$142.5B 2015 U.S. ad spending for 200 LNA
Fashion retailer Chico's made news last month with ambitious plans to beam marketing messages to shoppers' smartphones using beacon technology. We can count on this to be the leading edge of a gold rush, as marketers chase the twin ideals of consumer understanding and personalization that beacon seems to make possible.
But if they race in without the intricate research required, retailers may ruin one of the biggest opportunities marketing has ever confronted. While the barrier to entry has never been lower, the barrier to effectiveness has never been higher.
It's easy to understand the rush. Being able to translate intimate knowledge of patrons into individual offers in the moment could change the face of retailing, banking, transportation, health care, events and home ownership (think smart homes). Beacons make it easy and cheap to connect with more than 300 million smartphones running Apple iOS7 or Android Jelly Bean 4.3.
Here's the problem: No one is addressing the practical and emotional realities from a shopper's perspective. Shoppers have to make the effort to turn on Bluetooth, allow location-sharing with the mobile app and opt-in to in-store notifications. On the emotional side, shoppers have to be comfortable with what is arguably an intrusion.
Unless shoppers experience tangible value from beacon technology, they're likely to sour on it. Think Facebook Commerce, in-store Wi-Fi and QR codes. In each case, marketers rushed in before understanding why and how people would use the technologies, and without fully thought-out plans to expand the experience and user bases. QR codes, in particular, added one-size-fits-all content to the in-store experience, turning phones into kiosks. Shoppers naturally chose to ignore them.
Delivering real value for shoppers takes a lot more than deploying a few beacons to deliver discount offers when a shopper enters a store. A retailer has to offer consumers a benefit chain that lasts beyond the beacon: sharable offers of value that cement a satisfying experience. The prescription for these offers is anchored in a sophisticated analysis of every shopper's interests and needs, practical and emotional.
That analysis is the essential challenge in the beacon opportunity. Success requires marrying customer profile data, historical interaction/past purchase data, and situational data in real time to create a highly personalized and relevant experience.
Questions arise on many levels. Do consumers have a strong affinity for the retailer's products, or are they buying out of necessity? Is their core motivation for a category self-expression, convenience, entertainment, status or something else? Is price the arbiter, or are they willing to pay more for products that better meet their needs? Is the retail environment a source of inspiration and information, or merely a place to transact? Are they looking for an immersive experience, or do they want to get in and out as fast as possible?
Solving these riddles can mean a big opportunity for agencies that excel in consumer insights and have the technology chops to integrate all the real-time data feeds. But until you know precisely how you're going to create a richer experience for each customer, you're wasting money and jeopardizing the long-term viability of the location-based category.
So from one marketer to another, please don't ruin it for the rest of us. Invest the time, energy and expertise required to know and deliver precisely what individual shoppers want in their hands.