Beacon Technology: What You Need to Know

Couple shopping with beacon technologyCommunicating offers to customers is an ongoing challenge to businesses. Emails can get lost in a sea of similar offers and text-based marketing can be seen as spammy or annoying. The future of marketing appears to be proximity-based, where businesses push messages directly to customers located nearby. This could mean sending a special offer to a customer who has just walked through the door or alerting customers about a flash sale while they’re shopping.

For proximity-based offers to work, however, businesses must have beacon technology in place. This technology is already in use in stores across the country—and small businesses are learning that they, too, can put it to work for their customers. Here’s what you need to know.

Beacons and iBeacon
A beacon is a small device that can wirelessly transmit information to smartphones and other mobile devices. It uses Bluetooth technology to allow businesses to communicate with an app loaded on a customer’s smartphone. While the cost of a beacon is relatively inexpensive, businesses must rely on customers downloading their dedicated store app to communicate with the phone. Since only the most loyal customers will have a store’s app installed, businesses will be unable to communicate with many of their shoppers.

Apple has come up with a solution to that problem. As with its wallet app, an iBeacon will allow Apple device owners to install one app that will work with multiple beacons. Apple is currently working with developers to have its technology included in various devices. Once those devices hit the market, a business can begin communicating with all of the nearby Apple devices that have iBeacon communication capabilities installed. Apple hopes to take its solution a step further, having reportedly filed FCC documents that would allow it to manufacture its own iBeacon hardware. iBeacon is currently available in all devices with iOS 7 or later, as long as the customer has Location Services turned on under Privacy in the device’s settings.

Customer Impact
Beacons stand to revolutionize consumers’ lives in a variety of ways. Since customers already interact with their smartphones while in stores, push notifications based on their presence in those stores would possibly be welcome—especially if the content helps them save money during checkout. Soon, customers may no longer need to look for coupons or promotions, since businesses will be able to extend these offers to customers who are already nearby.

As beacons become more widespread, stores will begin to refine notifications to be more effective. A message can be sent about a product that is near a customer or notifications can be designed to direct customers to another section of the store. Retailers can also gather information on a customer’s purchase history and deploy offers that are customized to that customer’s personal interests. Real-time personalization is more likely to get results than generic messages, so a business may see a boost in sales when connecting with customers this way.

Early Adopters
Beacons are already in use around the country. While these businesses are still considered at the front end of the adoption curve, some customers are already being tracked when they shop at big-box retailers. Target’s use of beacons is one of the most publicly-known instances of retailer use of the technology. In August, the company announced it was rolling out testing of beacon technology in 50 of its locations. Opted-in customers with the Target app will get product recommendations and specials based on their physical locations in a store. A customer shopping in the sleepwear section, for instance, might get a notification of a big sale on pajamas. This allows shoppers to have a small-business experience in a corporate location.

Like Target, stores that either have their own app or iBeacon installed could use technology to alert in-store shoppers of deals. Stores that experience a great deal of foot traffic could reach out to nearby shoppers and lure them in with deals and specials. This proximity-based marketing will help brick-and-mortar businesses compete with online retailers that regularly use retargeting to lure frequent shoppers over to their sites.

In the next few years, beacons will likely be seen in an increasing number of stores. As businesses learn new ways to use the technology to communicate with customers, both retailers and consumers will benefit. Once both the hardware and software are in place, businesses will then be responsible for creating messages that connect with customers and increase sales.

Follow Ramon Ray on Twitter @ramonray.

Ajeet Khurana
Ajeet Khurana
Ajeet Khurana wears many hats: author, angel investor, mentor, TEDx speaker, steering committee of the NASSCOM Start-Up Warehouse, Director of Founder Institute, Venture Partner with the seed initiative of a top Venture Capital firm, and former CEO of IIT Bombay’s business incubator, among others. Before all this, he was entrepreneurial twice in the field of education and web publishing. As a lecturer at the University of Texas at Austin, he taught e-commerce back in 1993, when the term "e-commerce" had not yet been coined. An undergrad in computer engineering from the University of Mumbai, and an MBA from the University of Texas, Ajeet is presently an active name in the startup ecosystem. From starting two ventures as a solopreneur, to helping a large number of startups with their go-to-market, he has never shied from getting his hands dirty. At the same time he has helped dozens of startups raise investment. He truly believes that small business owners are driving change in the world, and need to be facilitated as much as possible. Innumerable small businesses have gained from his attitude, vast professional networks, financial acumen and digital mindset.

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