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How Location-Based Advertising Can Drive Shoppers In Store

By: Kaan Bingöl

The importance of mobile presence for every industry is increasing with consumers spending more than 85% of their time on their smart phones – most of them grabbing phones before washing their faces in the morning! Therefore, online retailers can no longer afford to ignore the power of location data; especially ecommerce and retail since mobile is now no different than a retailer’s storefront.

Blog articles in this series

[Step By Step Guide] How To Improve Your Customer Segmentation

How Mobile Marketing Automation Can Help You Increase Engagement

This article will discuss how location-based advertising can drive shoppers in store and convert the visit.

What is location-based advertising?

Recently, location-based marketing technology has seen enormous improvement thanks to the big investments and innovations. These efforts and investments are of course not for nothing! With location-based strategies, online retail (and multichannel) companies started to leverage real-time data to better target consumers, effectively measure their campaigns and provide the best personalised experience to their customers.

Because of these new opportunities they bring to the businesses, location based advertising and marketing are taking a significant part in mobile driving marketing budgets. In fact, According to the “Global Location Trends Report” launched at SXSW, 75% of global marketers including Coca-Cola, BMW and Starbucks stated that location-based marketing would play a crucial role in their businesses this year.

Well, you have heard the big guys! Let’s take a look at location-based technologies and master how to use them effectively in your campaigns.

Geofence and Beacon Technologies… what are they?

You might have heard these buzzwords recently quite a lot when it comes to location-based marketing. Location based marketing is only available with geofencing and beacon management technologies, that target users’ locations in order to promote a service or a product in a more relevant and personalised way.

a. Geolocation and Geofencing: Trigger messages as users enter or exit specific locations

Geofences are basically virtual fences that use the global positioning system (GPS), WiFi or radio frequency identification (RFID) technologies to set triggers or collect data and define geographical boundaries.

So, if you want to target users as soon as they enter or exit a certain geographical area, you can easily achieve this goal through geofencing. While it is easy and not particularly expensive to set up, geofences require being paired with either a mobile app with location services enabled, or triggered by an event like a geotagged post on a social platform.

After building a geofence around a specific location or around your physical store, you can set up automatic messages for your customers within the radius. You can store geocoded data and content, and query them using geospatial search methods. You can also rank data around user location or display content on integrated maps.

Geofences enable you to target your customers at the most important point in the consideration cycle in real-time, and analyse the results to move your campaigns from annoying to necessary; from intrusive to addictive.

b. Beacons: Know who enters your store and when

A beacon is a small Bluetooth radio transmitter designed to attract attention to a specific location. Since Apple first introduced iBeacon technology, it didn’t take long to catch the attention of ecommerce companies, retailers and marketers. In fact, BI Intelligence Report indicated that beacons has been driving $44 billion in retail sales in 2016, up from $4 billion in 2015 (Forbes). 

Beacon technology — used mostly in indoor locations — allows you to engage with customers while they shop in your store, and analyse user behaviours to create powerful new campaigns. They also help you to attract users to your apps, retain those users, and increase engagement on those apps.

In addition to use beacons for only your business, you can also enable developers and app owners to have free access to your beacons in order to increase foot traffic to your store. For example, mobile applications about food and dieting could send location-based notifications to users within the range of a specific beacon and encourage them to enter the store and buy what they need for their diets.


What can you do with Geofences and Beacons?

Using location-based technologies you can get your customers’ physical locations easily and reach them while they enter a shopping center or a small store or even your competitors’ venues.

Businesses can trigger timely notifications in spaces as big as a store down to areas as specific as an aisle. By using geofences and beacons you can target users based on their real-time or past location and send messages in such occasions:

  • Invite nearby customers to your store and greet them with a welcome message as they enter the store
  • Entice them with related promotions, discounts or new products while they walk through your aisles
  • Notify them about payment options as they approach the cashier
  • Bring mobile users who have recently checked products to nearest stores
  • Offer a special treat to encourage them to come back
  • Announce local events to nearby locations
  • Track your customers and drivers for your car booking service
  • Send promotions of restaurants close to your customers’ home when they are on the way home in traffic

… to name a few.

Location history data provides historical insights about where a customer has been, or what he has been doing at a specific location over a period of time. Beacons and geo-fences can collect store data and track user behaviours (such as purchasing habits, favourite products and payment choices), enabling retailers to re-target customers with even more personalised campaigns.

How do Businesses Utilise Location-Based Marketing?

According to a report from Econsultancy, 66% of marketers stated location-based advertising was the ‘most exciting’ mobile opportunity for 2016. Let’s take a look at how companies harness this exciting opportunity in practice.

The most popular and effective scenario that ecommerce, retailer and telecommunications ccompanies use is sending related promotions and offers to users’ phones when they are nearby or in-store.  The motto here is simple: “Your customers are in your store for a reason, don’t miss the opportunity to provide exactly what they need from you”.

In addition to the common usage, an ‘online food order app’ in Turkey has an unusual approach. They take advantage of the time spent in Istanbul traffic and send push notifications to their users using customer location data.

When users are on their way home, the app sends a push message about the promotions of restaurants close to their homes. This enables users to buy their food without having to wait and also benefit from the discount. Using this interesting approach, the app achieved a higher engagement, gained more loyal customers and built more active users.

How about big players worldwide?

One of the companies who practise innovations is the supermarket Whole Foods. In 2015 they started using location-based marketing in order to improve post-click conversion rates for their mobile ads.

They placed geofences in their stores and targeted special promotions to their customers who passed by that particular location. Well, as we already know, this is a very common usage. What they did out of the box was placing geofences near their competitors’ stores and used these ‘geo-conquesting’ tools to target customers near those stores offered better deals at Whole Foods.

With this campaign they achieved a 4.69% post-click conversion rate, which is more than 3 times the national average of 1.43%.

Another unusual approach is from the department store Barneys (New York Store). In addition to the common store-based promotion notifications, they also added recommendations for other attractions and dining around the store’s neighbourhood. This way, they improved engagement as well as providing other benefits to their customer base.

Last but not least, Starbucks is continuously experimenting different location-based campaigns. They use their customer data (behavioural, location, social media etc.) very wisely to offer tailor-made promotions based on that information. 

According to Starbucks, with this personalised campaign, the likelihood of a person entering a store increased by 100% after seeing a location-based notification.

Starbucks also managed to improve engagement while offering convenience to their customers with their Mobile Order and Pay feature. This feature on Starbucks app uses customers’ proximity to a store, and allows users to order ahead before actually entering the physical store. By the help of this feature, they are saving their customers’ time and creating a big loyalty on their brand.

What About Customer Privacy?

When it comes to location-based marketing, customer privacy is one of the biggest concerns for advertisers because when done wrong, it might be a little bit off-putting from consumers’ point of view. However if you make sure that you have the right communication with your customers, location-based marketing can offer meaningful insights and results.

You should educate your customers on how they will benefit and improve their experiences; allow them to opt-in and take the control by giving them the options where and how frequently they want to receive notifications etc. The more you learn about your customers’ preferences, the better your brand will be able to provide targeted content that drives trust and loyalty.

Conclusion

The reality is crystal clear: consumers want personalisation, online retail brands want engagement. In this blog series, we tried to guide you through Segmentation & Targeting, Mobile Marketing Automation and location-based marketing in order you to provide your customers with the best tailor-made experience in every channel while improving your customer engagement conversion rates.


By: Kaan Bingöl - CEO at Netmera

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