Beacon Technology: Slow to Take Off

Since Apple first announced its foray into beacon technology back in 2013, the expectation was for a revolution in the way that retailers engage with shoppers. By 2014, however, less than one per cent of US stores employed the technology despite its promise for increased revenue.

A promising start to customer engagement

Some caught on to the technology early. In 2014 food giant Hillshire Brands relied on Apple’s iBeacon protocol to connect to apps like Epicurious that sent in-store notifications about purchases the customer might take an interest in. During the test period, customers were twenty times more likely to buy the advertised product when they received a notification. Other US brands including Lord & Taylor and Starwood Hotels have seen good levels of engagement with beacons.

What are the pitfalls?

So if beacons are so promising, why are many retailers hesitating? One reason for the slow take-up is the necessity of working with a third-party service. In order for the messaging to work, shoppers must have downloaded an app that uses tracking technology, such as Shopkick, Mall Maverick or Epicurious, and then they’ve got to have them turned on. If the apps aren’t on, the beacon pings to no avail.

The other challenge is cost. The tech outfits producing the apps seek to target the big retailers with large customer bases that they see as their source for meaningful revenues. The apps are thus priced higher, and this can alienate vast numbers of SMEs who would otherwise take an interest if their budgets allowed.

Making the content relevant

Once a retailer decides to adopt beacon tech, a crucial hurdle presents itself: tailoring the content. Call-to-action messaging is more likely to succeed when it is customised to the shopper; the risk is an insubstantial return on investment otherwise. Writing for the Huffington Post, Kenny Kline proposes that the success of beacons lies in personalisation: ‘Whatever the retailer, the ultimate goal of using beacons should be to deepen a personal relationship with current customers. Rather than using the beacons to draw in new customers or bring back customers who are long gone, it should be used to create a tailored experience.’

Personalising the shopping experience

Stores are using beacons to do exactly that: create a personal experience for shoppers. Famed department store Macy’s welcomes visitors to its New York and San Francisco stores with rewards based on the department shoppers finds themselves in.