Bea-con and Carry On
Beacons took the retail world by storm in 2014, but have had limited traction over the years. In this post, we’ll explore a recent execution of beacon technology in Macy’s, and use it to provide a useful operating framework to show how the technology needs to be integrated to provide the best customer experience.
In late 2013 Apple announced the arrival of the “iBeacon”, a simple piece of technology that was accompanied by some of the greatest hyperbole that the marketing world had yet seen: “Beacons are taking the world by storm”  “Apple’s iBeacon signals turning point for mobile engagement”  “Beacons have been generating buzz…today it’s catching fire”  If you’re reading this and are wondering when exactly your next retail experience is going to be “taken by storm”, you’re not alone. For reasons we’ll explore, the technology has only had very limited traction in a handful of retailers.
A beacon is a golf ball-sized device which sends out a short-range Bluetooth signal that can be detected by smartphones. If a user walks within proximity of a beacon, the signal gets detected by the user’s smartphone and triggers an app to display a message, a prompt or some other notification . They’re cheap (up to $40 each), easy to install and have battery life of up to three years 
For a retail marketer, therefore, the device becomes a solution to a number of challenges:
- Shopper data: given that GPS signals cannot usually penetrate a bricks-and-mortar store, the beacon becomes a viable geo-locating device to allow retailers to track shopper foot traffic.
- Contextual marketing: the beacon can allow the marketer to deliver personalised, targeted offers 
For Macy’s, these solutions could revolutionise their business model by differentiating Macy’s via the shopping experience. Within the shopper’s “path to purchase”, the beacon allows the marketer to provide shopper value with tailored, timely messages (such as a discount or a prompt from the shopper’s wishlist) to prompt a purchasing decision at the crucial “moment of truth”, when the shopper is in front of the fixture . This combines the best of internet-style personalised shopping with physical in-store theatre.
Take a look at this video to see how it works.
Let’s now look at a beacon-based marketing initiative. Macy’s pioneered beacon technology by deploying 4,000 beacons across its 850 stores in 2014 and then used the technology in their “Walk In and Win” campaign on Black Friday in 2015 . This was a scratch-and-win game using the Macy’s app; if the shopper walked into a Macy’s on Black Friday, the store beacons would prompt the app to present a game which the shopper could then play for instant prizes. All the shopper had to do was follow some simple steps:
Given that engagement required a 90 second educational video, this campaign asked a lot of the shopper:
- Download (or update) the app
- Register with their name, address, mobile number and email
- Enable the following:
- Push notifications
- Location services
- In store notifications
- Walk into a store on Black Friday
- Turn on Bluetooth
- Play the game, potentially win
Was it successful? Unfortunately “the ultimate results of the Walk In and Win promotion haven’t been publicly shared”  so we must leave the results up to our imagination. However at first glance it seems that execution of this campaign was not its strongest point. Too much commitment was required to engage. Too much personal information was required. Finally, the campaign failed to deepen a personal relationship with the shopper with any kind of tailored offering. The whole concept of personalisation was abandoned in favour of driving penetration of the Macy’s app.
So, whither beacons? The current state of play is a mixed bag: Only 23% of US retailers have satisfactorily implemented them. Another 23% have no plans to use them; the remaining 54% have some varying levels of enthusiasm. More worryingly, 52% of smartphone users have no interest in the concept or are actively concerned about privacy implications .
With this in mind, to integrate beacons within Macy’s operating model we can consider the Product Diffusion framework for successful innovation: 
- Relative Advantage
- Beacons must provide a significantly improved shopper experience versus simple browsing. Macy’s must be militantly focused on personalising the messages, not just pushing out more marketing noise.
- Macy’s needs to ensure beacons fit seamlessly within a shopper’s digital ecosystem by reducing the hassle required to engage with the experience.
- Macy’s must ensure that privacy concerns are carefully handled. Asking for a ton of personal information up front can be perceived as “creepy”.
- To drive shopper engagement with beacons, provide incentives to trial – perhaps a blanket discount on purchases after downloading the app.
- Macy’s should consider a way to show shoppers the benefits of engaging with the technology, perhaps by promoting word-of-mouth or via social media engagement.
In a broader sense, this framework is a timely reminder as we enter the era of the “Internet of Things”: tech is the easy part, but execution is the all-important final 95% of strategy!
 Chuck Martin, “How Beacons Are Changing the Shopping Experience”, Harvard Business Review, September 1, 2014, https://hbr.org/2014/09/how-beacons-are-changing-the-shopping-experience, accessed November 2016.
 Heather Clancy, “Apple’s iBeacon Signals Turning Point for Mobile Engagement”, Fortune, February 28, 2014, http://fortune.com/2014/02/28/apples-ibeacon-signals-turning-point-for-mobile-engagement/, accessed November 2016.
 H.O Maycotte, “Beacon Technology: The Where, What, Who, How and Why”, Forbes, September 1, 2015, http://www.forbes.com/sites/homaycotte/2015/09/01/beacon-technology-the-what-who-how-why-and-where/#635b82904fc1, accessed November 2016.
 “What is iBeacon? A Guide to Beacons”, iBeacon Insider, http://www.ibeacon.com/what-is-ibeacon-a-guide-to-beacons/, accessed November 2016.
 Nic Newman, “Apple iBeacon Technology Briefing”, Journal of Direct, Data and Digital Marketing Practice, 2014. Vol. 15 No. 3, pp 222-225.
 James Martin, “6 Things Marketers Need to Know About Beacons”, CIO, February 24th, 2016, http://www.cio.com/article/3037354/marketing/6-things-marketers-need-to-know-about-beacons.html, accessed November 2016.
 https://www.youtube.com/watch?v=c3h0eKGfUfI, accessed November 2016.
