Back in 2014, tech websites were awash with headlines like “Why Beacons are the Future of Customer Engagement.” In case you missed it, beacons are tiny, wireless devices that run on batteries and transmit Bluetooth signals to smartphones in the vicinity. At last, thought retail marketers, we’ve found the secret sauce to proximity marketing. Proximity marketing refers to marketing efforts based on location, enabling businesses to communicate hyper-localized messages to consumers without the use of a human employee.
But the tide has turned. Alas, beacon technology had severe limitations. Today, the buzz about beacons is typified by Location3 marketing President Alex Porter’s op-ed in Retail Dive stating, “The hype cycle for beacons has waned, with little return on the heavy investment for retailers. Most have either struggled with deploying the technology, using the data generated from it or understanding how it can benefit their business.” Euclid CEO Brent Franson put it far more succinctly: “Beacons are dead.”
So has the book closed on proximity marketing for retail? Far from it.
With the evolution of deep learning and facial recognition technology, proximity marketing is finally set for success.
Here are three reasons proximity marketing programs fail, and how you can make your proximity marketing a success in 2019 and beyond.
Only 13% of Retailers Can Identify Customers In Stores
Five years after the deployment of beacons, existing proximity marketing technologies just aren’t doing the trick. According to Boston Retail Partners, just 13% of retailers can identify customers as they enter a store, with another 10% identifying customers at checkout. In comparison, 60% of retailers identify customers during online shopping.
One of the biggest reasons for this is that beacon technologies have required customers to have bluetooth turned on. Beacon programs also often require customers to have download the right app and have that app turned on. Talk about friction! It’s no wonder that despite initial optimism, beacons have yet to transform the in-store customer experience.
Just 25% of Retailers think Beacons Can Drive Sales
A survey conducted by Borrell and Associates discovered that just 25% of retailers think beacons have a greater-than-50 percent chance of driving sales in stores. The truth is that beacon programs routinely fail to offer customers requisite value.
To say that today’s consumers are oversaturated with marketing would be a wild understatement. And as a result, consumers are growing increasingly adept at tuning out marketing unless it provides tangible value. The promise of proximity marketing is being able to deliver messages that are not just hyper-personalized but also offer value.
Let’s imagine two proximity marketing messages. First imagine imagine a customer receiving an ad for a stereo system because she’s walking by the stereo aisle in a big box electronic store. Unless she’s really in the market for a stereo, the ad will likely not have an effect. But now imagine that the retailer knows she has bought a TV recently and instead triggers an ad for $100 off a TV stereo system complete with dozens of reviews from consumers. By providing an ad in the right location, that’s contextually relevant and provides value, the retailer has greatly increased the chance of making a sale.
Only 4% of Consumers Download Luxury Shopping Apps
According to research, consumers change phones often, every 2-3 years. When customers change phones they also change their MAC addresses. When this happens, retailers instantly lose insight into that individual’s historical behavior.
This presents problems for proximity marketing programs that rely on apps. And when people change phones, they’re just not likely to keep apps they don’t use. That aside, in spite of some noted exceptions, the brunt of retailers haven’t exactly enjoyed mind-boggling app engagement in general. According to econsultancy, only 4 percent of consumers have ever downloaded a luxury retail shopping app. And even consumers who do download retail apps only spend 5% of their time using shopping apps. In truth, a proximity marketing strategy based heavily on an app can present some serious friction. As a result, 44% of retailers have removed their apps from the app store since 2015 and 56% fail to regularly update that app.
The Future: Face Recognition and Proximity Marketing
Though there have been historic limitations, proximity marketing is not going away it’s merely evolving. When asked about the future of proximity marketing, Joyce Reitman, CEO of Motionloft, stated that, “[retailers] will embrace neural networks and machine learning devices to get more connected. Analysts will use customer … traffic and behavior data to create experiential shopping destinations.”
Using AI-powered face recognition enables retailers to instantly recognize when individuals enter a store. While consumers change their phones regularly, they don’t change their faces. This allows retailers to capture behavioral data without even using beacon technology. This data can integrate with CRM and analytics solutions to provide in-store reps with details that can help them offer better service. Customers that opt-into facial recognition programs can also receive localized and personalized discounts via text message, circumventing the need for app downloads.
Facial recognition can also remove friction across the buying journey by offering the ability to seamlessly pay by face, verify age, or participate in loyalty programs. Today and beyond, we expect facial recognition to be the linchpin to successful proximity marketing.