Today’s constantly connected consumers are using smartphones in-store more than ever.

A recent Google survey states that a staggering 80 percent of shoppers are using smartphones to make purchasing decisions. Retailers and start-ups have taken notice, and the concepts of mobile location analytics and proximity marketing are emerging out of that.

Publications like Techcrunch and Adweek have articles of retailers launching Bluetooth beacon pilot programs almost on a daily basis. Some recent examples includeTarget, Country Market and Urban Outfitters.

But when you clear away all the buzzwords, what exactly is this shift we’re seeing? It’s the world customizing itself to you. The world is reacting to your presence, specific to you as an individual.

Proximity marketing is an exciting concept, but a lot of people are worried they’ll be inundated with spam if they opt in.

Proximity marketing is an exciting concept, but a lot of people are worried they’ll be inundated with spam if they opt in.

That is an exciting concept. Talking about this out in the world will get you varying reactions, from concerns about privacy issues to the idea that your phone is going to spam you with Viagra ads non-stop, but if you boil down the idea, there are some really compelling concepts here.

Personalization Is A Key Benefit

Let’s take a look at a form of personalization we all know about today. A husband and his wife have individual key FOBs for their car. When the husband gets in the car, the mirrors adjust, the seat slides back, and the radio station changes to his favorite morning radio station. When his wife uses the car that evening, the car returns to her preferences. That’s an example of very useful personalization. Now, imagine if a retail store could do that for you.

We’ve seen online personalization become more and more sophisticated over the past decade with platforms such as Google AdWords and the Facebook Audience Network, and the addition of proximity marketing technologies is making it possible to expand that personalization in-store, effectively bridging the gap between digital and physical environments. There are both exciting and scary possibilities to this.

So, why can’t retailers live without it? The retailer will now be able to understand shopper behavior beyond POS data. Retailers currently have the ability to analyze traffic patterns, deliver personalized offers, measure dwell times, build on customer loyalty profiles and even A/B test physical displays. And what does the shopper get? By integrating this technology into a retailer’s app, the shopper gets an ultra-personalized experience through customer-specific offers, location-specific coupons and contextual information such as maps and menus.

But the question that keeps coming up is: Will shoppers adapt to this kind of experience? If users don’t adopt the technology, hockey stick graphs will never happen for retailers. I think of a Sheryl Sandburg story I’ve heard during her presentations several times. When Caller ID first came out, users were scared by it. They thought the concept of knowing who’s calling before you picked up was creepy. Now, 20+ years later, we don’t pick up our phones without knowing who’s calling.The user’s perception of the technology completely flipped over a couple of decades.

It seems a general consensus among investors and marketers that someone will figure out and win the proximity marketing race.

Proximity Marketing Use Cases

Let’s take a look at some use cases that highlight potential values of proximity marketing:

Kitchen Remodel

You’ve finally made the decision to remodel your kitchen after 30 years, but you don’t know where to begin. You enter the kitchen department of a national hardware store and you are notified by an employee about an app that helps guide you through the complicated and expensive process of remodeling your kitchen. Upon app download, you’re given a series of easy directions that show you how to use your new app. You start by picking out your cabinets and you find a style that you like but they are not in the color you like. By tapping a swatch smart tag (tags that you swipe to receive contextual information), you are able to view additional colors available by special order. You save your style and color to your profile. As you’re walking over to pick out countertops you are notified in app not to forget to pick out your cabinet hardware. Once that’s picked out you head over to the countertops.

The app has measured that you have now spent 20 minutes in the kitchen department. It gives you an offer for 5 percent off, incentivizing you to make the purchase today. Out of the 10 displays of countertops the retailer has on hand, most app users only spend time at four of them. The retailer knows that it may be time to change out the other six with more trendy options. Since styles may trend by region the retailer can analyze stats broken down by segments.

After finding a countertop you like, you save it to your profile and swipe a delivery tag to see how long that countertop takes to be installed. You have a question about how rugged the countertop is and you tap a button that alerts a store employee that you need assistance. The app has successfully guided you through this process in a way that makes the shopper feel comfortable that their dream kitchen will come together perfectly.

Retail Environment

In the retail environment, smart zones and tags can be used in an endless ways. Here are a few examples.

A family walks into a store with an app in hand to check the latest offers the retailer has published. After adding the coupons in which they’re interested to the app, they walk around the store. Shoppers save money and time because the app tells them the quickest route to pick up everything on their list. If a coupon is missed, the app can alert the shoppers.

Retail giants have already recognized the potential of proximity marketing, along with scores of startups.

Retail giants have already recognized the potential of proximity marketing, along with scores of startups.

The family decides to get a new TV, and after dwelling in the electronics department for five minutes, they are asked if they need assistance. They respond yes, and an employee gets a television from the warehouse for them. Next, they swipe a tag that shows them accessories, store stock information, and related products from the same brand. They can easily see which mounts work for that TV, and find the appropriate cables in the next aisle.