 Lauryn Chamberlain, “Macy’s to Test Beacon Messages Outside App, Explore Retargeting”, GeoMarketing, March 24, 2016, http://www.geomarketing.com/macys-to-test-beacon-messages-outside-app-explore-retargeting, accessed November 2016.
 http://www.macys.com/campaign/social?campaign_id=629&channel_id=1&cm_mmc=VanityUrl-_-win-_-n-_-n, accessed November 2016.
 Ian Riner, “When Mobile, Beacons and Games Merge: A Look at the Macy’s Case Study”, Survey Sampling International, June 23, 2016, http://www.surveysampling.com/blog/when-mobile-beacons-and-games-merge-a-look-at-the-macys-case-study/, accessed November 2016.
 “What’s Going On With Beacons?” eMarketer, July 15, 2016, https://www.emarketer.com/Article/Whats-Going-On-with-Beacons/1014218, accessed November 2016.
 Everett Rogers, Diffusion of Innovations Fourth Edition, (New York, NY: The Free Press, 1983), pp 204-251.
Student comments on Bea-con and Carry On
Interesting article! I also wrote about Macy’s, and while I am still generally bullish about beacons, I agree that there are many risks to successful adoption.
One of the main limitations, as far as I understand, is that beacon communication is currently one-way: beacons push data, often in the form of marketing messages, to nearby smartphones. I like to think that in the future, there will be opportunities to also collect data from passerby smartphones. This way, retailers will have a better understanding of how their customers actually behave while in stores. Eventually, as the technology becomes more sophisticated, they can match shoppers’ in-store behavior with their digital habits to create a unified view of their customers, thereby enabling more personalized marketing.
Great post, Sir Lunchalot! I was not very familiar with beacons before reading this post, probably because of the lack of penetration in retailers as you mentioned. I think you raise some good points about how retailers might be able to use this technology to engage with customers in the store. I also could see other advantages to retailers in being able to track customers’ shopping patterns within the store – which aisles did they shop, what did they look at but not buy, etc. Right now it seems retailers can only rely on POS data of what customers actually purchase, but beacons could help add a layer of granularity and additional analytics that retailers could use to understand how their customers are shopping. Combined with targeted messages and promotions to customers in the store, it seems beacons could be a great opportunity. I’ll be curious to see how this evolves and whether or not more retailers roll out this technology. I’m sure there are a bunch of use cases that have yet to be discovered.
Interesting article Sir! I see what you mean when you you say that the tech is the easy part of IoT, the execution not so much. Getting hands on some exciting technology makes us forget that the technology cannot become the central theme of the product being sold. It may be too early to ask but do you have any ideas as to how Macy’s could have implemented this better? Or maybe it was a tech that didn’t belong at Macy’s in the first place!
Hey guys – thanks for the comments! You’re all completely spot on, you all raised some really valid points:
1) Tracking shoppers; I didn’t get the chance to talk much about it in the post but collecting data on how shoppers move through your stores is incredibly valuable. Typically this looks like a “heat map” to understand where the most trafficked part of the store is, but beacons can also follow a shopper’s actual movement through the store. If you remember the La Pliage case, Longchamps put the La Pliage bags at the back of the store to draw shoppers past their other products, in hopes that shoppers would see something they like & pick it up. It’s a simple example, but that’s one really powerful application of understanding shopper movements.
2) Absolutely correct Surbhi, technology cannot be the central theme of the shopper experience. My concern is that if shoppers have a poor experience with a beacon-based campaign, they’ll simply refuse to engage with the technology any further. So the cost of a poorly executed campaign isn’t just a short-term flat sales result, but also a long-term sabotage of future beacon campaigns. I think there’s onus on retailers to ensure that shoppers get the best experience they can to ensure that the technology continues to be viable down the line.
3) BM I did read your post and really enjoyed it, the RFID technology on inventory is such a critical component of ensuring that shoppers get the product they want, where they want it, when they want it. To your point about a unified customer view, I’d love to see how beacon technology could combine with great inventory management to anticipate and forecast the likelihood of a customer purchase – that way Macy’s could anticipate inventory movements and ensure that products are available in store just-in-time for the shopper. But this will only work if Macy’s gets the shopper data, which requires shoppers to engage with beacons, which requires great marketing to provide the valuable experience that shoppers seek!
I am still bullish on the potential for beacons too, it’s the best way to drive a true omni-channel retail strategy. But we’ll need a step-change in personalised marketing to realise that potential.
Really interesting article, and one that shows how IoT can help industries leverage a lot of unstructured data to help inform future decisions. I think from your post, it makes sense for a retailer like Macy’s to implement this kind of technology, so they can better track retail related metrics, and feedback from the consumer’s in-store experience (e.g. how well did a promotion work in driving food traffic, etc.). But I was wondering from your research if you’ve seen any other use cases outside of retail. Presumably, there may be use cases in say officers to engage with the employee or at airports who engage with the consumers. Additionally, with respect to retail, are there any potential privacy issues to this, and if so, how do you think companies like Macy’s may be able to alleviate/address these concerns.
Interesting article Sir Lunchalot! Over the years I’ve definitely seen the hype over beacons grow and have yet to see meaningful penetration in retail. As you mention in the article there are many benefits to the retailer, from more targeted adverts to increased shopper data that can help with understanding buyer decision making. However, my main issue with beacon technology and the reason I think it hasn’t taken (and won’t take) off meaningfully is that it doesn’t provide much value to the shopper – low relative advantage compared to the existing shopping experience under the product diffusion framework. I don’t think location driven personalised offers are a compelling enough reason to jump through the hoops necessary to download and activate the beacon technology. Just my opinion, but until the benefits to the consumer are substantial I think Beacons will be added to the list of over-hyped technologies that fell by the wayside.