Location-based marketing (LBM) is a strategy that uses the location of customers' mobile devices to deliver personalized and relevant messages to them. LBM can help retailers increase customer engagement, loyalty, and sales by providing timely and useful information, offers, and recommendations and one of the technologies that enables LBM is beacon technology.
What are beacons?
Beacons are small, wireless devices that use Bluetooth low energy to communicate with nearby smartphones. They can be placed in strategic locations inside or outside a store, such as entrances, aisles, shelves, or checkout counters.
How does it work?
When a customer with a compatible app enters the range of a beacon, the beacon can send a signal to the app, triggering a notification or an action on the smartphone. For example, a beacon can welcome a customer to the store, send a coupon for a product they are looking at, or collect feedback after a purchase.
Beacons can also collect data on customer behavior, such as dwell time, visit frequency, and purchase history. This data can help retailers understand their customers better and optimize their marketing campaigns.
An indispensable part of Location-based marketing
Beacons have various applications for in-store location-based marketing. For example, customers can receive welcome messages and coupons when they enter the store or a specific department. When they approach a certain display or shelf, beacons can provide product information, reviews, and recommendations. Customers can also get loyalty rewards, discounts, or free samples when they complete a purchase or visit a certain number of times. After they leave the store or a certain section, beacons can collect feedback, ratings, or surveys from them. Additionally, beacons can analyze customer behavior, preferences, and patterns to optimize store layout, merchandising, and inventory.
According to some studies that investigated consumer reactions towards in-store MLBA (Mobile location-based marketing) in terms of their attention, attitudes, purchase intentions, brand choice and actual purchase behavior. What these studies show is that the location of the advertised product, personal relevance and the openness of the advertisement are important factors to consider when designing for a more effective MLBA. In terms of the effect of the location of the advertised product, there are mixed findings. Participants in the studies received a mobile advertisement in front of a shelf, which either displayed a product that was available on that shelf or a completely different product. Consumers were more likely to pay attention and show more positive attitudes to the mobile advertisement in case the advertised product was at a different location than the location where the advertisement was triggered. However, when provided with a mobile advertisement in front of the advertised product, participants felt the advertisement to be less intrusive and purchased more.
To use beacons for in-store location-based marketing, marketers need to have a mobile app that can communicate with the beacons and send notifications to customers. They also need to obtain customers' permission to access their location data and send them messages. Customers need to have Bluetooth enabled on their smartphones and have the marketers' app installed and running.
Marketers benefit:
By attracting customers with pertinent and personalized offers based on their location and interests, beacons can help increase foot traffic and conversions. They also help marketers enhance customer loyalty and retention by rewarding them for repeat visits and purchases with coupons, discounts, or loyalty points. Moreover, beacons can improve customer satisfaction and experience by providing helpful information and assistance, such as product details, reviews, or directions. Finally, beacons can gain insights into customer preferences and behavior by analyzing the data collected by beacons, such as dwell time, visit frequency, or purchase history.
Customers benefit:
Beacons can help customers save time and money by receiving discounts and deals on products they are interested in, based on their location and previous purchases. By receiving recommendations based on their preferences and location, such as nearby stores, events, or promotions, they can also assist customers in discovering new products and services. Moreover, beacons can help customers enjoy a seamless and convenient shopping experience by getting assistance and guidance from the app, such as product information, delivery options, or customer service. Finally, by responding to surveys and reviews, customers may send feedback and opinions to the retailer, enhancing both the quality and reputation of the products and services.
What is the difference between beacon technology and GPS?
| GPS |
Beacon Technology |
|
| Scale | Global - Works anywhere on Earth with a clear line of sight to at least four GPS satellites. | Local - Works within a specific venue, such as a store, museum, or stadium. |
| Ideal Environment | Outdoors - Signals may be blocked by buildings, bridges, trees, or other obstructions indoors. | Indoors - Ideal for providing precise location information within a building. |
| Accuracy | Accurate to within a few meters under open sky. Accuracy diminishes in dense urban areas or indoors due to signal obstruction. | Accurate up to a few centimeters, making it more precise than GPS for location-based services in a defined area. |
| Power Consumption | Can be power-intensive, especially when used continuously. | Uses Bluetooth Low Energy (BLE), which is designed to minimize power consumption. |
In summary, while both GPS and beacon technology can provide location-based services, they serve different purposes. GPS is better suited for determining a device's location on a global scale, especially outdoors. In contrast, beacon technology is ideal for providing precise, location-based interactions in smaller, typically indoor environments.
Can beacon technology work without an app?
Most beacon technology solutions require a specific app to communicate with the beacon. However, some newer technologies can send notifications to devices without the need for a specific app, using features built into the device's operating system.
| Beacon Technology WITH App | Beacon Technology WITHOUT App |
| Requires users to have a specific app installed to interact with the beacon | Can communicate with all Android devices and iOS devices that have downloaded a client coupon linked to the campaign |
| App can listen for beacon signals even when it is not running | Does not require an app running in the background |
| Can provide personalized user experiences based on app user data | Provides general broadcast messages, possibly less personalized |
| Typically used for location-based services like indoor navigation, automatic ticketing, or personalization | Used for more broad applications like proximity marketing, sending offers and messages, or enhancing visitors' experiences |
| Allows for extensive analytics tracking, which can be used to improve app features and the user experience | Limited analytics and targeting capabilities compared to app-based solutions, cannot broadcast to all iOS users |
| App can control how, when, and where beacon interactions happen | App can control how, when, and where beacon interactions happen |
| Can be a more expensive route, due to app development and maintenance costs | A more economical route to take when initially entering the proximity marketing channel |
| Interactions can be highly controlled and moderated through the app | Engagement strategy includes strategy development, beacon programming (messaging, targeting), strategic beacon placement, and beacon monitoring/maintenance if required |
Challenges
Beacons also have some challenges and limitations that need to be addressed. Some of these are:
Privacy and security concerns:
Beacons and mobile apps face some challenges for location-based marketing. For instance, customers may have privacy and security concerns about sharing their location data or receiving unwanted messages. Marketers need to ensure that they have the customers' consent and respect their preferences. They also need to protect the data collected by beacons from unauthorized access or misuse.
Technology compatibility
Customers need to have a compatible smartphone, app, and Bluetooth enabled to receive messages from beacons. Marketers need to ensure that their app is compatible with different devices and operating systems. They also need to maintain and update their beacons regularly.
Customer engagement
Customers may not notice or respond to the messages sent by beacons if they are too frequent, irrelevant, or intrusive. They may also lack adoption and awareness of beacons and mobile apps, and may not know how to use them or what value they provide. Marketers need to segment their customers based on their behavior and preferences and tailor their messages accordingly. They also need to test and measure the effectiveness of their campaigns.
Technical issues
Technical issues such as battery life, signal interference, compatibility, and accuracy of beacons and mobile devices can affect the performance and reliability of location-based marketing.
Law and ethics
Legal and ethical issues such as compliance with data protection laws, regulations, and best practices can pose risks and responsibilities for location-based marketing.
To overcome these challenges, marketers need to educate customers about the benefits of beacons and mobile apps, provide them with clear and transparent privacy policies and opt-in options, ensure the quality and reliability of their technology, and follow the legal and ethical guidelines for location-based marketing.
To summary, beacon technology is a powerful tool for LBM that can help retailers create a competitive advantage in the market. However, it has a limitation and time to educate customers. At YOOSE,we have more than that to evolve location-based technology. We have careful planning, execution, and evaluation to ensure that it delivers value to both retailers and customers. You can discover more about location-based marketing here.
