WiFi vs. Beacons – Which LBS Technology Will Work for your Business?

- 18th Jul 2016


Listen to the voice of your customer or face the risk of obliteration – this is the writing on the wall for every brick and mortar store today. To combat the growth of online retail and to turn your products into profits, you need more than motivational fire in your belly. You need to be tuned into the consumption behavior of your customer. With the rapid growth and dissemination of digital devices, the current generation is experiencing what is being called a ‘mobile mind shift’.  He expects to get what he wants in his immediate context and moments of need. This expectation of your mobile savvy customer can be met by revamping your existing marketing practices to incorporate the latest trend in mobility – Location Based Services (LBS).

In a survey conducted by Accenture on US retailer operations, 39% of customers opted to receive in-store offers and loyalty benefits, while 45% expressed interest in receiving real-time promotions via mobile devices. According to Mobile Marketer, 2012 – mobile coupons get 10 times the redemption rate than traditional coupons. These statistics go on to prove that the location of a potential customer is an important attribute in today’s commercial sector because detecting and mapping it can supply you with a wealth of information about your consumer’s preferences and needs. Capturing and analyzing location data of your consumers can translate into real tangible benefits for your business.

New age marketing techniques, better known as proximity or hyper local marketing, involve sending targeted promotional content directly to the mobile phones of customers who are present in a given location. These ads are served based on the coordinates of a customer’s smartphone. While there are 4 popular technologies that make use of LBS – GPS, NFC, WiFi and Beacon, only 2 are apposite to hyper local marketing – WiFi and Beacons.

Industries Where Location Based Services are Being Used

Location based services find many applications in today’s world. Some popular use cases include navigation and wayfinding, asset and people tracking, advertising and marketing, social networking, context aware data mining and geo-fencing. Hyperlocal marketing is all set to evolve in some of the following industries:

Healthcare –Location Based Services in the healthcare industry is gaining traction and is expected to grow by 31.23 percent from 2015-2019. It is used to assist navigation within the hospital premises and help visitors and patients easily locate different departments. Information about facilities, registration and appointment can be transmitted to waiting patients. In times of medical emergency, carefully positioned sensors can help track the location of various members of the staff and alert the closest ones to attend to the crisis immediately.

Airline industry – There are myriad opportunities in the aviation sector that can be addresses by indoor location based systems. The Heathrow Airport was the first to launch location based services in mid-2014, after the success of which many other airports followed suit. Currently, these systems are being leveraged by Miami International Airport, Amsterdam Airport and Hong Kong International Airport to facilitate unique interaction with their passengers. To expedite the departure of flights, LBS technologies assist passengers to find their way and reach the boarding gates on time. It is also particularly useful in identifying missing passengers and alerting them about their flight schedule.

Retail Industry – Location based services found rapid application in the retail industry as it provided a potent solution to tackle the threat of online marketplaces. The ability of beacons and WiFi to detect the location of customers has helped in pushing personalized offers to proximal customers, resulting in increased in store purchases. By giving sales staff of retail operations access to critical consumer data, they have been successful in mapping the preferences and behavior of consumers. Other information like location of a particular item, that is probably not visible to a customer’s eye, is pushed to his or her smartphone, making his in-store experience more convenient and delightful.

Choosing the Right Technology

Every technology used for localization has its own specific properties and advantages, but also its specific disadvantages. The success of your business depends on the right choice of technology. Following are few factors that warrant consideration while choosing the right one for your business:

Accuracy of Location Detection

Beacon – Beacon is an indoor positioned transmitter, which uses Bluetooth Low energy (BLE) to sense proximity of a customer and broadcast one-way information to his smartphone or tablet. A Bluetooth beacon device transmits a unique ID number that can be read by any Bluetooth receiver. The signal is received by a mobile app, which activates the location specific information on the smartphone. Beacons transmit radio waves, which can penetrate physical barriers like walls and pillars. Beacons can work under difficult radio frequency conditions too and can therefore establish a customer’s location within four feet of accuracy. For a Beacon to work, the Bluetooth signal on a consumer’s mobile phone must be turned on.

WiFi – WiFi is a wireless LAN (Local Area Network) technology that allows two or more electronic devices to network together using the ISM radio band. To identify location information, these devices try to triangulate the location of a customer by measuring parameters such as MAC addresses and SSID. Since WiFi technology does not rely only on proximity of consumers, it is not as effective as Beacons when it comes to micro locationing. WiFi signals cannot penetrate through walls or any type of solid object. The customer needs to be in direct line of site with the WiFi device to receive ads.For WiFi to work, a customer’s mobile phone must have the WiFi network enabled on his phone.

Inference – Functioning of both technologies rely on features that are a part of every mobile phone but WiFi unlike Beacons is less locationally accurate.

Ease of User Accessibility

Beacon – It is a misconception that beacons can transmit data only to iPhones. This is particularly because beacons have become synonymous with iBeacons. Beacons in general respond to both Android and Apple mobile phones. However, both these platforms require mandatory installation of an app. Beacons are not designed to deliver proximity experiences without an app. In case, a customer does not have the dedicated app of a service or business installed on his mobile device, no transmission of information will take place.

WiFi – WiFi is compatible with all smartphones. Unlike beacons, WiFi technology totally bypasses the need for an app. It can send information, coupons, promotional offers and discounts directly to all mobile phones. The customer does not need to have an app open or running in the background to receive content. To push hyperlocal content, all that is needed is an active internet connection.

Inference – Not limited to users with dedicated apps, WiFi is a better choice to expand the reach of your marketing activity.

Deployment Costs

Beacon – Beacons are inexpensive and are priced as low as $30 per unit. Although inexpensive, there is definitely a need for deployment of dedicated devices. Despite its affordability, businesses have had poor experiences with it. In order to tweak its settings, each sensor had to be manually adjusted with a scanner. Also, it is known to be effective when multiple beacons are strategically deployed – this automatically increases the cost of deployment. A separate platform is required for management of all deployed beacons, thereby hiking up the cost further. Beacons are battery operated, which need to be frequently changed.

WiFi – WiFi, unlike beacons, is usually a necessary part of every setup. This allows businesses to leverage their existing WiFi device without having to rely on the installation of any additional hardware infrastructure. In fact, your WiFi system ceases to be an IT expense and becomes a revenue generation channel. However, the WiFi device is connected to the main power source and will be non-functional during a power outage.

Inference – Using beacons will incur new costs and its maintenance will incur additional costs.

Formulate a Strategy

Since product related advantages are quickly declining, companies must reorient their strategies around customer interactions to create distinctive value for its consumers. This value, unlike product-related advantage, is cumulative and will continue to build over time.

Proximity marketing can give brands hyper targeted access to a captive audience of millions but to get desired results from this marketing technique, it becomes imperative to formulate a strategy. Before you drive such a campaign, it is important to decide the goals of the company, depending on which you should make your choice.

If you want to go with breadth of appeal, you will choose Wifi but then it is likely that you will soon encounter a different situation, where the use of Beacons would be more reasonable. If you want to be in a win-win situation, you will have to deploy and manage two different systems – but that wouldn’t be a practical solution.

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