Beacons are hardware transmitters that broadcast their identifier via Wi-Fi or Bluetooth Low Energy (BLE) to smartphones in close proximity. Once opted in with a mobile app, consumers can use beacons strategically placed throughout a brick-and-mortar store to receive product recommendations and coupons, view purchase history, display the precise location of items on store shelves and even listen to product descriptions.
A November 2014 study by Swirl found that 73% of consumers felt beacon campaigns increased the likelihood of a transaction during their visit. Similarly, 62% of CVS customers polled by the company said beacon push notifications improved their store experience, with the number increasing to 72% for those who received a pharmacy notification. As such, beacons have been deployed in many prominent stores and locations, including Lord & Taylor, Macy’s, Urban Outfitters, GameStop, Duane Reade, CVS, Heineken and Target. The beacons are used to send “click-to-claim” coupons, promote loyalty programs, display purchase history, render detailed floor maps and act as helpful product locators.
According to Mike Krell of Moor Insights & Strategy, the advent of beacons is a “marketers dream,” with applications expected to “go way beyond” retail or location-based marketing. To be sure, Krell ultimately sees large-scale deployment of beacons in airports, subways and train stations for departure and delay information, as well as hospitals for navigation and real-time patient information.
It should be noted that Chiltern Railways recently confirmed plans to pilot Bluetooth beacon mobile payments on its London to Birmingham line. The beacons will be used test automatic fare payments; detecting when passengers board and leave the train. Dave Penney, managing director of Chiltern, told the UK-based Times that the pilot program could represent “the next evolution of rail ticketing.” Meanwhile, Xerox’s Shop and Ride beacon system is designed to deliver personalized, hyperlocal and mobile offers to transit riders based on their preferences and travel patterns. Specifically, Xerox beacon technology placed in bus stops and merchant sites alert commuters to redeemable coupons and offers in nearby locations and stores.
As TechCrunch’s Kjartan Slette confirms, connecting the physical world to our digital footprint offers “immense value – both product wise and economically.” To be sure, multiple major retailers are currently testing beacons, with the technology expected to deliver approximately 1.6 billion coupons to shoppers on an annual basis by 2020.
According to Lauren Foye of Juniper Research, next-gen beacons will allow retailers to offer consumers more tailored deals. In a broader sense, even the early deployment of beacons provides an exciting glimpse into a future world where online behavior blends into offline activities. Indeed, there are multiple beacon specifications on the market today, including Wi-Fi Aware and Bluetooth Smart, the latter of which powers the technology behind Apple’s iBeacon and Google’s Eddystone. Beacons are clearly poised to play a critical role in the evolution of mobile payments as consumers begin to truly interact with previously inanimate locales such as brick-and-mortar stores, bus stops, museums and stadiums.