Beacons in Retail: How Retailers can Earn Consumer Trust
May 5, 2015
Year 2015 will see retail brands take a substantial leap in proximity marketing, as they shift fast from pilot projects to larger commercial deployments, reported Business Insider. In fact, according to a recent study by AirSpace, 99% of U.K retail brands are considering including proximity marketing as a part of their 2015 marketing plan, of which 79% are planning to implement proximity marketing over the next 6 months. This clearly marks a signalled shift towards the explosion of beacon-led consumer interactions in 2015 and beyond. At the same time, many consumers have voiced a number of concerns around privacy aspect of beacons. These vary from being worried about brands sharing user information with third parties without the explicit permission of users to being bombarded with spammy adverts.
Are concerns over privacy a showstopper to beacon-enabled in-store experience?
Though there are number of ways in which retailers can put beacons to use, they are primarily being used for push marketing. However, merely pushing offers without referring to information on in-store consumer behavior such as their movements and purchase history, can cause brands to bombard consumers with irrelevant offers that have no contextual connection. This can then nudge consumers to stop using an app or uninstall the app altogether.
On the other hand, when used properly, beacons can help retailers identify highly valued customers in store and combine that with data on the customer’s historical shopping behavior, to provide an enhanced in-store experience. This could even lead to opportunities to cross-sell, up-sell, or simply increase the size of the customer’s purchase basket. However, will concerns over consumer privacy be a major barrier in this road to retail success? Here are a few data points to note:
1. Customers are happy to share their location data, as long as retailers ensure responsible use of data
According to a recent survey conducted by Lightspeed GMI amongst 1,000 mobile phone users for Brainstorm and the Mobile Marketing Association, 74% of consumers are happy to share their location data with retailers. At the same time, 72% of them fear that brands are not taking adequate steps to ensure the responsible use of the data. Similarly, preliminary data collected from a survey of about 200 consumers showed that negative experiences in the past further lowered the willingness among customers to share their location information.
2. Top concerns about sharing location data vary from issues around security and privacy to being bombarded with spammy offers
When enquired about the primary concerns that consumers had regarding sharing their location data, both security and privacy were found to be equal causes for concern, at 34% each. At the same time, while 21% of consumers are worried that brands might share their location information with third parties without their explicit permission, at 9% spam and unwanted adverts were considered to be a minor issue.
Is there a way out of these above mentioned problems? – Fortunately, yes. Retail brands and policy makers should come to terms with the fact that aggressive data collection is bad. The key here lies in more nuanced guidelines that align the interests of retail brands with those of their consumers and ensure that both parties benefit from personal data collection. Let’s now take a look at some practical solutions to them.
How retailers can ensure transparency and trust
Here are 3 ways retailers can earn consumer trust when it comes to beacon-enabled interactions.
1. Engage in trust-building interactions before offering any personalized shopping experience
According to the earlier mentioned survey of about 200 consumers, unlike in the online world, traditional trust-building mechanisms were found to be not sufficient enough to mitigate consumers’ concerns in sharing their personally identifiable information. Further, it even found that having had some kind of personal experience with the retailer such as a previous purchase, not only decreased the consumers’ concerns but also and increased their willingness, in sharing their personal information.
Therefore retailers that require consumers to share personally identifiable information need to begin by focusing on generating consumers’ trust by focusing on trust-building interactions prior to offering any kind of personalization services based on other data sources.
2. Ensure that users are not asked for irrelevant data
Another major reason behind why consumers lack trust when sharing their location information is lack of transparency into proposed usage of data. In fact, according to earlier mentioned survey of about 200 consumers, 27% of consumers wanted transparency on how they will benefit by sharing the proposed data with retailers.
Moreover, with most experts predicting that customer data will be a growing source of competitive advantage for brands in near future, gaining the confidence of consumers will play a crucial role in retail success. Retail brands that grant users full control over their personal data and are transparent about the user information they gather while offering value-added experiences in return will be trusted in the long run.
That said, it is also important for retail brands to note that asking users for irrelevant data, such as the other apps they use, call history etc. could also result in them losing out on consumers’ goodwill and their business.
3. Deliver offers that users can’t refuse
For beacons to reach their full potential, retail brands should be able to convince consumers that there is great value in engaging with the brand’s messages. This can be done by crafting messages and notifications based on a deeper understanding of consumers’ behavior, demographics, location and actions such as purchase history and more.
For example, retail brands can utilize such consumer data insights to enhance their customer loyalty programs and grant consumers relevant customized offers that they just can’t refuse. With 61% of small business owners reported to drive more than half of their revenue from repeat customers, rather than the new ones, this technique of rewarding consumers for staying loyal to your brand will help retailers drive in more revenue.
Are there any other ways by which retailers can earn consumer trust? Let us know in the comments below.
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