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Location-Based Marketing 101: The 3 Must-Haves

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Mar 12 2015, Posted by Lisa Cramer

Location-based marketing or proximity marketing—some call it the new 5th ‘P’ of marketing, which normally includes Product, Price, Promotion and Placement. The idea of “proximity” is particularly relevant to marketers today because it represents the final missing link between consumers and brands/retailers in physical retail.
 
Through location-based marketing, brands and retailers can send hyper-targeted content to a consumer’s smartphone based on their location via beacons (small, wireless devices that transmit content to a smartphone via radio signals). As a marketer, this means that I can deliver messages, ads, coupons and any other immediately relevant content to help influence the sale based on the consumer’s location or what products/displays they may be interacting with in store.
 
All in all, while some brands/retailers have been hesitant to jump on the location-based marketing bandwagon, others have taken the leap and seen great successes. Some of these early adopters include: Macy’s, Hillshire Brands, American Eagle, Lord and Taylor, American Airlines and the Golden State Warriors Basketball team.
 

And, what kind of results have they seen?

  • Macy’s started testing beacon technology in select New York and San Fransisco locations in 2013, and while the retailer hasn’t released hard data, its move to deploy beacons across all its stores tells us that its tests went well.
  • Hillshire said shoppers were “20 times more likely to buy” its American Craft sausages when they received such tailored communications.
  • American Eagle learned it could impact shopper behavior through beacon offers, after more than doubling the number of shoppers who visited their fitting rooms to try on clothes following receipt of beacon messages.
  • The Warriors realized a 93% higher take rate with beacons offers, than without”, says Kenny Lauer, VP of Digital Media, Golden State Warriors basketball team.

What’s more, according to Business Insider, beacons are expected to directly influence over $4 billion worth of U.S. retail sales this year at top retailers (.1% of the total), and that number is expected climb tenfold in 2016.

 
So, how do you get started?
 
Here are the 3 keys things you need to get proximity marketing working for your brand or store:
 
1) The Technology

When implementing location-based marketing, the first place to start is to understand how these hyper-targeted messages will reach the right consumers at the right time using beacons. As we mentioned before, beacons are a small, battery-operated, low-cost hardware that use radio signals to transmit specific messages or prompts to specific smartphones. They engage consumers, by working in concert with an application on their smartphones. And, they can also detect and recognize devices based on their previous behavior, allowing them to send customized messages to each device. Before choosing a beacon solution provider, the first step is to figure out your goals. Do you want to boost loyalty program participation? Are you looking to increase brand/specific product awareness? Are you trying to actively engage with consumers? These types of questions will help you determine the best solution providers for your brand or store.

 
2) The Application

In order to send messages/content/offers to a consumer via beacons, a specific application (belonging to either the brand, the retailer or a 3rd party) must be on that consumer’s smartphone. If you aren’t looking to develop a whole app, there are a growing number of 3rd party apps with beacon technology already integrated that you might be able to piggyback off of such as CollectRewards or RetailMeNot. Alternatively, it might be worthwhile to tag team with other retailers. Simon Mall is a good example of this, retailers in Simon mall locations are able to reach numerous shoppers every week on their mobile phones through a dedicated network.

 
3) Analytics

Okay, the technology is available, the offers are primed and ready to be distributed, but how do you uncover what’s working and what’s not? Location-based marketing and big data/analytics go hand-in-hand and that’s a great thing for marketers. With location-based marketing you can get tremendous feedback on what consumers are interacting with and what they aren’t. What messages did they open? What offers or other links did they click on or engage with? What messages prompted a reaction? Did they end up purchasing a product (ties into the POS system)? Beacon technologies can enable a wealth of analytics that can help us start to see what’s working and what’s not, even specific to the type of consumer (demographic, phase of the buy cycle, etc.).

 

Regardless of how quickly you think location-based marketing will take hold, the fact is many brands and retailers are already having great success with it. And, given the extremely quick pace of technology evolution and the heavy use of smartphones by consumers in store, proximity marketing is something that should be on every retailer and brand’s list of marketing considerations. After all, it can help you reconnect with your consumers, influence consumer behavior in store and drive sales and loyalty in store.

 

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