Are beacons ready for their close-up?

Beacon adoption is growing, but for the technology to really deliver on its promise, it must deliver more than discounts at the shelf.

Apple (NASDAQ:AAPL) introduced the iBeacon in 2013 and it has been full steam ahead ever since, as companies create solutions around the low-energy Bluetooth device that promises to improve the in-store experience.

Beacons are heralded as the best of the in-store technology solutions. The beacons themselves are relatively inexpensive, can run for close to three years on alkaline batteries and create a robust network developed by one of the most trusted technology providers.

Thus far, much of the hype around beacons has been focused on the ability to push coupons to shoppers at key decision-making moments in stores.

At this, beacons have already proved quite effective. Safeway and Giant Eagle began beaming messages via inMarket's platform in January 2014 and by September reported in-store beacon engagement had a 45 percent interaction rate, five times higher than traditional push messages that occur without location context.

Shoppers who receive branded messages at that opportune time in the store are 7.5 times more likely to seek out the product off the shelf than those who do not. InMarket has more than 50 million people using apps on the its platform.

Hillshire Brands saw a 20 percent increase in purchase intent from beacons during this 2014 promotion. Credit: Hillshire Brands

"These stats clarify that beacons are a powerful tool that can alter the user experience depending on how they are deployed. Blanketing people with pop-ups on their phone is a sure-fire way to lose an audience, but reaching the right person with helpful info at the perfect time causes enormous lift," said Todd Dipaola, CEO of inMarket. "Simply deploying beacons is not enough, and misusing beacons can have the opposite of the intended effect."

Promotions rank as the No. 1 trigger for shoppers to prompt in store purchases, according to a recent study by RetailMeNot. But for beacons to truly ingratiate themselves with consumers, they need to do more than send coupons.

"The quick and dirty knee-jerk response its to deliver a coupon at the right moment, but the highest and best experience is a more memorable experience," said Jim Meckley chief marketing officer, Mobiquity Networks. "That is what will ultimately win [with shoppers]."

But are there more effective ways to leverage this than sending a promotion to the shopper in the store and at the shelf?
One of the larger issues surrounding the use of beacon technology -- beyond the need to avoid being creepy -- is whether or not to use it with a proprietary or third-party app.

There is a case being made for both.

Shoppers don't want 50 apps cluttering up their smartphones, is the refrain from third-party app providers. And there's certainly a lot of truth in that.

"The third-party apps that we are aggregating bring millions of users and segmented audiences to the table," said Meckley. "It's both an opportunity and a challenge."

Individual apps may make more sense, and be more executable for large national chains. And certainly, each retailer is looking at apps as a means to not only grow sales and loyalty, but as a source of data. But when it comes to reaching a wide swathe of consumers, communicating with third party apps can really increase the effectiveness of a marketing campaign.

ShopKick, for example, claims to be the most used shopping app today, and SnipSnap boasts 4 million users of its app and was recently acquired by Slyce for $6.5 million.

But the real drivers of beacon use may well be outside of the retail industry.

Sports facilities and hospitals are two examples where beacons are being adopted for reasons that have less to do with selling goods and more with providing a better user experience. And while retailers often say that providing a better user experience is the goal, these institutions and arenas are using the technology to do just that.

"Stadiums are still leveraging this technology," said Kevin Hunter, COO, Gimbal. "You have to get people off the couch and to the games." Beacons are helping get them to the stadium faster, making lines shorter, bringing hawkers to seats to make sales quicker. All things that help make the stadium experience better.

In hospital settings, beacons are solving pain points for healthcare providers by providing wayfinding capabilities that help reduce missed appointments and improve patient reviews that contribute to a facility's ranking, explained Ben Gibson, chief marketing officer, Aruba Networks.

"In hospitals there are regulations that you have to provide good way finding instructions," said Gibson. "Today you have a lot of signage [in] different languages. Beacons [combined with WiFi] help reduce labor and missed appointments definitely have an economic impact."

There's also a missed opportunity to notify a patient coming from an appointment about filling a prescription at the in-house pharmacy on their way out.

But ultimately, installing beacon networks will also have to cross departmental lines, where IT departments and marketing often clash.  

"[Beacons] blur the line between operations and marketing," said Aruba's Gibson. "Whether it's Nebraska Furniture Mart or [a] stadium, it needs to be collaborative. The funding model for us early on has tended to be more IT driven with the infrastructure, but the trend is more and more that marketing becomes the funder and IT becomes the implementer."

For beacon implementation to work, CIO's must collaborate with chief marketing officers within an organization. Something that is perhaps more difficult than creating a new technology network within a store.