The app services are integrated with e-commerce and m-commerce platforms, so users can use ‘Buy Now’ buttons that simply send the product to their door. The family chooses not to bother squeezing the TV into their car, and instead choose to have it delivered that afternoon.

On the way out, the app recognizes that the dwell times in the checkout areas are longer than managers would like for a good customer experience, so more cashiers are sent to the checkouts.

Outdoor Concert

A group of friends is going to an outdoor concert with several stages. The concert promoters built an app that helps concert attendees navigate the event. The app has many useful features like schedules, barcode access to VIP areas, and information on concession stands.

The event promoters also installed Bluetooth Low Energy beacons throughout the event so that the app could provide contextual information to attendees based on their locations. While standing in long beer lines, the group is notified that lines are half as long at the beer tents half a block away. When a band is about to begin playing, the friends are alerted that they better head over to that stage.

As they head over, they get pushed a coupon that gives them 20 percent off a T-shirt in the merchandise tent. Upon leaving, the app lets them know where the closest and fastest exit is, according to their location.

Brand Opportunities

Various brands might use proximity marketing to build loyalty and boost user engagement. So, if a shopping mall with 100,000 items on the shelves from a thousand different brands uses the technology, each brand can opt in or out of the program.

A brand could market special offers without having to invest a small fortune in on-site marketing activities or on their own app. Imagine a soft drink company doing a virtual promotion for a certain product: They could have the campaign up and running with a few lines of copy and code.

It could be deployed nationwide, or worldwide, in seconds. Imagine a flash sale: 30 minutes in which people, worldwide, could get 30 percent off a specific product at the same time, just like an e-commerce platform. And like an e-commerce platform, the brands would have access to performance analytics about the campaign they just ran. They could immediately justify the spend, while the retailer could monetize its brick-and-mortar space through the program.

Moving Towards A More Frictionless Experience With Current Technology

The key to winning this space is building a more frictionless experience. Cautious clients always reference QR codes when considering new smart tags. QR codes were a good idea, but didn’t work because it took longer to snap the picture than it did to type in a URL. Users ended up rejecting it.

Latest technologies such as Bluetooth Low Energy (BLE) and Near Field Communication (NFC) have less friction and are easier to use with integrated apps. NFC is not open on iOS yet, so it is not being widely used for smart tags, but may be in the future. If we look to the past, Touch ID wasn’t open to third-party devs, but Apple eventually opened it up in iOS 8. We’re on iOS 9 now, but if Apple chooses to do the same with NFC, web-like links in the real world will become more commonplace. NFC has been available on Android devices since about late 2011.

Proximity marketing relies on Bluetooth and beacon technologies, but the hardware is not perfect, limiting potential in-store applications.

Proximity marketing relies on Bluetooth and beacon technologies, but the hardware is not perfect, limiting potential in-store applications.

So, that leads to BLE emerging as the best current cross-platform technology. Beacons are great because they are cheap, small, and don’t need to be plugged in, so installation is relatively easy. Apple introduced the iBeacon protocol in 2013, and various vendors have produced iBeacon-compatible hardware that is being used to power mobile commerce pilot programs. Several companies in this space are trying to figure it out, Qualcomm Gimball , Swirl and Shelfbucks to name a few. Most of them produce their own beacons but they all follow the BLE protocol.

Is the experience frictionless yet? Absolutely not. Users need to download an app that takes up precious real estate on their phone. The app needs to be running while they’re in the brick-and-mortar, and most integrations I’ve seen are less than seamless.

Beacons are not perfect technology; you cannot create shapes other than cones or circles, and they overlap. You cannot define a perfect space as a zone. If you picture a store map, most departments are laid out in rectangles and a beacon broadcasts its unique identifier to nearby smartphones in a circle radiating out from the beacon. So the best we can do currently is make the circles take up most of the department or endcap. This makes for imperfect mapping of the store. Some zones will overlap and some won’t work well, but in general, marketers are getting data they didn’t have before and users are getting a new and unique experience. Augmented reality (AR) can add another twist to beacon mapping a store through functionality that helps the user with wayfinding or even gamification of a brick-and-mortar store.

The way I look at it is that we’re at the Atari phase of proximity marketing, and it will eventually evolve to Playstation 4. There are a lot of things to be excited about, even at this early stage. I firmly believe that the concept of interacting in our environments with our smartphones will not go away. It’s not a fad. Take a look around the next time you’re walking through a shopping mall or a retail store. People are using their phones to digest, share, and understand the world around them, and if we give them the right tools I believe they will use them.

“At this stage I don’t think the problem of adoption lies in technology, but rather the experience we’re creating for the user.”

At this stage I don’t think the problem of adoption lies in technology, but rather the experience we’re creating for the user. Real estate on user’s phones is more competitive than ever. For a user to not only download a retailer’s app, but keep it and use it, the app needs to have some powerful information. It must do more than pop a coupon. It’s got to make their lives easier, educate them on things they don’t know, introduce them to things they’re interested in and engage them when they’re about to lose interest.

