Beacons are small, cost-effective bluetooth enabled devices that can communicate by sending messages or triggering an event on a consumer’s mobile phone or mobile app when they are within close proximity of a physical store location. Sometimes referred to as an iBeacon (an Apple term used for their own beacon device), this technology is bringing value for retail businesses, with a strong potential for banks and credit unions that want to integrate location-based communication with their branches.
Usage of this technology is only limited by developers imagination, with the retail industry already using it to increase repeat walk-in traffic. By deploying a few beacon devices and rewarding customers who walk within range of the device, retailers are seeing significant revenue generation opportunities using ‘proximity based marketing’ according to Investors.com.
Success of utilizing beacon technology depends on how easy you can make it for consumers to use and the benefits provided. It’s not about technology, but it’s about user experience and user value. In other words, you must be able to humanize the technology.
If you are not building a solution that will make humans feel comfortable using it, they’ll look for another over-hyped app by the tech media. Remember the most recent buzz around the ‘Yo’ app? Millions of early adopters were ‘Yoing’ and not sure what happened after that. If you can’t explain the benefits of a new application to a non-user in a sentence, the app usually fails.
The excitement around the future of beacon technology is not because of its capability to communicate to mobile apps, but because of the humanized touch it can deliver in a retail space. This can be a game changer for retail banking by driving increasingly hard to get traffic to the branch.
Building a technology solution is usually easier than user adoption because it depends on other human factors like:
- Trust – User must trust to install the app on their favorite smartphone
- Ease of Use – The app must be easy to install, earn rewards, and redeem rewards
- Value – Relevant offers must be based on user demographics and their needs
- Contextual – The app must understand and constantly learn from user behavior
If beacons are able to address these human values, retail banking can widely benefit from using this technology.
Imagine walking into a branch office and your phone tells you that you earned reward points by simply visiting the office. Then your phone lets you know that you can earn extra reward points by talking to the Financial Solution Representatives about your auto loan or you can double your reward points by meeting the mortgage loan officer. With this one simple visit, you might be able to redeem your reward points for a cup of coffee at the local Starbucks.
If you have an employer-based banking program and you want to organize an educational or new account sign-up event inside your employer location, you could place a beacon at your booth and reward any employee of that company with reward points or other goodies if they visit your booth. Beacon technology could enhance the development of new business in a trusted location like a company campus.
It’s a win-win situation for the financial institution and the consumer. With the ability to close an application in-person being greater than digital or a call center channels, beacons could provide a great opportunity to capture a lead, create interest, nurture the lead and convert the lead into a new account or loan.
Key Beacon Strategies
To make beacons an effective digital channel, you need a strategy and a game plan. Simply installing a few beacons in your ‘branch of the future’ and annoying your customers or members by asking them to install a new app or asking them to check their rewards won’t work.
Consumers don’t want to install apps with limited value since smartphones are limited by memory, battery life, and internet bandwidth. People won’t install apps just because you want them to do so.
Some key beacon strategies include:
- Partner with an independent mobile app. Don’t add a beacon or reward system within your banking app initially. You can show the number of reward points earned on your banking mobile app, but limit information on the display, since the whole purpose of your beacon app is different.
- Partner with retail and local business as possible for reward redemption. The more choices the consumer has to redeem his/her reward points the better the adoption rate.
- Customize and personalize your redeem programs. Customize your program based on consumer demographics, age, interests and behavior. Do not throw an offer that’s not relevant … this is usually the first step for user adoption failure.
- Make it easy. Make easy to earn, learn and redeem the rewards. There are creative ways to earn reward points and to redeem the rewards, so get creative.
- Don’t discuss rewards during face to face interactions. Educate consumers by visuals and let the customers get excited to talk about the rewards program with you.
According to a study by Swirl, beacons change people’s shopping behavior in the following ways:
- 60% will spend more money
- 61% will do more holiday shopping at the store
- 61% will visit the store more often
- 73% will increase likelihood of purchase
- 60% will open and engage with beacon-triggered content
- 30% will redeem a beacon-triggered offer
According to BI Intelligence estimates, the beacon install base will grow by at least 100% every year with an estimated 1.5 million retail stores in the near term, helping to educate consumers on the potential benefits of beacon rewards. For banking, there is an opportunity to increase customer per visit value and build stronger relationships with existing and new customers.
We have long ways to go before we can create real interest for customers to take the extra step of installing a new rewards app and redeeming rewards. The most difficult and challenging part of this type of initiative is user adoption and building the long-term stickiness. Building technology, creative promotions, advertising, partnerships and value are easy but winning customer trust will take time and effort.
Usage of beacon technology is still in its infancy, but the potential for growth is real for those institutions ready to integrate this new technology with an overarching digital strategy.
Research on beacon technology continues to be done. Rajesh Patil, Principal Consultant at Digital Align, Inc. has compiled a list of helpful resources for readers interested in learning more. To access these insights, simply visit his LinkedIn post on this subject.