Guest blog by Oren Levy
In today’s highly connected world, privacy is becoming a more precious and rare commodity. Between social media and mobile connectivity, the lines between the personal and public spheres are blurring, and now people are reachable and information is accessible virtually anywhere at any time. As a result, there is mounting concern about data exposure and accessibility, particularly in the realm of retail. Consumers are worried about merchants’ efforts to extract and store data about their customers, and the increase in retail data breaches has not positively impacted their sense of security.
Matters of data security and transparency have been further pushed to the fore with the advent and implementation of beacon technology. Venture Beat explains beacons as battery-powered sensors that use BLE technology to detect the location of a Bluetooth enabled mobile device and then transmit messages or prompts to the devices, often through the use of an associated mobile application.
Even though most Americans already use mobile devices in store for research and showrooming purposes, as reported by Business Insider, consumers are wary of this technology that can tap into their phones – and ultimately their pockets. The question then is whether beacons are as invasive as consumers believe? This paper will explore the actual capabilities of beacons to show the value beacons add to the shopping experience for consumers and retailers alike, as well as the way this technology protects consumers and their privacy.
Big Brother, Big Data, and Beacon Misperceptions
Before explaining why consumers should or should not be concerned about beacons, it is crucial to first explain how beacons work, what kind of data they provide, and the ways they do protect consumer privacy. One of the reasons consumers dislike the idea of beacons is that they attribute to beacons the ability to spy on them, allowing retailers to exploit them. In reality, beacons’ functionality is completely dependent on the consumer.
As Executive Director of the Future of Privacy Forum, Jules Polonetsky, explains, beacons do not track consumers or collect data. Moreover, before a beacon can operate on a consumer’s mobile device, the consumer must authorize a number of permissions. Firstly, Bluetooth must be activated for the beacon to detect the phone at all. Next, since most beacons function in conjunction with an associated application, consumers must also have the correct app downloaded on their mobile device with location services and push notifications enabled. The technology can only impact the consumers who have opted to activate it on their mobile devices, and consumers can change these settings at will to prevent receiving targeted messages from beacons.
There is much mystery surrounding beacons in regards to the type of information they collect about consumers and the manner of data collection. In fact, beacons draw data about location exclusively – they detect where a consumer is in a store or whether he or she is passing by outside the store. Based on location metrics, retailers that deploy beacons can learn about where customers spend the most time browsing in-store, the average customer journey throughout the store, and general browsing patterns. They cannot draw any personal information about consumers – any personalization capabilities enabled by beacons are tied to the associated loyalty program or app when it is authorized to do so.
Based on the metrics collected, retailers can then analyze information and draw conclusions about in-store navigation and popular products in general. For example, if consumers consistently lingered by a display but very few actually purchased the item on display, the retailer could conclude that he or she might have to reconsider the pricing of the item to boost sales and customer satisfaction.
Disturbing or Disruptive?
Although beacons do not violate privacy to the extent presumed, consumer concern about them is not completely unfounded. In October, Buzzfeed exposed a scandal where New York City phone booths were fitted with the devices, causing a sense of voyeurism amongst the city’s residents. As Buzzfeed and the New York Times have described – given that the user has authorized all permissions associated with beacons – this technology could easily be used to proliferate spam and exploit consumers anytime and anywhere. Beacons make it possible for advertisers to invade the personal domain, infringing on shopper privacy. Lori Andrews, an IIT Chicago-Kent college of law professor, points out that the conclusions to be drawn from the location technology can be invasive: “Knowing a person’s location can reveal whether she is at a mosque or church or synagogue, whether she is at an abortion clinic, an AIDS clinic, or meeting with a competitor of her employer” she said in an interview with Red Eye Chicago.
While concerns about data privacy and beacons are legitimate, it does not mean that beacon technology should be dismissed as an intrusive technology. Beacons are already showing great promise in the retail sector as well as in other industries: in addition to being used to optimize in-store experiences, a number of companies, including Barclay’s bank, are using beacons to improve their service and accessibility to handicapped customers. They are even being used by airlines and airports to improve customer travel efficiency and in stadiums and at sporting events to share helpful information.
For consumers open to authorizing beacons, beacons can translate the personalization features enjoyed by online shoppers to the brick-and-mortar shopping experience. Online customers receive recommendations for items they might need or enjoy at various points in their digital shopping experience – a phenomenon that beacons are enabling in-store. The Guardian has reported that House of Fraser even plans on putting the beacons in mannequins and pushing notifications of where items in the display are located in the store. Consumers benefit from the useful location and navigation services enabled by beacons, which assist in in-store navigation and product discovery, as well as providing location-specific offers when appropriate.
From Detecting Location to Building Loyalty
In enabling a more seamless in-store experience, through beacons retailers improve shopper satisfaction and conversions in addition to gaining valuable location-based data that can help them further maximize their retail potential. Retailers can even use beacons to detect consumers passing by their store and incentivize entering the shop. They can determine inefficiencies in their in-store design and make improvements that better serve the needs of their customers – they can even use this information to optimize website content and organization. Finally, utilizing the apps associated with beacons, retailers can share custom content and offers with consumers to personalize their brand experience and build loyalty.
However, beacons’ impact will be limited unless retailers regulate the collection and use of consumer data and become more transparent about data collection processes and objectives. As TechTarget suggests, companies using beacons “walk a fine line between offering useful information and being invasive.” If they can strike the proper balance regarding data collection and use, then their benefit to both retailers and consumers will be clearer and better executed.
One way to regulate beacons could be to restrict beacon interference to the checkout stage, so as not to bombard consumers while they shop. Other suggestions include focusing on beacons’ location data and resulting analytics instead of using the devices to push notifications to consumers. By limiting the frequency of messages sent to a consumer’s phone in a given period of time, consumers will feel less badgered by the brand and more likely to repeat their experience.
Furthermore, if retailers inform customers about them, why they use them, and what data they collect, they can impact consumer confidence and, ultimately, brand loyalty. As beacon technology develops the question of what retailers do or can collect may even become regulated by governing bodies to further protect consumer interests and privacy and to create a standard of what protecting consumer privacy entails. The applications associated with beacons will also have to be standardized, as to achieve optimal success with beacons, retailers will have to condense the amount of applications a consumer has to download. By concentrating all beacons into one centralized application, customers are more likely to download one beacon associated application than numerous branded options.
The bottom line is that providing a beneficial experience is crucial to the success of beacons – if the consumers can appreciate the added-value of beacons to their shopping experience, they will realize they do not need to worry about retailers’ invading their privacy. Instead, they will appreciate that the limited data retailers collect can have major impacts on their retail experience without being overly intrusive. Once consumers feel confident using beacons, they can be used to optimize other elements of the retail experience as well: One major possibility for beacons is their evolution to pushing checkout capabilities to shoppers’ phones instead of requiring them to wait in line to pay for their purchases.
Oren Levy is CEO of Zooz