What retailers need to know about location-based marketing: Definition & best practices

What retailers need to know about location-based marketing: Definition & best practices
Apr 18, 2018

What is location-based marketing?

Location-based marketing aims to motivate a target consumer to visit a physical store and complete a purchase. The overall objective is to generate qualified foot traffic in stores thanks to real-time location data and mobile technology.

The growth in location-based marketing can be linked to the ongoing rise in consumer smartphone and internet use; this has led to the creation of massive amounts of location data and has provided an increasingly sophisticated understanding of consumer buying behaviors and habits. All this data can then be combined to create personalized advertising and offers that will attract consumers into a physical point of sale.

Despite an increase in e-commerce, 91% of sales are still made in brick-and-mortar stores (Fevad 2017). In addition, 88% of US consumers research online before buying in-store demonstrating that shoppers now expect an omnichannel shopping experience.

Retailers can use location-based marketing to ensure that the physical store remains at the heart of their communication strategy.

location-based marketing campaigns

Location-based marketing strategies

There are many ways retailers can use location-based marketing to engage consumers and ultimately drive foot traffic into their stores.

Examples include:

  • Marketing campaigns triggered by location: sending special offers via email, ads on desktop and mobile, push notifications
  • Coupons: online discounts and offers which have to be redeemed in-store
  • Delivery and logistics options: offering click & collect services and easy to use store locators on websites
  • Competitions
  • Beacons: Beacon technology allows an even greater degree of accuracy in targeting consumers within a physical area. Retailers can deploy beacons which then communicate directly with a smartphone via Bluetooth (rather than via GPS) and enable highly personalized ads
  • Geofencing: By creating a virtual ‘fence’, retailers can customize the in-store experience for customers adding an additional layer of convenience to their shopping. For example, when a consumer is detected to be inside the ‘fence’ (i.e. in-store) extra features inside branded apps can be enabled such as maps to products (Home Depot), a product barcode scanner (Under Armour) or rewards for consumers earned by trying clothes on (American Eagle).

Why retailers should be investing in location-based marketing campaigns

1/ Increase in-store foot traffic

The main advantage of location-based campaigns is to drive in-store foot traffic from potential customers.

2/ Target qualified prospects

These days understanding online behavior is relatively simple thanks to cookies which allow the collection of thousands of pieces of anonymous data giving an overall picture of user browsing habits. It’s also possible to effectively track a user journey from research to purchase thanks to analytics software and attribution models. But when it comes to the offline world, how can we replicate the same kind of insights into user behaviors?

To be able to predict a user purchase, it’s necessary to have an in-depth understanding of shopping behaviors in an offline point of sale. This requires gathering location data and modelling consumer profiles which then allows brands to target a qualified audience in real-time with the right message at the moment they are ready to buy.

The location data gathered thereby becomes an offline version of the online ‘cookie’.

location-based marketing

3/ Benefit from detailed location data

The collection of anonymous location data enables the creation of qualified audiences which can then be targeted in real-time via location-based advertising campaigns.

The collected location data includes public places such as shops, restaurants, and / or places associated with leisure such as cinemas, theatres, stadiums etc. It never includes private or sensitive locations link to religion, politics, health etc.

A large network of partner applications enables the collection of the location data which then in turn allows the creation of predictive models of consumption habits. A consumer’s location is one of the best indicators of their intent to make a purchase. This then allows advertisers to create segments based on how often their audience frequents a store, their habits and interests.

4/ Propose additional services to consumers

Location-based marketing allows brands with brick-and-mortar stores to target their audience in a more accurate and personalized way. It also offers the possibility of additional touch points with their consumers and the ability to create a complete omnichannel experience.

Retailers can therefore:

  • Boost communication during quiet periods;
  • Use personalized messages to increase consumer loyalty and upsell products;
  • Offer promotions or special prices targeted at their competitors’ customers.

How to launch your first location-based marketing campaign

There are online advertising platforms, such as Teemo, that enable retailers to create location-based campaigns based on the mobile location data they have available via their partners.

This involves:

  • Collection of anonymous location data via partner mobile apps;
  • Qualification and prospect scoring via intelligent algorithms - this enables the platform to predict the consumer’s next shopping trip;
  • Personalized mobile advertising on the smartphones of ‘hot’ or highly qualified prospects to motivate them to visit the brand’s store.

3 steps to launching a campaign:

1. Supply a brief including campaign objectives, number of stores, target URL and the required creative
2. Decide on the length of the campaign
3. Decide on a budget

How to evaluate campaign success

Measuring the offline impact of online campaigns on foot traffic and sales has long been a challenge for retail marketers.

However the new generation of location-based advertising platforms enable marketers to accurately measure how many verified store visits are triggered thanks to a campaign. A visit is defined by the route taken by the consumer within the store as well as the length of time they spend.

Retailers are therefore able to access performance indicators such as:

  • Real-time foot traffic in a point of sale
  • Audience profiles of prospects and clients
  • Impact of online campaigns on offline sales

This enables retail markets to control campaign costs and ensure that an online investment is translating into offline results.

Teemo is a location-based marketing platform that enables retailers to create campaigns targeting potential consumers and motivating them to visit brick-and-mortar stores. This leads to increased foot traffic and sales as well as a better understanding of consumer behaviors and buying habits. Request your demo today to learn more about how our solution can help your brand.