The Watchful Salesman

Feature_BeaconStreamBeaconStream founder Venkat Nallapati wants to fill our malls with tiny transmitters to help us shop, dine and play. As long as we don’t mind sharing our whereabouts.

By Jimmy Magahern

Next month, as tens of thousands descend on the University of Phoenix Stadium for Super Bowl XLIX, they’ll get help finding their seats from a new kind of usher: their smartphone.

As it did for last year’s Super Bowl at New Jersey’s MetLife Stadium, the NFL has been outfitting the Glendale stadium with beacons: tiny wireless transmitters that can send location-driven messages to smartphones as the users pass within range.

Can’t find your section? Beacons can precisely triangulate where you are and guide you right to your seat. Got time first to grab some grub? Beacons can instantly check with each other and tell you where to find the shortest beer line.

Small, inexpensive and as easy to install as a stick-up air freshener, a beacon—technically a battery-powered Bluetooth Low Energy (BLE) transmitter—has just one job, but it does it flawlessly.

“It simply detects when you walk into proximity, and can stream content to your device. And that’s it,” says Venkat Nallapati, founder of Beaconstream—a business with offices split between Bengaluru, India, and the Scottsdale Airpark—which is aiming to become the Valley’s first big player in the emerging market. “It doesn’t care about gathering your personal information. It just does one thing. It sees your device and says, ‘This is the coupon or information you need to get at this point. I’m giving it up.’ That’s all.”

BeaconStream was late to the party on the Super Bowl, although the company did do a soft launch of its product at the stadium’s Arizona Sports Fan Expo last June, where Chief Marketing Officer Chris Damron met with representatives for the Cardinals, Coyotes and Suns. “We talked to them, but unfortunately where those applications are coming from is the NFL, NHL, NBA,” Damron says. (The Super Bowl was snatched up prior to last year’s game by Qualcomm’s Gimbal beacon division.) “It’s coming from the national leagues.”

Nevertheless, the company is hoping the Super Bowl will serve as a massive business demo for the new technology, which can pinpoint a smartphone user’s location with much more accuracy than location-tracking technologies that use satellite-based GPS and send them “experiential” marketing content at precisely the right time.

“An app like Foursquare uses GPS technology,” says Damron. “Well, inside the mall it just doesn’t work. Not to mention the fact that GPS has about 60 feet of inaccuracy. It can be off.”

Nallapati supplies an example: “If you are at the Macy’s store in the mall, GPS doesn’t know exactly where you are. It may place you at Macy’s or JCPenney. With beacons, an app not only knows you’re in Macy’s, it knows what department you’re in.”

The struggle for businesses, Damron explains, is trying to get beyond the shotgun approach of digital marketing, social media or email. “This allows businesses to really target customers and send them relevant content exactly where they are.”

Huge power play

While consumers can download a free BeaconStream app that will simply receive coupons from participating mom-and-pop shops when they walk past their doors, BeaconStream’s main product is a software developer’s kit (SDK) that gives app developers for bigger corporations the tools to incorporate beacon capabilities into their latest update.

It’s why the start-up—whose parent company, AdeptPros, has already been piloting beacons in malls in its native Bengaluru and Chennai, India—settled on the Scottsdale Airpark for its U.S. headquarters.

“This area has established itself as a technology corridor,” Damron says. “So there’s a lot of software developers creating apps that do certain things. And if you take those apps and you incorporate beacon technology, you’ve got a huge power play there.”

For Nallapati, who has ventured into a series of enterprise mobility start-ups during his 20 years in the IT industry, the beacon is the bacon: that one strip of add-on app code that can potentially bring everyone to the table. “Where businesses are failing is in doing good mobile marketing,” Nallapati says. “It’s all about the moment of encounter. With beacons, it’s easy to catch people at that moment.”

Thank you, come again

It makes sense that the early excitement over Bluetooth LE technology, in existence since 2006 but only first integrated into a mobile operating system by Apple in 2013, has been coming out of India. This past November saw the world’s first Beacon App Hack Day in Bangalore, where India’s top iOS developers gathered to invent exciting new uses for beacon-enabled apps. The winner, a surprising choice to American observers, was a virtual store assistant that helps guide customers to DVDs they might like in a movie rental store—something that still exists in India, thanks to a thriving Bollywood and Hindi film industry. Third prize went to a teddy bear that can locate other teddy bears for children’s play dates.

The beacon is very polite. Unassuming and, most of all, not pushy, it stands quietly in the corner, only giving you the information you need when you need it.

“It becomes like a watchful salesman,” says DC Ranch resident Nallapati, an Indian IT whiz with a resume that spans a string of international Fortune 500 companies.

“It knows where you are, but it won’t push you or anything. If you’re in a shoe section looking for Nike shoes, it knows you’re there, and it can cross-sell—maybe send you a coupon for a matching jacket. But if you are not wanting the coupon, you can simply close the notification and put it in the background. All the coupons you are getting are stacked,” Nallapati says, describing a framework similar to the iPhone’s native Passbook app. “So you can view everything at once later.”

