When Apple speaks, people listen. Hence, when the tech giant revealed its latest innovation-iBeacons-during the summer of 2013, critics, analysts, and retailers were abuzz with predictions about the future of mobile brand engagement. Yet, nearly two years later, not much has changed within the retail space. The technology remains top of mind, but few retailers have yet to employ and grow location-based programs. But what's stopping leaders from hopping on the iBeacon bandwagon?
Known as Apple's application of Bluetooth low-energy (BLE) wireless technology, iBeacons communicate via mobile app, allowing brands to gather behavioral and preferential data about customers in the vicinity of their physical location. Unlike Near Field Communication (NFC), iBeacon usage requires opt-in consent, as this technology monitors consumers' movements in order to target users with real-time, personalized content and promotions that encourage brand engagement and conversions.
Unfortunately, however, iBeacon implementations seemed to have stalled even before they started. While companies, such as Macy's and Starbucks, continue to make strides toward adoption, few others have yet to develop initiatives that bring this emerging technology to the fore.
As with most new technologies, the initial buzz played right into Gartner's Hype Cycle, which graphically represents the maturity of technology and applications. Dave Wentker, CEO of Tapcentive, highlights that iBeacons skyrocketed to the peak of inflated expectations almost immediately, but retailers' reluctance to adopt has left most staggering about the trough of disillusionment, as leaders remain hesitant to integrate this emerging technology until it becomes more established and accepted.
Wentker adds that, "The retail industry can't afford to get religious about one technology. Mobile is many technologies packed into one smartphone, and they all have different characteristics. They all have different pros and cons when it comes to thinking about a particular application. If you're a retailer, you have business requirements. You're not shopping for the technology-you're shopping for good customer experiences, better response rates, and greater reach."
Jim Davidson, head of research at Bronto Software notes that, like many emerging technologies, beacon-related tools will struggle to become widely adopted by consumers. "While hardware is close, there has not been one single solution to emerge as the clear choice by shoppers. GPS, NFC, photo and barcode scanning-even QR codes-have all been used to offer similar features, but have yet to become deeply integrated into the customer experience. Retailers must find more convenient solutions with clear value propositions to encourage their customers to see the benefits of iBeacons and start to engage."
Davidson adds that, while beacons offer retailers ways to learn more about how and where customers are shopping, many have yet to translate successful online strategies, like cart reminder emails and dynamic content displays, into mobile engagement tactics for the physical space. For example, iBeacon technology could enable retailers to send information regarding product location in-store for those browsing specific departments, or connect with shoppers who've left the store empty handed by delivering an offer to complete their purchases online. Yet, while marketers understand that beacons feature revenue potential, consumers still fail to recognize the strong value proposition. The need for proximity-related interactions simply hasn't found its place in the brick-and-mortar retail space at present.
In many instances, Davidson notes, retailers are hesitant to invest in iBeacon technology because they are still wary about its place in the market. Consumers fail to see the value in engaging with brand specific mobile applications, thereby causing retailers to shy away from integration and implementation, as most don't have the freedom to spend their budget on risky innovations. Instead, smaller brands are waiting for their larger counterparts to adopt iBeacons so they may learn from and improve upon proven examples. Success, however, will depend upon open and honest communication between brands and their customers, as this emerging technology requires partnership between both sides of the transaction if companies are to hone their strategies and provide the greatest possible value to all participating consumers.
Don Peppers, founding partner at Peppers & Rogers Group, notes that iBeacon technology has yet to earn widespread consumer acceptance, as many perceive such tactics as creepy and invasive. Moving forward, brands must demonstrate transparency and supply real value in order to win customer support. Davidson predicts that consumers won't buy into iBeacons until one of the major players within the retail space changes the game. Successful, significant adoption by one of the foremost retailers will likely lead other companies to mimic their greatest achievements and breed industrywide iBeacon implementation.
Many retailers, nevertheless, are waiting to see if one standard beacon specification will emerge, explains Brad Fick, president of Direct Source. He says brands also face great privacy concerns. "Consumers are suspicious of technologies they don't understand and that they perceive to be violating their personal digital space," he adds. "We need to educate the consumers on what beacons can and cannot do, the risks and benefits, and let them decide how much or little they want to engage. Making shoppers part of the decision can go a long way in making shoppers feel secure and appreciated."
In the coming years, iBeacon success will hinge upon customer education and awareness. BI Intelligence predicts that beacon technology will directly influence more than $4 billion of retail sales in the U.S. by the end of 2015, with that amount increasing tenfold to more than $44 billion in 2016. However, until the majority of consumers come to understand the benefits behind beacon technology, implementation will continue to stall. Transparency, of course, remains essential. By clearly highlighting the benefits of beacon use, as well as how to download the brand's mobile app and turn on push notifications, marketers can open the pathways for communication and education.
Consumers now expect digital and mobile brand experiences to be personalized and targeted, with most already willing to provide deeper insights in exchange for added value. Thus, marketers must ensure that all data collected is then analyzed and applied to future strategic improvements. If consumers see that the information they've shared directly impact their personal shopping experience for the better, they will be more likely to engage regularly throughout their journeys, cultivating relationships that are beneficial for all parties involved.
But, as one recent Forrester Research report reiterates, retailers shouldn't be consumed by hype at the start of customers' shopping journeys. Instead, leaders must be sure to constantly put the customer at the center of their strategies, for beacons cannot deliver the desired level of engagement. Marketers that insist on pushing advertising messages based on iBeacon insight run the risk of 'over-beaconing,' which can inevitably cause irreparable brand damage and churn.
Steven Van Belleghem, author of When Digital Becomes Human, also emphasizes that, if consumers feel bombarded by promotions and commercial messages when they're not receptive, most will opt-out or remove the given app from their mobile phone, thereby erasing all potential for increased engagement. Many feel that beacon technology disrespects their privacy, as perfectly targeted messages may feel intrusive. Thus, marketers should continue to focus on cultivating customer relationships by delivering deep and immediate value to consumers through enhanced shopping experiences and greater customer personalization.