How the hospitality industry can benefit from proximity marketing systems

In short, Proximity marketing is a form of communication strategy. The hospitality industry is always looking for ways to improve the experience of customers. Proximity marketing systems are innovative ways of accomplishing this. This blog post will explore a variety of ways the hospitality industry can use and benefit from these tools with a focus on streamlining operations, increasing sales revenue, and improving customer experience.

 What is proximity marketing?

Proximity marketing is a form of electronic marketing where customers are targeted by marketers based on their proximity to a certain location. Generally, these communications are personalised and aimed at motivating the customer to make a purchase in the immediate future.

Studies have shown the when implemented well, proximity marketing systems offer an ROI that is 16% greater than PPC SEM. In part due to its cost-effectiveness, proximity marketing has begun to see widespread adoption by companies like McDonald’s, Walmart, and Macy’s.

How does it work?

Proximity marketing: active engagement by being at the right time and the right place
Proximity marketing: being at the right time and the right place

There are several ways a proximity marketing system can be implemented. Options include:

  • QR Codes
  • Geofencing (RFID or GPS)
  • Beacons
  • Wi-Fi

In this article, we’re going to be focusing on two of the most common proximity marketing systems: geofencing systems and beacons.

Geofencing systems

Geofencing is a tool that facilitates proximity marketing by tracking a guest’s movement using an app that has been granted access to analyze their device’s GPS signal. When they enter a predetermined area (such as a hotel or restaurant), marketing materials are sent to the device through the app. The process looks like this:

  1. Guest installs an app with geofencing capabilities and grants both GPS and notification permissions.
  2. App tracks guest’s location and sends updates to proximity marketing system using cellular data.
  3. App alerts proximity marketing system that guest has entered an area defined by owners as ‘the business’.
  4. Guest receives marketing materials in the form of push notifications via the app.

Beacons

Beacon systems (like the Alertiee Plus) work by using Bluetooth to open a line of communication between a guest’s device and a specific location’s beacon when the two come close enough together to establish a connection. Here’s how it works:

  1. Guest with Bluetooth enabled on their device enters the range of a location’s beacon. 
  2. Beacon system sends a prompt to the device asking for permission to continue communicating.
  3. Guest grants permission and the system is free to send information, promotions, or assistance in the form of push notifications to the guest’s device.
  4. Guest leaves the beacon’s Bluetooth radius and communications are stopped.

Which solution is better?

While both geofencing and beacon systems offer several benefits to businesses in the hospitality industry, beacons are by far the more intuitive and less invasive of the two.

The primary reason for this is that beacon systems don’t need to (and, in fact, can’t) track a guest’s location when they aren’t near the beacon itself. In contrast, geofencing technologies typically need to continually update their records of the guest’s location so that the system is aware when they enter the designated area. While this certainly has its benefits, it also comes along with a suite of privacy concerns.

In addition, beacons allow for much more flexibility, reliability, and detail in locations where GSP or cell signals are weak (e.g., malls, department stores, and hotels). If a guest enters the beacon’s Bluetooth radius the system will be able to communicate, regardless of any other factors. Beacons typically use Bluetooth Low Energy (BLE), which uses significantly less bandwidth and battery power than GPS-based geofencing systems.

Finally, beacon systems are compatible with a far greater number of apps. That includes apps that don’t have tracking capabilities, internet access available, or those specifically designed for proximity marketing.

Proximity marketing to create spontaneous engagement. Be at the right place, right time and with the right message.
Using proximity marketing to create spontaneous engagement

How can proximity marketing and geofencing technology benefit hospitality businesses?

With that background out of the way, it’s time to get into some of the benefits of proximity marketing systems in the hospitality industry. A full list would be impossible to cover in a single article, but hopefully, these example applications get you thinking about the wealth of possibilities these technologies promise.

Streamlining operations

Proximity marketing systems are incredible tools for streamlining and automating operations in the hospitality industry. The uses are almost limitless, but here are a few examples of the ways they can make your life easier:

Check-ins

When a contactable customer enters an area defined as the hotel, a beacon or geofencing system can send push notifications to their device that allow them to enter their details and confirm their booking without needing to speak with a front-of-house representative. The same system can be used to fulfil reservations at restaurants by automatically guiding arriving guests to their tables once the system registers that the previous occupants have departed.

Key delivery

For hotels that use electronic, virtual, or combination key systems, beacon systems can allow checked-in guests to automatically receive their keys upon reaching their rooms. Proximity door unlocking is also possible using extremely short-range beacons.

Menus 

When a diner enters a restaurant, the restaurant’s beacon can deliver a menu directly to the customer’s phone to browse while they wait for a server to become available.

Reviews

Studies show that around 70% of customers will leave a review when prompted. Beacons and geofencing systems can increase the rate of guest review by issuing a prompt when they leave a designated area.

Increasing sales revenue

One of the most promising benefits of proximity marketing and geofencing technologies in the hospitality industry is in boosting sales revenue. Generally, this usually works by increasing either the relevancy or the personalisation of the marketing materials hospitality businesses issue.

Targeted marketing

A room-based beacon system can be configured to register whenever a guest returns to their room around dinner time. In response, the proximity marketing system could issue a discount code for a room service order. Or, a list of the specials being offered in the hotel’s restaurant. Or, a 2-for-1 cocktail offer for the bar. Due to the targeted nature of these communications, your efforts will be rewarded with an improved marketing ROI and increased sales revenue.

Personalised marketing

Proximity marketing systems can also be used to issue personalised marketing materials when combined with AI-powered algorithms like those offered by Alertiee’s solution.

When a guest reenters a restaurant’s beacon range their previous purchases and preferences can be used to recommend dishes that guests with similar preferences enjoyed. This level of personalisation will impress guests and keep them coming back.

Improving guest experience

These technologies also help improve the guest experience by giving guests instant access to the information they’ll need during their visit (along with all the information they don’t know they need yet). Once again, the possibilities are almost limitless. Here are some possible applications to serve as inspiration:

Room service

When a guest enters a room’s beacon radius the system can send them a link to the room service menu or online ordering system. This saves them the hassle of searching for the menu and calling their order into the front desk.

By designing geofenced hotel rooms, guests can receive a room service menu along with access to a chat for placing an order immediately upon entering their room rather than searching for the menu and calling the front desk.

Wait times

Restaurants with beacon or geofencing systems in place can streamline the process of determining how many people currently dining. This information can be used to automatically inform customers how close the restaurant is to capacity and how long expected wait times are. 

Hopefully, this article has opened your eyes to some of the benefits that proximity marketing systems have in store for the hospitality industry. As I mentioned earlier, these examples were not intended to be exhaustive. Rather, they were supposed to inspire you to think seriously about how proximity marketing systems could revolutionise the way you do business.

Further Reading

If you enjoyed this post: What can reHow the hospitality industry can benefit from proximity marketing systems, be sure to check out our recent IoT and AI pilot with Adnams here: AI and IoT for retailers how physical stores can enhance customer experience

Proven benefits of Alertiee technology

Alertiee will help you realise missing sales opportunities, stores’ performance based on conversion rate, and stores’ sales hotspots areas.

We support and guide you through how you best convert both inside and outside traffic opportunities by supplying you with options around service risks and how to serve your existing and potential new customers best.

Alertiee will help you to provide a harmonious customer experience across your omnichannel business. Our technology enables customer experience, marketing and retail teams to close the gap between customers’ digital experience and their physical experience.

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Sahand Malek