in which aisles. "If you know customers spend a great deal of time in this store versus another store, and this product grouping versus another, you might do some retargeting across one of your ad networks, or maybe in your app" as a result of that knowledge, according to Pulsate's Leddy.

Beacons can help boost customer loyalty by "rewarding not only transactions but physical presence in the store and getting click-and-collect orders ready as soon as customers walk in, and then letting them know," Leddy says.

Marketers are also more likely to get the attention they want for their marketing messages when they use beacons. And the geo-targeted messages beacons transmit can increase the "open rate" of mobile marketing messages significantly. In fact, people open standard push notifications about 14 percent of the time, but they open messages transmitted by a beacon 53 percent of the time, because they're more immediately relevant, according to mobile advertising firm Beintoo.

Coupled with special offers and promotions, beacons can help increase sales of merchandise, food and beverages, as well. For example, at the recent Super Bowl in Santa Clara, Calif., Levi's Stadium used about 2,000 beacons, along with the stadium's app, which helped increase food and beverage orders by 67 percent compared to the stadium's previous record, according to John Paul, CEO and founder of VenueNext. (VenueNext developed the infrastructure that let fans order food and drinks from their smartphones and have them delivered to their seats, as well. It also provided directions around the stadium and video replays.) 

5. Do beacons have disadvantages or shortcomings?

As Shelley Bernstein, the Brooklyn Museum's vice director of digital engagement and technology explained in a blog post, "there's a lot of overhead to deal with" when deploying beacons. Bernsteincited a number of potential problems, including the need to match the colors of beacons to the museum walls they stick to; keeping the beacons stuck to those walls; and identifying faulty beacons, because the devices typically lack individual serial numbers. 

Managing a network of beacons can also pose multiple challenges. The limited range of BLE devices may mean many beacons are required to fully cover a large area. Marketers may also need to adjust signal strength and manually check some inexpensive beacons on a regular basis to ensure they're charged and working properly. For more expensive beacons, firmware updates and other management tasks can be performed via Wi-Fi. (InfoWorld recently detailed these and other beacon deployment challenges.)

Beacon implementations costs aren't always affordable, either.According to a February 2016 Forrester Research report, "Beacon implementation costs appear to be low … However, many business and technology decision-makers don't take into consideration that the operational costs of deploying and managing these devices on an ongoing basis can be around $300 per beacon per year. For example, with beacons, someone has to manually place one and map it on a drawing. And this assumes that one is using the same type of beacons. Managing beacon technologies from multiple vendors exponentially increases the operational costs to install, update, and maintain them across each of these platforms."

Too often, enterprise marketers get excited about the potential to reach customers in new ways, according to Michele Pelino, a principal analyst with Forrester Research and coauthor of the report, "but they don't think about who will manage the beacons over time, what the full business costs will be, what happens if something goes wrong with the beacons, or what to do if their signals overlap another store next door."

Many different firms manage enterprise beacon deployment and the maintenance of mobile-marketing or customer engagement efforts, including Aruba, Swirl (for retailers), Proximity Sense, Gimbal, MOCA, inMarket and Rover.

Most beacon-based marketing efforts are immature at this point, however, according to several analysts interviewed for this story, because marketers are still trying to figure out how to leverage the technology. Krista Garcia, a retail analyst for eMarketer, recently visited three stores in Manhattan that she knows uses beacons: Sephora, Macy's, and Lord & Taylor. Her goal was to receive location-aware offers and notifications in the stores. Of the three retailers, only one deliver an in-store offer — a Macy's promotion for Dolce & Gabbana perfume, which Garcia got when she wasn't even in the perfume department. (She was on the same floor, though).

Marketers must tread a fine line between enabling better customer experiences and annoying those people with too many messages, according to Mark Hung, a research vice president with Gartner. "Retailers are still trying to figure out the best way to engage customers, and the last thing they want to do is alienate them by pushing coupons that annoy them," he says.

Beacons can also raise privacy and security concerns. They typically transmit to mobile apps on users' smartphones and may "ask permissions for things people don't quite understand," says Kurt Roemer, chief security strategist at Citrix. When consumers accept those requests, "beacons can install software, access contacts, your location — they can do anything on your phone you can do," Roemer says. "CMOs and digital marketers should ensure that consumers are aware of privacy policies associated with beacons, or lack there of."

(This Kontakt.io blog post lists a number of beacon-related security best practices for marketers.) 

6. What's next for beacons? 

Beacons are still a nascent technology. After the initial hype around beacons during the past year or two, some observers say they are likely to go the route of the QR code and remain a niche technology.

Others, such as Gartner's Hung, say beacon deployments will continue to grow, as a way for marketers to reach customers and as a logistics technology, helping companies manage assets in large facilities. And beacons are also being used in many new ways, such as helping to guide blind commuters through London's Tube system, according to Wired.

In the near future, beacons will find their ways into smart home systems, too, according to Kroeter of the Bluetooth SIG. Imagine arriving home after a long day — at an enterprise marketing job, perhaps — to a home that automatically senses your presence, switches on the lights, and turns on a favorite playlist. This sort of "useful contextual awareness," according to Kroeter, could play a significant part in the future of beacons.

Copyright © 2016 IDG Communications, Inc.

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