Location based marketing is the technique of providing targeted, real-time advertisements to people based on their current location. It makes use of geo-location devices to sense the customer’s current location and display relevant ads, offers, promotions and product recommendations. Targeted product informations and offers are delivered to customer phones through SMS when they are in close proximity to a retail store or even as they walk across an aisle within a store. Location based marketing brings the huge benefit of attracting customers and boosting sales.
Why is location based marketing on the rise?
The primary reason for the rising popularity of location based marketing is the increasing use of smart phones. Six in ten UK adults (62%) now use a smartphone. 48% of mobile phone users prefer downloading mobile apps for various purposes with smartphone users having an average of 23 apps in their device.
Customer preferences are also changing with 72% consumers admitting they will respond to call to action if they are within sight of the retailer. Emergence of new technologies like Wi-Fi positioning, Near-Field Communication and GPS enabled Apps that can pin-point a device (and hence the customer’s) exact location at any time have immensely aided location based advertising. In-store sensors and beacons help convert sales better by sending alerts to a customer as they browse items in a store.
Types of location based marketing
The two types of location based advertising are Push and Pull.
Under Push services, location specific alerts are sent to the customer’s phone without the customer actually requesting for it. However, the customer should have agreed to receive such alerts previously, for ex: through a subscription or through consent given while downloading an app.
Under Pull services, the customer uses his or her phone to explicitly ask for location specific information. For ex: a person using a smart phone to locate the nearest cinema or coffee house.
Push is considered to be more expensive than pull. It is more network intensive as it requires continuous information on the subscribed users within the monitored area. Too much of push notifications can also be considered intrusive and may have a detrimental effect. Retailers need to understand customer behaviour to predict what kind of alerts may be useful to a customer and what will be simply annoying. They would also need to store history of past communications with the customer to prevent sending redundant alerts.
Advantages of location based marketing
• Higher customer engagement and loyalty
• Targeted alerts can be used to reward loyal customers
• Results in more footfall in stores
• Creates customer interest and generates more sales
• Helps to create brand awareness
• Gives the business a greater competitive edge
• Data collected gives useful insight into customer behaviour
The mobile context and location services market is set to reach $43.3bn by 2019, up from $12.2bn in 2014. While SMS alerts have been around for a long time, nine in ten people dislike being targeted with irrelevant messages. Location based advertising helps to deliver timely and relevant messages that are useful and can be immediately acted upon by the customer. Businesses that use it intelligently stand to achieve higher conversion rates, greater customer satisfaction and consequently, more revenue.