Every retailer knows it’s more efficient to serve repeat customers than to heavily promote to lure new ones. Repeat customers are more likely to buy new and long-tail merchandise, not only merchandize on sale. This means higher profits.
It’s big business. Up to 41% of retail revenue in the U.S. comes from repeat purchasers, who represent only 8% of all visitors. So how can retailers engage repeat visitors to maximize their spend in-store? Beacons and Indoor Location are emerging as a top solution.
In ABI Research’s latest report on beacons and indoor positioning systems entitled “Indoor Location Technologies,” senior analyst Patrick Connolly predicts infrastructure-based technologies like light field communication and Beacons will break 20,000 retail implementations by 2015. In addition, he predicts 800 million smartphones will be actively using indoor location for applications in venues by 2018.
Indoor location beacons and positioning systems are the hardware sensors designed to wirelessly communicate and transmit data with mobile devices (and other beacons) within a certain area or network. And with the aforementioned momentum behind them, retailers are finally getting a chance to create one-to-one customer relationships with shoppers.
1) Light Field Communication Transforms Lights Into a Marketing Solution for Retailers: Light field communication turns lights into a location-based marketing solution. It leverages existing infrastructure to pinpoint consumer location with unmatched accuracy, enabling retailers to deliver hyper-targeted content to any shopper with a smartphone, based on precisely what aisle—or part of the aisle—they’re currently shopping.
2) It Operates Similarly Bluetooth LE without Needing to Add Infrastructure or overhead costs: Light field communication operates very similar to Bluetooth LE (used in hardware Beacons) in terms of being low energy, highly responsive and accurate. The difference being of course that it’s optical and not radio-based. More importantly, it’s turning an existing infrastructure cost (lighting) into a valuable source of data and a means by which retailers can engage with customers and employees. Unlike Bluetooth LE beacons, which need to be added to a store environment, lighting infrastructure is already in place for light field communication and optimally spaced throughout a venue to provide indoor location coverage.
Both online and physical retailers often know whom their highest volume shoppers and biggest fans are, but do they really know who their Most Valuable Shopper (MVS) is?
The answer to date has largely been NO. Instead, retailers have focused on marketing and gearing in-store experiences towards their high volume visit customers and biggest brand advocates with limited success.
Indoor location is changing that by giving omnichannel retailers real-time access to customer data online and in-store, as well as access to individual shopping profiles. With this ability to automate shopper identification in-store, retailers can now narrow in on the key “average order size per visit” performance indicator to segment their most valuable customers. Once these MVS’s are identified, retailers can design tailored advertising and customer service programs, and implement in real-time while these customers shop.
While analytics have made some headway in brick and mortar retail over the last decade, the primary method for retailers to obtain store floor data for analyzing has been through video solutions. That method has proven to be costly and a heavy burden on bandwidth.
Armed with their successful ability to track and analyze how shoppers visit, browse and checkout at their online stores, “click to brick” retailers like Warby Parker and Bonobos are taking a different approach with in-store analytics. Schooled in A/B tests and tracking customers through their sales funnels, they’re now focused on maximizing revenue per square foot, optimizing foot traffic and converting online browsing into in-store buying. And they’re using new tools.