The jury is still out on whether Amazon’s Dash buttons will be a success, but I can tell you I use mine.

Amazon Dash buttons did not impress the tech press, but here is why I use them on a regular basis.

Amazon Dash buttons did not impress the tech press, but here is why I use them on a regular basis.

Why? Because it’s so easy. I don’t even have to take my phone out of my pocket these days when I run out of garbage bags. I use the last one and I simply push the button to the right and they’re at my door the next day. Buying garbage bags was easy before when I did it in the store. It was a little easier via Amazon Prime, but now it’s reached a new level of frictionless that I can’t turn away from. I hope they quit making dash buttons before I turn into a Wall-E dystopian human that they predict so hilariously.

I used to believe that the value needed to be balanced for both the user and the marketer, but I now believe that the value for the user needs to be higher than the value for the marketer. Users don’t care if it’s an uneven playing field, they want useful tools and experiences, and if they don’t find what they’re looking for the app is going to be deleted.

The Future Is Now! (Sort of)

That’s where we as UX/UI designers and developers come in. Clients are excited about this space, but they’re looking for guidance. They have many questions about what is possible and what is a responsible way of using it without annoying their customers. They need help molding their ideas into solutions that increase ROI but don’t jeopardize the customer experience they’ve worked so hard to refine.

What do clients want and expect?

  • Clients and IT departments are very protective of their apps; a solid security plan will always need to be in place.
  • Clients will not commit to this technology in all their stores until it’s proven through a pilot period. Most published sources start small, one to 10 stores, and then roll out a larger footprint.
  • In-app privacy policies will need to be updated to launch a program full scale. Launching a controlled pilot program (employees only, for example) would provide a case study that highlights consumer value before deciding to update the policy.
  • Clients usually gravitate towards popping offers that help get things moving, but to create an effective campaign, the experience has to be much better.
  • Clients expect the technology to be more accurate than it currently is. They should be informed of its quirks. Great demos are powerful, but scaling the technology to multiple locations can’t be overlooked.
  • All clients want increased loyalty that results in larger basket sizes and trip frequency. Location-based functionality would add to loyalty programs by incentivizing brick-and-mortar trips over online shopping.

What sort of questions can designers and developers expect?

  • Since this is a new way of interacting with shoppers, testing is vital.
  • Every retailer is different. Create a one-store playground and have fun. Figure out what customers find valuable. Then, scale.
  • Even though popping offers always comes up, we should try guiding our prospective clients in the right direction by always attempting to answer the question, “Why would the shopper need this app?” If a loyal customer doesn’t need the app, it’s not worth creating it.
  • The key to selling a concept is to find a way of giving the shopper an experience they couldn’t have had without the technology. Understand the customer.
  • Test, test, test. Stores are made of different materials, and different types of merchandise can be a mess for creating zones.

I believe that if we create great experiences that users will adopt, marketing ROI will follow, but we need to focus on the user first. If we achieve that, there are many exciting opportunities ahead as our environments react to us and become more personalized.

I’m very excited to see how proximity marketing unfolds over the next five to 10 years. In the end, if we’re focusing on the customer experience and building them great tools, I think it becomes something more than advertising, and the benefit for marketers will follow.

About the author

Brandon R Johnson, United States
member since October 8, 2015
Brandon is a Digital Designer that has always had a passion for technology. He thrives on taking raw ideas and turning them into business solutions. Brandon has nearly 13 years of experience in interactive design. From marketing departments to top agencies, he has developed a broad skill set that is sure to suit any client. [click to continue...]
Hiring? Meet the Top 10 Freelance Mobile Developers for Hire in September 2016

Comments

Alfred Beiley
Hi, Nice Article, you are right now a day 80 percent of shoppers are using smartphones to make purchasing decisions. Retailers and start-ups have taken notice, and the concepts of mobile location analytics and proximity marketing are emerging out of that.
Alice W
My only hesitation with location analytics/proximity marketing is how it will affect battery life. I currently have an S5. To prevent running out of charge by the end of the day (which still happens, but closer to 9pm at least this way), I keep location services off until I need directions. I'm curious if this type of software will cause heavier battery drain when than usual when this is turned on. Hopefully this is all improving with newer hardware, but I do know plenty of people who do the same.
Nicholas Bodell
Great post. It opens up a wide variety of options not just for local stores but brands as well. It will be interesting during 2016 to watch where this trends will lead and will it catch on.
comments powered by Disqus
Subscribe
The #1 Blog for Engineers
Get the latest content first.
No spam. Just great engineering and design posts.
The #1 Blog for Engineers
Get the latest content first.
Thank you for subscribing!
You can edit your subscription preferences here.
Trending articles
Relevant technologies
About the author
Brandon R Johnson
Designer
Brandon is a Digital Designer that has always had a passion for technology. He thrives on taking raw ideas and turning them into business solutions. Brandon has nearly 13 years of experience in interactive design. From marketing departments to top agencies, he has developed a broad skill set that is sure to suit any client.