The beacon experience, after all, is about customer intent. “Think like an experiential marketer,” writes Karen Macumber, CMO of the price-tracking firm ShopAdvisor. “While most of us think about context as related to content, for proximity marketing the context has to be a combination of location and moment in time.”

In other words, today’s on-demand consumers are most receptive to advertising when it catches them at just the right moment, and in just the right place. All a beacon gets from each device scanned is its location. “Email captures more data,” says Nallapati, countering the common privacy concern people voice about proximity marketing. “If you open Google, it tracks everything. All a beacon knows is where you were in a store. It won’t even know if you bought anything or not.”

Still, as any watchful salesperson knows, you can tell a lot about a customer by what products they linger over. Particularly in this age, when consumers visit brick-and-mortar stores to physically check out products they later purchase (at a discount) online, and use “check-ins” at favored restaurants and stores to broadcast their interests through social media. With beacon strategies, notes Macumber, “you are bringing virtual and physical worlds together.”

Even better, beacons catch us at the point we abandon brick-and-mortar to go e-shopping—and effectively beat us to the punch. “Let’s say you’re looking at a TV in Macy’s,” says Nallapati, again citing the retail giant that’s been an early adopter of beacon technology. “You have to be very close to the TV, then you get the coupon. You get the specs, video, anything. The content can be streamed in any format.” Before you can pick up your smartphone to find a better price or customer reviews on that TV, your device is already displaying the store’s best deal and marketing pitch.

Because it’s so in tune with the way we shop and play today, Nallapati believes he can grow BeaconStream into a billion dollar product by 2020, and hopes to create between 30 and 40 jobs at its Scottsdale Airpark office by the end of 2015. About the biggest challenge Nallapati has had in duplicating BeaconStream’s Indian success in America has been in getting its disc-shaped transmitters into key retail outlets all across the country.

“In India, most of the the competition is in one or two cities,” he says. “The good thing with India, there are only 10 cities which are really big, so we can reach out to them very easily. Here,” he adds, with a laugh, “much bigger!”

Sharing where you are

Selling businesses on beacons is only half the challenge, admits Damron. “The second half is selling the consumers. How do you get them to opt in?”

In order for beacons to transmit messages to smartphones, the devices have to first be able to read BLE signals (about 80 percent of phones today can), have Bluetooth enabled (typically a user has to turn it on in the phone’s settings), and have apps installed that can decode the messages sent through the signal. That means people have to intentionally open the door to receive content from beacons—and few of us are keen on welcoming even more marketing intrusions into our daily lives.

The key is to get beacons to provide functionality or services consumers actually want. The NFL Mobile app is a good example: if you’re stuck in a long concession line at a Cardinals game, who wouldn’t welcome a notification that tells you there’s a shorter wait for hot dogs at the next stand? Good use of proximity tracking can turn an app into that helpful friend who really “gets” you, too. If you’re hanging out at Westgate City Center following the big game, perusing the rack of ‘Saturday Night Live’ skit candy at It’s Sugar, a beacon can buzz your pocket with a notification about the shop’s discount on Holiday Schweddy Balls on display at the register, at the precise moment you get to the register.

A recent survey of 1,300 smartphone owners by eDigitalResearch found that almost half (45 percent) of them would actually be willing for retailers to send location-based content to their smartphone if it meant more personalized messages for them.

But Damron admits that persuading consumers to download and enable an app that merely sends them more marketing material as they walk through a mall can be a tough sell. The better option is to persuade retailers to build beacon capabilities into the apps their customers already use, pairing the technology with the app’s existing data-gathering functions for a truly personalized experience.

“For the larger retailers that have their own apps, the BeaconStream technology can easily be embedded into them,” he says. “Overnight a developer could implement it and have thousands of consumers on beacon technology, because their app is already out there and people are using it. They update it and next time the consumer goes into the app, they’ve got the technology added.”

Talking businesses into jumping on the beacon bandwagon has been easier. BeaconStream recently signed up Sushi Roku, part of the Innovative Dining Group, which will start using beacons throughout its restaurant located inside the Scottsdale W Hotel, and Damron says they’re negotiating with businesses around the Airpark as well.

“There are so many uses for this technology,” he says. “We’ve seen some Realtors doing things with signs, so when a car drives by you get the listing of a house. Every time you turn around, there’s somebody doing something different with it. What’s interesting is when we go and sit with these businesses, they always come up with some different idea or tweak of how to use it. Things that we haven’t even thought of!”

Adds Nallapati, “As soon as I saw where this technology was going, we jumped into it. We want to be ahead of the curve on this.”

Adept Pros
14301 N. 87th Street, Suite 110
Scottsdale, AZ 85260