Everything Business Owners Need to Know About Beacons

Everything Business Owners Need to Know About Beacons
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This story appears in the April 2015 issue of Entrepreneur. Subscribe »

Q: What are beacons, and how can they boost my sales?

Beacons are small, wireless broadcasting devices that transmit a data signal that can be received by a smartphone—in this case, the one belonging to your customer. Once the beacon and smartphone connect, a retailer or service provider can instantly deliver a welcome message or discount. 

There will be 4.5 million beacons in use in the U.S. by the end of 2018, according to a report from BI Intelligence, with 3.5 million of those used by brick-and-mortar retailers. 

For help understanding what that means for small businesses, we talked to Rob Murphy, vice president of marketing for Swirl Networks, a proximity-based mobile marketing startup in Boston that helps retailers and brands engage customers while they shop. 

How exactly do beacons work?

Using the Bluetooth low energy signal, they trigger an app to deliver targeted offers that are meant to encourage customers to buy more during their visit to your retail store, restaurant or business. Beacon marketing can also be used to reward frequent visitors and deliver helpful content to consumers while they shop or wait for service.

Where else can beacons be used?

Wherever there is value to be created by delivering relevant digital content to a person who is standing in a particular location. This applies to museums, stadiums, conferences, trade shows and inside banks and offices with walk-in traffic.

What kind of results do they produce?

Major retailers—Macy’s and McDonald’s among them—say they are seeing 60 percent engagement rates and 30 percent purchase rates for beacon-triggered messages and offers sent to in-store shoppers. In one study, 73 percent of shoppers who received beacon-triggered mobile content said it increased their likelihood of making a purchase during their store visit. And more than 60 percent of surveyed shoppers said that beacon marketing campaigns would cause them to visit a store more often and spend more money at a store. So yes, marketing by beacon really can drive up your sales revenue.

How much does this tech cost?

The beacon transmitters themselves are relatively inexpensive, retailing for $20 to $40. The real expense for businesses is the cost of licensing the software and the media expense associated with paying third-party app providers to create and deliver the messages to their mobile users. Costs for this new form of mobile advertising will be comparable to other marketing investments such as email platforms and digital advertising. 

Small-business owners should keep an eye on developments in this evolving space, which is still in its infancy. It’s only a matter of time before the technology and the costs involved drop to the level of being affordable for small businesses with only a handful of stores or locations. It’s also only a matter of time before customers become conditioned to expect an offer to appear on their phone as soon as they walk in the door.

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