The death of proximity marketing, and in particular beacon marketing, has been foretold a thousand times in just a few years. But having spoken with hundreds of retailers and technologists at industry conferences over the past few months, it’s clear to me that the desire for in-store engagement is as high as ever. And yet, a whopping 87% of retailers still cannot identify customers as they enter stores, and only 10% identify them at checkout. The question is, what technology will finally enable retailers to engage their best customers in stores?
The answer is undoubtedly face recognition. As Forbes recently noted, face recognition is here to stay, and that goes for both security and customer engagement. The technology is becoming ubiquitous, with nearly 1 billion phones shipped with face recognition included, and adoption by banks, airports and retailers happening at a rapid pace. At an invitation-only retail conference I attended in February, face recognition scored #1 among polled technologies that retailers were most interested in exploring.
When it comes to proximity marketing, face recognition enables retailers, banks and other organizations to instantly recognize the moment customers enter a location or even a specific area within a location. Customers will opt-into an advanced loyalty program, much like they do today with their email or phone number. From there, a rich text message, coupon QR code or any other communique can be instantly delivered via text message upon in-store identification (example of a useful message: Welcome back! Would you like us to refill your prescription while you’re here today?).
While beacons have virtually unlimited potential for reporting useful and actionable data, they are not the long-term answer for proximity marketing. Widely heralded as the second coming of customer engagement for retailers, the primary objective was a noble one: deliver contextually relevant messages to customers that are already engaged with a brand (real-world example: a push notification to a customer in a retail location offering two cans of Red Bull for $4).
The problem is not with beacons per se, but the things that beacons depend on, namely mobile apps:
Dismal App Engagement. Beacon marketing depends on a customer downloading a retailer’s app, creating an account, staying logged in and having notifications turned on. Even after retailers have cleared those steep hurdles, the drop off rate is shocking. According to Localytics, only 30% of users return to the app one day after downloading it. Two weeks after downloading the app, only 12% of users return. To understand why this is such a big problem, imagine if email marketers were sending messages to email addresses that only a third of customers used just once.
Discontinuation of Google Nearby for Android. Nearby uses three different signals to determine when two devices are close enough to connect—Wi-Fi, Bluetooth, and audio. When Google discontinued its Nearby product in 2018, it killed off a primary messaging channel for beacon technology. Similar technologies offered by competitors have been similarly afflicted with spam, although there may be promise yet.
Beacons were not the only promising technology intended for proximity marketing. Here are two others:
Wifi Marketing. The idea of offering free wifi in exchange for marketing messages seems like a win/win, right? Unfortunately, some marketers have used the technology to collect vast amounts of data through phone scraping, including personally identifiable information, and re-engagement by recognizing the customers’ mobile mac address. Fortunately, both iOS and Android have released options intended to mask or randomize mobile mac addresses. Adding to the problem, most people upgrade their phones every 22 months, making the identity trail a very cold one.
NFC and QR Codes. Some argue that NFC and to a lesser extent, QR, are a replacement for beacon marketing, but they could not be more different. The promise of proximity marketing is to deliver a highly engaging message or offer without any additional effort from the customer, much in the way that email or social media marketing does. Both NFC and QR Codes require the customer to actively engage with an item that they might otherwise have found on their own.
Given all the issues with beacons, wifi marketing, NFC and QR codes, face recognition appears to be the obvious answer to the future of proximity marketing. With airlines, restaurants, banks and other brands already using it widely, expect your retail loyalty program to be next.