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Setting the Stage for a Beacon Breakthrough


By Tim Tang, Director, Enterprise Retail Solutions, Hughes

Beacons have spawned a movement.  It began with small devices from unknown names like Estimote and Gimbal that carry tremendous potential if used properly. Then marketing companies like Shopkick, InMarket and Shelfbucks demonstrated the business potential via customer engagement of these tiny devices.  Major retailers such as Macy’s, Tesco, and Walgreens are actively deploying beacons to create new forms of mobile customer engagement, reducing friction in the path-to-purchase. A perfect storm is brewing for an epic revolution in retail customer engagement.  As with a child learning to ride a bike, it is critical to anticipate and address potential problems in order to exploit the emerging momentum.

Due to the experimental nature of any new technology, beacon-enabled marketing initiatives may either thrill the customer or irritate them.  For example, imagine a customer walking into their favorite specialty shop.  The beacon at the front entrance of the store wakes the customer’s smartphone to let them know about a new promotion for that weekend only.  The customer responds with interest and engages the retailer’s app to retrieve the mobile offer.  But, the offer never arrives.  For this loyal customer, their mobile carrier doesn’t have sufficient coverage on the lower levels of the mall.  What is a customer supposed to do?  Go outside, retrieve the coupon, and then come back in the store?  What could have been a positive experience is now nothing more than frustration – and with today’s social media connected consumer, one bad experience can be disastrous.

The more friction in the purchase process, the less likely it will complete. Consider a nationwide promotion where at some stores only Verizon customers may successfully convert, in other stores only AT&T customers convert, and in still other stores, nobody can convert successfully!  A retailer has no ability to ensure adequate 3G/4G wireless coverage by all the major carriers in all of their stores.  However, a retailer does have the ability to provide Wi-Fi in all of their stores. The availability of in-store Wi-Fi is a crucial element to consistent, reliable beacon marketing.

The beacon merely enables the potential for a new experience.  What happens once a customer engages with an app triggered by beacons is limited only by a marketer’s creativity.  Exclusive content will likely become a major motivator to drive customer conversion rates.  “Visit our store TODAY @ 2pm to hear Beyonce’s live rehearsal for this weekend’s performance!”  Or how about “Columbus Day Mobile Special! Choose your gift – a new mobile game or an exclusive trailer.”  What happens if the customer bites?  Even better, what happens when many customers bite at the same time?  While Wi-Fi provides connectivity to receive content, Wi-Fi alone does not guarantee the ability to “surprise and delight” a customer and lead to a purchase. Marketers must work with store operations to ensure that delighted customers can convert their content experience into a merchandise sale.

In order to guarantee an outstanding customer experience, there are many potential options to consider. To support large distributions of content and mobile applications, some retailers will simply expand the existing Internet connections to the store.  However, for many retailers, some stores have insufficient access to Internet capacity—as little as one tenth of what customers typically enjoy in the comforts of their homes (i.e., 10 Mbps).  Even worse, during peak traffic times there could be more than 10 times the number of users trying to share that tiny connection to the Internet. This is a recipe for failure. The more successful the campaign to drive customers into the store, the worse the customer’s mobile experience will be in the store. Regardless of how enticing the content may be, if customers have to wait five or 10 minutes for the premium to download, they will simply give up and move on to the next store.  As one retailer put it, “Five seconds feels like an eternity!” 

A new paradigm is needed.  New technologies should be employed to leverage higher speed and less expensive bandwidth, while still preserving real-time customer-facing applications, such as product information look-ups and loyalty coupons.  Existing limitations to store access may be addressed by leveraging virtual capacity created by WAN optimization systems.  Dynamic, self-adjusting networks may be employed to ensure that the Internet usage aligns with business objectives.  In some situations, a local media server may provide even greater flexibility to distribute multimedia content.

The emerging opportunity with beacons is expected to transform the customer’s in-store experience as significantly as mobile technology has transformed shopping. In order to succeed with beacon marketing, retailers need to adequately address the limitations of cellular coverage with Wi-Fi and seek new methods to fully satisfy a customer’s appetite for content in deciding on a purchase. Given the competing demands to exceed customer expectations and the cold reality of resource limitations, new store technologies and trusted partners to implement them is the only route to successful beacon marketing.