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Shopkick’s beacon results suggest shoppers care about promotions, not information

Mobile application shopkick has doubled its users in the past year to a whopping 15 million, partially due to the shopping companion’s wide-scale deployment of beacons in major retail stores, which focus on offering consumers rewards rather than banal product information.

Shopkick saw active users spend nearly two hours per month within the app in July, proving that shopping companions can lead to extended engagement. The company also disclosed its strategy of tackling beacons in bricks-and-mortar locations, and teased its plans of tapping the technology for brands and manufacturers’ products as well.

“We hear from a lot of retailers that their first tests of some beacon technology didn’t work for them when they tried it, because most consumers did not respond to the messages they sent,” said Cyriac Roeding, CEO of shopkick, Redwood City, CA. “What’s missing is the value to consumers.

“For example, if you stand in front of a handbag and the app tells you what brand it is, there is no advantage to that,” he said. “I can see that on the label.

“There is a lot of confusion in the market about what beacons are really useful for. Consumers don’t care about beacons per se, they care about the value they get from the use case.”

Finding the right method
Shopkick currently deploys 20,000 beacons at more than 14,000 retailers nationwide. When a shopkick app user walks into a participating store, he or she may receive a message or promotion on his or her smartphone in a bid to fuel a purchase.

Beacons’ complexity and necessity of tapping shoppers’ information have led to widespread debates on their effectiveness in malls and stores. However, shopkick posits that its beacon trials in the past year have been eye-opening, and have uncovered that consumers do not care about the technology unless there is a tangible trade-off.

If a customer walks past a leather wallet in a department store and then receives a beacon-enabled push notification displaying what the wallet brand is, he or she will most likely not find that information useful. As shoppers are already in-store, it is not a smart move to send them product alerts or messages encouraging them to check out a particular display or section.

“We spent a lot of time last year leveraging our experience with mobile users to learn what works with beacons,” Mr. Roeding said. “One example that is eye-opening was something that we did with American Eagle Outfitters.

“We offered 20 cents on shopkick at the door when a shopper walked in, and then we also offered another 10 cents for walking into the fitting room,” he said. “Typically, fashion retailers discount products by 30 to 40 percent to get substantially more people to try on clothes, and that cuts their margins by 60 to 80 percent.

“Once customers visit the fitting room, conversion rates to sales can more than triple,” he said. “What if you could achieve the same result with a 10 cent reward?

“We were able to prove through an A/B test that we could double the percentage of people who walked into the fitting room after walking in the store.”

This is an example of the revenue potential that beacons offer, if used in the right manner.

Strong results
Shopkick’s results show that 52 percent of all sales supported by the app would not have occurred without the mobile shopping companion. Seventy-four percent of incremental spend stemmed from new consumers that shopkick introduced to its partners, who had not purchased at their stores in at least one year.

While consumers undoubtedly respond well to the loyalty points, or kicks, they receive from using the app while shopping, beacons also deserve some of the credit for streamlining the in-store experience.

“Beacons are one example of the increasing attempts to tie together online and offline shopping, which is obviously major focus as marketers look to understand how these channels interact,” said Tom Manning, head of pay-per-click at Forward3D, London. “This increased understanding will in turn provide businesses with an even greater insight into who their most valuable customers are and how they prefer to shop.”

Shopkick has set its newest goals on working with brands to roll out beacon-powered objects. For example, a customer looking to purchase new eyeshadow could scan the item with their smartphone and receive advice on how best to wear the product.

“The holiday season is significant for beacons,” Mr. Roeding said. “We’re deploying several thousand shopBeacons just this fall season.

“Brands are now getting interested in beacons,” he said. “Brands often have fixtures in the stores where they are placing their own products.

“We’re now starting to work with the brands themselves, putting shopBeacons on the display units.”

Final Take
Alex Samuely, editorial assistant on Mobile Commerce Daily, New York