With Beacons, retailers can directly connect with their customers. With Beacons, retailers can personalize their marketing promotions. With Beacons, retailers can bring the online shopping experience to the physical store. With Beacons, retailers can know where their customers are, in real-time. That’s the theory.
Too bad, the Customers Opt-In Rate stubbornly stands at 3-5%.
Meanwhile, or maybe, because of the consumer resistance to retail applications, innovative business models for beacons are emerging. There are good reasons to deploy beacons, and they are not what you think.
1. Target the Shopaholics (the Rest Will NOT Come)
Your loyal customer is a shopaholic.
Yes, she loves your brand, but mostly she loves shopping. Yes, she is loyal to your stuff, but she is also more sensitive to price (including those luxury splurges). Yes, she will gladly visit your store, but she will also check what your competitors are offering.
Yes, your super customer is the core of your business, but she is also prone to chase the best offer around.
The Customer Model is widely successful in increasing the basket for these loyal customers. Despite massive advertising efforts, however, enticing consumers who are not “shopaholics” to “opt-in” has, so far, proven futile
2. Empower Local Ads (It is NOT about Personalization)
The Local Marketing Model targets potential customers. This beacon solution bypasses the opt-in obstacle by using the opt-in of prominent and scalable applications. The third-party application “wakes up” when the smartphone comes close to a participating retailer.
Two examples are Google Maps and Weather.com. I often use Google Maps when I am traveling. It means the Location feature is probably turned on when I visit stores and shopping malls across the country. It also means Google can better target Local Ads to my actual location.
Weather.com deploys this model. Another great example is the Waze Pins
If my habits are any indication, this model will not work. I turn on the Location feature only when I must, and I try to remember to turn it off because I do not want to be tracked. But this is a war of attrition, and defaults, and I’m probably the exception to the rule.
In neither of these examples, does the retailer control the interaction with the consumer. It is very likely that the retailers will NOT know which customers were drawn into the store due to the Local Ads.
My guess is that the big players – i.e. Google, Apple, and Facebook – will dominate the Local Location Model.
3. Sell Your Data (Not Your Customer)
The CPG Analytics Model is a side-effect of the current Beacon Solutions.
In order for the solution to be effective – hence offer marketing promotions based on where the customer actually is – the retailer needs to have a “living map” of the store.
In other words, the Beacon Solution offers data on where the products are in the store, and where the customers interacted with the products. Information on the “Purchase Point” is crucial not only to the retailer but also to the category brand. Companies such as Proctor & Gamble will gladly pay for such details.
It sounds intrusive, and it is. That said, this is the core of the “free application” model. And once the customer has opted-in, the data is a treasure.
To choose the best beacon solution for you, also should check for accuracy, integration, interface, analytics, scaling, deployment, and business models.
Beacons may be a true “disruptive” technology, but the innovations may not be the way we think about them today