A comprehensive comparison of all proximity marketing solutions for retail (PART – 1)
Since the 1960s, E. Jerome McCarthy’s concept of the “Four P’s of Marketing,” – using Product, Price, Promotion and Placement as the primary pillars of marketing strategy has served various businesses. And although the four P’s have gone through various iterations over the years, I believe that another “P” – “Proximity” – is most relevant today, as it represents the physical connection between customers and businesses.
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Traditionally, marketers and business owners had been using proximity solutions that did not involve technology – physical signage and banners. But in the last few years, technologies have become much more affordable, and therefore, businesses are willing to integrate them into their marketing strategies. Advanced technologies include QR codes, RFID tags, WiFi, NFC tags and Bluetooth beacons.
In this blog post, we will talk in detail about two of these proximity marketing solutions – QR code, RFID. Also, why proximity today, in 2018 and beyond, is all about BLE beacons.
We will be discussing WiFi and NFC technologies, and their comparison with Bluetooth beacon technology in the following week.
QR codes vs beacons
Back in 2009/10, QR code seemed to be the next big thing. It appeared everywhere – shop windows, food labels, brand fliers, magazine advertisements and every other customer-facing platform had distinct little black-and-white squares that could be scanned to access a website or a piece of information. This seemed like an immediate success.
But this did not really turn out to be what marketers expected it to – in a research by Inc’s in 2012, merely 2 years later, revealed that 97% of the consumers didn’t know what a QR code was!
Here are few other reports and studies that re-emphasize the limited success of the technology-
- According to a Marketingchart.com survey, only 21% of American smartphone owners say they’ve ever scanned a QR code, and just 2% say they scan a QR code at least once per day.
- A 2011 survey by Econsultancy reported that only 19% of the UK consumers have scanned a QR code.
Beacons outshine QR codes
iBeacon protocol for beacons was introduced by Apple in 2013, and in the next year, Google came up with the Eddystone protocol, which made it possible for smartphones to receive notifications even without an app.
A study by Firstinsight in Aug 2015, two years after the introduction of iBeacons, states that 30% of customers already knew what beacons are. That is 10 times higher when compared to the 3% awareness of QR codes within the same time frame.
The advantage of using BLE beacons over QR codes is that consumers don’t have to do any extra legwork to receive a warm greeting or store offers.
Companies that moved to beacons after trying QR codes
- Macy’s used QR codes for its Backstage pass campaign back in 2010. These QR codes could be scanned to access videos, trends and helpful advice, straight from Macy’s stable of star designers and industry experts.
In 2014, this big-box retail chain deployed roughly around 4,000 Bluetooth beacons across 850 stores. This shift in itself proves that QR codes did not measure up to the abilities and results of BLE beacons.
- McDonald’s – Back in 2013, the giant fast food chain, McDonald’s, launched a new QR code campaign in 14,000 outlets in the United States. These QR codes on the fountain drink cups and takeout bags informed the diner about the food’s nutritional value. Based on the statistics from comScore, a well-designed QR code has a scan rate of 6.2%.
Image source – https://goo.gl/Qgx83V
In 2015, McDonald’s leveraged beacons at 15 McD Cafés in Istanbul, Turkey. These beacon notifications pushed mobile coupons to customers prompting them to purchase one coffee and receive a beverage from the new drink line for free. McDonald’s achieved a 20% conversion rate with 30% of users who received the promotion using it more than once.
Image source – https://goo.gl/EauwZ5
Why did QR code have limited success?
- The greatest hurdle for QR code technology is the lack of standardization. When a consumer purchases an Android phone, the unit comes with a Google Map feature, built-in-utilities, a standard web browser, a weather app and more. But QR code scanner is not one of these in-built services.
- QR codes do not have the ability to connect context to a certain location.
- End users have to take the extra step of discovering the QR code.
RFID vs beacons
Back in 2003, the headlines read out “Get Ready For The RFID Retail Revolution” or, “Wal-Mart Kicks Off The RFID Revolution”. Because of Walmart’s announcement of adopting RFID in its supply chain, RFID quickly went from a little-known technology to the next big thing. But this rapid growth was ephemeral.
Even before the 2008 financial crisis set in, the market for RFID shrunk and the revenue fell flat. Walmart themselves faced issues with the implementation, including pushback from the suppliers and technical problems.
Currently a lot of retailers “have plans” to start using RFID, but fully deployed RFID systems – including tags, readers and supporting software and where retailers are experiencing measurable results and ROI – presently ranges from 4% – 8% only.
Beacons over RFID
Walmart’s announcement made it sound like RFID is fast taking over the retail world, but the advent of BLE beacons in 2015 changed the game by providing business with a whole new option for generating contextual intelligence. There is a host of reasons that account for the limited success of RFID tags. And these shortcomings essentially account for welcoming beacons into the retail space.
Why does RFID have limited adoption?
- The greatest hurdle in RFID adoption is that deploying RFID system requires a number of different components – basic hardware such as tags, readers, reader control and apps. Retailers have to invest a heavy amount upfront on the infrastructure front, on both sender and receiver side. Here’s a comparison of the investment to run a pilot for both the technologies :
- Unlike most other proximity solutions, RFID does not come with inherent compatibility with mobile. It requires hardware to process signals at specific frequencies.
- Information passed by RFID cannot be personalized based on location, frequency, time of the day etc. It is constant and has to be embedded in the tag.
- RFID tags only work at a very close range. For this reason, a scanner must be brought incredibly close to the tag in order to register and record presence.
There isn’t a binary solution to which is the best proximity marketing solution for a business. Different technologies have different capabilities and adoption rate. But, Bluetooth beacons, on the other hand, are versatile due to the wide adoption of Bluetooth among users and have far fewer requirements beyond a smartphone with mobile data access.
Stay tuned to this space for the second half of the article which talks about WiFi and NFC tags as proximity marketing solutions, and how they measure up to BLE beacons!
If you are looking to get started on a pilot for your retail store, head to our Beaconstac store page and invest in a set of beacons and our Basic subscription plan. You can have the campaigns up and running in less than 15 mins!