Proximity Marketing

Proximity Marketing In Retail: Let's Get 'Phygital'

Imagine you are excited to buy a pair of new sneakers that have just been released. You search for them on the retailer’s website and mobile app multiple times, but they are already out of stock. Then one day you go to the mall with friends and receive a push notification on your phone, saying the sneakers you were looking for are now available in a retail outlet inside the mall. To add to your delight, you’re offered an exclusive discount of 20%–just for you.

This is what proximity marketing is all about: communicating with customers at the right place, at the right time, with highly relevant and personalized messages. This advanced technology finds mobile users who are close to a specific sensor or beacon situated on a company’s premises and targets them with compelling marketing messages.

Advantages Of Proximity Marketing

According to eMarketer, 88% of global retail sales still occur offline. Proximity marketing provides an opportunity for these stores to personalize content in real time, increase visitor engagement, and, ultimately, improve the in-store customer experience. In addition, omnichannel retailers can use the offline data gathered from beacons and integrate it with online behavior to provide hyper-personalization in real time.

Here’s a closer look at why marketers should take advantage of proximity marketing to engage customers “phygitally.”

1. Competitors will use it: According to "Store Experience Study 2019," by RIS/IHL Group, proximity marketing is the most popular emerging technology among retailers in North America, ahead of artificial intelligence (AI), machine learning, and the Internet of Things. In addition, 24% of respondents indicated they plan to install beacons and sensors in their stores in the next 12 to 24 months—ahead of all other types of technologies, including in-store video analytics (20%), robotics for inventory management (17%), and smart shelves/RFID/computer vision (16%).

With 71% of retailers already using location data for advertising, smart marketers know that their competitors are likely taking steps in this direction, and they don’t want to fall behind.

2. Customers are attached to digital channels in-store: A report by Windstream and Incisiv revealed that around 75% of in-store visits are influenced by digital channels, with customers using mobile phones primarily for product comparisons and product information. Mobile is one of the most promising channels to reach customers directly. Research shows that 58% of shoppers rarely or never find in-store ads valuable, so providing personalized ads directly to their phones may improve the in-store experience.

3. Shoppers are looking for a ‘phygital’ experience: A year-long study by HBR of almost 46,000 shoppers revealed that almost 73% shop multichannel across physical and digital domains. These omnichannel shoppers have 35% higher lifetime value and can increase company profitability by nearly 10%. Customers can research products across multiple channels and embrace recent trends like buying online and picking up in-store (BOPIS) to avoid delivery challenges, while retailers can use the data for a holistic customer view.

4. Increase store footfall: Using beacons, retailers can reach out to a targeted audience within a store’s vicinity about ongoing promotions and discounts, new product launches, and navigation to a venue, which can increase foot traffic in a store.

For example, Dunkin Donuts used proximity marketing to attract customers by offering coupons to people located near a competitor store a short distance away. This not only led to more store visits, but it also provided higher coupon redemption and conversion rates.

5. Smooth navigation and checkout: According to a Capgemini study, 65% of customers become frustrated in retail stores over the inability to locate products, and 66% get frustrated with long lines at checkout counters. By employing a process called triangulation to detect the exact position of a Bluetooth device, big retail stores can mark the exact location of customers within a store, such as the women’s department, to guide them to open cash registers. Retailers can also leverage customer data, such as purchase patterns, to create heatmaps, plan the store layout, and manage inventory.

Amazon Go took location technology one step further, using beacons to identify customers, sensors and radio-frequency identification (RFID) for tagging products, and near-field communication (NFC) for automatic payment. This allows customers to walk into stores, add products to their baskets, and walk out without waiting in line.

6. Advanced personalization: Personalization continues to be the focus of customer experience in the retail industry. According to BCG, personalization can increase the average order value by 40% and improve brand satisfaction by 20% in retail.

Online retailers like Amazon recommend products and personalize experiences by leveraging online customer data. But how can offline retailers do so? Imagine you enter a store. The in-store representative not only greets you by name, but also recommends products for you based on your interests. Nordstrom does this by using beacons to collect data from its mobile app, including a customer’s online browsing history, to provide recommendations based on items in the person’s cart.

The Future Of Proximity Marketing

Beacon technology has created a buzz in the market for the past five to six years, but adoption has been relatively low as many retailers have struggled to derive benefits from it.

But the technology is evolving, setting proximity marketing up for success in the near future:

1. App-free targeting: One of the major challenges with beacon technology is customer opt-ins. To receive communications via a beacon, users should have Bluetooth turned on and the retailer’s app downloaded on their mobile phones. However, as the technology evolves, the need for having a dedicated app will be eradicated as notifications can be sent through browsers. In related news, Apple has come up with a feature on its iPhones that turns on the device’s Bluetooth automatically as soon as it is in a beacon’s range.

2. Facial recognition: Retailers can deploy facial recognition systems at the entrance to their stores to identify customers as soon as they come in. By integrating this data with customer data and analytics, retailers can offer personalized services. This also can help retailers understand customer preferences, much in the same way cookies help in the online world.

For example, California-based eatery CaliBurger installed facial recognition software in a kiosk, providing a personalized food menu and recommended dishes to customers based on their previous purchases. Facial recognition technology can be leveraged in other ways, too. For instance, customers can order groceries online and when they reach the store, the retailer can identify them, present their orders, and offer personalized offers based on their online behavior.

3. Machine learning: Retailers can use a plethora of data from beacons for advanced analysis. They can deploy machine-learning algorithms to predict footfalls in store, integrate online and offline data to achieve a unified customer view, and personalize offers based on the data. With the advancement in AI, data-driven marketers are the real winners.

Proximity marketing is the perfect blend of technology and marketing to provide a seamless experience for users. With customers going phygital, it’s time for retailers to do the same. As Steve Jobs famously said, “You’ve got to start with the customer experience and work backwards toward the technology.” 

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