A potential customer wakes up one morning and shudders because the weather had changed drastically overnight. As he realizes that winter is fast approaching, he ponders over his wardrobe situation, wondering whether or not he needs new sweaters. At this exact instant, he receives a push notification on his phone from an eminent clothing brand, advertising a vast range of their warm, fuzzy sweaters. He stands there in awe, amazed at the smartness of his smartphone. Considering this a sign from the universe, he ends up buying a bunch of sweaters to stalk up for the winter. Marketers, however, are well aware that the customer’s reception of such notifications or recommendations is owed to meticulous background working and data collection—not because phones are too smart or because the universe cares too much. This scenario is a prime example of the incorporation of location-based data into marketing. Through the use of beacon technology, companies are able to access their customer’s current or previously visited geographic location, assess the requirements and needs, and consequently, provide their customers with exactly the right service at the right time.
There are three primary methods through which you can incorporate location-based data in marketing:
1. Geo-fencing
Geo-fencing is a location-based advertisement tactic which essentially refers to the technique of creating a virtual boundary around a specific geographic area, often around the company’s location. If the potential customer enters the designated geo-fenced area with their smartphone, they may receive a push notification from an app, a text message, or see location-based content and advertisements while using an app in that location. An appropriate example of geo-fencing is the “store companion” app created by Sephora. The companion is activated as soon as the customer enters the store and provides product recommendations, reviews, as well as information on the customer’s past purchases and wish-list product availability. Thus, by using geo-fence technology, Sephora is able to create exceedingly personalized mobile content and consequently increase customer satisfaction drastically. Various studies reveal that consumers indeed appreciate such notifications on their phone due to their practicality and location-based relevance. For instance, a study conducted in 2013 asked consumers if they would be interested in an app that allowed them to receive notifications for geo-targeted coupons on their smartphones. 67% of the consumers expressed varying degrees of interest in such an app.
2. Geo-targeting
Geo-targeting is another, highly effective location-based marketing trend that focuses on delivering advertisements to people that meet a very specific targeting criteria influenced by demographics, interests and location. Essentially, it is the practice of targeting potential customers online with localized or location-appropriate content based on their geographic location. The method of geo-targeting can be deployed on varying geographical scales—from targeting consumers based on the continent to more granular targeting on a country, city, or even zip code and neighborhood level.
Domino’s uses geo-targeting technology by asking the consumers to sign up for special offers by providing their addresses. Once the location details are provided, the door to rich advertising possibilities is then open for Dominos. For instance, a Dominos store in a location currently experiencing a thunderstorm might send a message to consumers tempting them with the suggestion of a comfortable night-in, indulging in the cheesy goodness of their decadent pizza. Irresistible, right?
3. Geo-conquesting
Geo-conquesting is undoubtedly the pettiest way to use location-based data, however, it also happens to be highly effective—alluding that pettiness begets effectiveness. Who knew! Technically, this method works in the same way that geo-fencing works, i.e., through the use of GPS, Wi-fi, Bluetooth and radio frequency to deliver advertisements to consumers when they are in a designated area or vicinity. However, the main difference is that with geo-conquesting, the company sends notifications or advertisements to consumers when they are in the vicinity of a competitor. This is precisely what enabled Burger King pull off an immensely interesting stunt called the “Whopper Detour”, which essentially steered customers away from its threatening rival: McDonald’s. Basically, consumers who went within 600 feet of a McDonald’s store would get an ad enabling them to order a Burger King Whopper sandwich for one penny. Once the customers placed the order through the BK app, it would then navigate them to the nearest Burger King store to claim their sandwiches. This tactic not only gained them billions but also was a source of amusement for everyone—well, everyone except for McDonald’s.
Why We Care
It is evident that any successful campaign must rely on various strategies and tactics in order to have effect and yield profits. Research showed that 83 percent of marketers who used location data saw higher response rates, while 83 percent saw more customer engagement. About 85 percent achieved growth in their overall customer base. Therefore, companies resort to investing in location-based marketing strategies because it enables them to deliver a more personalized and targeted experience to consumers, thus, increasing conversion as well as customer retention.
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