In 2012, Andrew Cove was dealing with a frustration most diners know well: His waitress was taking forever to bring the check. Inspired by Uber, the ride-sharing service that processes credit card payments automatically, Cove wondered, "Why can't we do that in restaurants?"

The next year, he launched Cover, an app that lets you pay your tab automatically with a credit card as you leave a restaurant. (Just tell the server you're paying with Cover, and leave when you like.) More than 300 restaurants have signed up for the service, and Cover has raised $7 million in funding. Its system works by using beacons--palm-size devices that communicate with mobile phones--installed in participating establishments.

You can use beacons, which emit low-energy Bluetooth signals, to sense customers' whereabouts and send notifications to their phones. (Unlike, say, RFID technology, beacons do not require special scanners and tags. And they are more accurate than GPS.)

The technology is still relatively new; Apple included iBeacon in its iOS 7 operating system two years ago, and Android devices can also use beacon apps. But with the launch of the Apple Watch--and the prospect of sending location-based marketing messages right to customers' wrists--more companies are experimenting with beacons. In January, Marsh, a supermarket chain based in Indi­ana­polis, announced it was rolling out beacons in more than 60 of its stores in order to market to Apple Watch users. Using beacons, Marsh can send coupons to customers' watches (or phones) as they walk by products in the store that they have previously purchased.

So far, most of the early adopters have been retailers like Marsh, which dig the idea of tracking customers in stores--and pinging them with promotions. But entertainment venues could install beacons to help customers find their friends in a crowd. Hotels might use them to automate guest check-in and grant access to rooms.

Last year, Major League Baseball installed beacons in most of its stadiums. Fans who download MLB's Ballpark app typically receive promotions for food and merchandise after they enter the stadium. Customers can also use the app to order snacks delivered to their seats.

Of course, not everyone's convinced beacons are more than a gimmick. For them to work, customers must willingly download an app (either one the company creates or one like Swirl, which sends promotions for multiple businesses). And even if they do, "it's one thing when you drop a bunch of catalogs in people's mailboxes," says Forrester retail analyst Sucharita Mulpuru, but "another when you push through a bunch of alerts on their phones." One study by InMarket, a platform for beacon apps, found that sending more than one notification per shopping trip led to a big drop in app usage, as those that offend are deleted.

Beacon companies warn that the technology is still in the early stages. "It will take time to get high-value experiences built on apps," says Steve Cheney, co-founder of Estimote, a beacon maker that has raised more than $3 million in funding. Cheney envisions a world in which beacons help you learn your customers' habits and anticipate what they want. That includes learning when they want to be left alone.

THE BEACON BASICS

1. Provide a valuable service
"To persuade customers to download an app and leave Bluetooth on, the experience needs to be compelling," says Andrew Cove, co-founder of Cover, a payment app that uses beacon technology. In other words, no one's going to sign up to get spammed with ads.

2. Start small
Once you have a plan, test the system in one location before rolling it out to the rest of your business. It can also take some fiddling to figure out the right spots and settings for the beacons. "Where you place each beacon and how strong the beacon is transmitting affect when customers' phones will detect the beacons," says Cove. Closely monitor the data to make sure customers are downloading your app and having the experience you intended.

3. Get creative
"Beacons aren't just for pushing coupons or ads," says Steve Cheney, co-founder of Estimote, which makes beacons. "This technology is capable of much more." For instance, you could use a beacon to remind a customer to pick up an item on her shopping list when she passes by it in the store, or provide a virtual "You are here" map of a location.

THEY'RE EVERYWHERE
Beacons can monitor you as you shop and travel--or raid the fridge

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Fast-Food Joints
McDonald's recently tested beacons in 26 restaurants in Georgia. Customers who downloaded an app received digital coupons when they entered Mickey D's. More than 18,000 coupons were redeemed over four weeks.

The Mall
Simon Property Group is installing beacons in about 240 of its malls and outlets. Some large retailers, like Macy's and American Eagle Outfitters, have already used beacons for in-store promos.

The Airport
EasyJet travelers can have their boarding passes automatically displayed on their phones as they approach security at several European airports.

Your Refrigerator
A new app called Carrot Hunger uses beacons to help you eat less. The app sounds an alarm if you get too close to the fridge when you're about to hit your daily calorie limit.

BATTLE OF THE BEACON STARTUPS
A few of the companies competing to help you keep tabs on your customers

Gelo Grand Rapids, Michigan
Gelo's beacons are the rugged option. They hold up against snow, humidity, heat, and direct sunlight. They can even survive underwater. Each beacon can operate for two years on two AAA batteries. $35 each

Glimworm Amsterdam
Glimworm's sleek-looking beacons operate on a coin-size battery that lasts about one to two years, and they can be branded with your company logo. The company is also working on creating wearable beacons. (In other words, you may soon be able to turn an employee into a walking beacon.) €99 for a package of four

Estimote New York City
Estimote's colorful beacons, housed in waterproof silicone, hold a charge for about three years. The company also recently launched beacon stickers. Only three millimeters thick, the postage-stamp-size devices stay juiced for up to a year. $99 for three beacons and a developer kit, or $99 for 10 beacon stickers and the kit

From the May 2015 issue of Inc. magazine