Is your business reaping the benefits of location-based marketing? If not, you are missing out.
Location-based marketing is a marketing strategy with a high return on investment (ROI) because, with it, you can reach customers where they are–online and offline. It combines the best of digital marketing with real-world customer interaction. By using mobile devices and location data, businesses can reach in-market customers exactly when they are physically nearby a store location.
Brands with physical store locations like retail, grocery, and franchise businesses can implement location-based marketing strategies to grow their businesses and increase sales. For example, in a Statista survey, 89% of mobile marketers said location-based marketing increased sales revenue.
How can you implement location-based marketing? There’s a lot to consider, but this full guide can answer all your questions and help you get started.
What Is Location-Based Marketing?
Location-based marketing utilizes smartphone location data to deliver targeted advertising and content to specific customer segments. The messages can either be offline via SMS or online. The strategy uses qualifiers such as proximity to your business, competitors’ business locations, or local events to build a target audience.
The software behind location-based marketing uses your location to trigger a notification or alert. It could be for a promotion, discount, or informational content about a brand. If you get it right, it is an easy way to reach and convert potential customers. Plus, you can also win new customers away from your competitors.
A huge advantage of location-based marketing is the connection of potential online customers to your offline store. Let’s say a customer is passing by your store, they get a notification about a product they were searching for online, and it’s on discount. They are more likely to visit in-store if they know about a deal on a product they looked at online.
This strategy increases foot traffic to your physical location. Other advantages of location-based marketing include:
- Better advertising ROI – By offering relevant ads and content to your customers, you are more likely to see conversions and sales.
- Scope the competition – By targeting customers in your competitor’s business location, you drive sales away from their business and to yours.
- Better user experiences -When done right, customers will only receive relevant ads.
- Personalization – Increase customer engagement when you add personalized messages.
With location data and marketing, security and privacy are important. Consider privacy when using location-based marketing. For instance, 87% of consumers will not buy from your store if they don’t believe you can protect their data.
There are data protection laws in various regions, so familiarize yourself with them before embarking on location-based marketing for your franchise.
Types of Location-Based Marketing
There are a few different tactics that you can set up location-based marketing for your business. Not all of them are right for your business, so choose wisely if you want to make a good return on your investment. Here are some common tools and tactics to be aware of:
A geofence is a boundary around a specific location. You can set a geofence as a circle or a polygon. The first thing you do is identify your point of interest, it may be your physical store location or even a competitor’s location, and use it as a reference point. If you use a circle, you can’t adjust it to include surrounding points of interest.
On the other hand, a polygon can be more precise because you create it based on surrounding buildings or parking footprints. Geofencing uses GPS technology to create the boundary. When a target customer comes within the area, they receive a message, notification, or email.
Geofencing marketing is excellent for large areas such as malls and events but also works well if you want to capture traffic right in front of your store. With it, you can encourage users to engage with your product in real-time. For example, if a customer viewing a product online happens to enter the marked area, you can inform them of its availability at a nearby store.
Geotargeting is the practice of targeting specific audiences based on their geographic location. Unlike geofencing, you aren’t targeting people based on their proximity to a location. Instead, if you have stores located in Atlanta, Miami, and New Orleans, you might target people that live in those cities.
Like other location-based marketing channels, your customer needs to opt in and permit an app to access their location data. Geotargeting is based on the customer’s device IP address. The IP address is unique to each device. You can use it to determine a user’s location information, such as country, zip code, etc.
Customers get a more personalized user experience when using geotargeting. For instance, people often get local news and events tailored to their locations. A simple Google search for restaurants nearby is another example. Using geo-targeting, Google gives you the restaurants closest to you.
Beacon devices connect with predetermined apps when they are within range. They use WiFi or Bluetooth to connect to the customer’s device. Beacons are best used in a small geographic area and work very well indoors, like in retail stores.
Once they detect the app, they send a signal to the customer’s device, prompting the server to send notifications, emails, or SMS. Beaconing provides a more direct channel of communication with the customer. For instance, you can track where the customer is in a store and send offer messages based on it.
An advantage of beaconing is that customers do not need to be online or have cell reception for it to work. Even in poor reception buildings, you can continue to track the customer.
Mobile targeting is the practice of sending marketing messages to audiences, specifically using mobile devices. The ads can be based on time, location, or even a particular device. The advantage of mobile targeting is that you can reach audiences wherever they are, even if they are not online at the time.
To achieve mobile targeting, you start by creating a customer segment to target. It can be based on anything relevant to your business. Once you have the segment, decide which qualifiers you will use to target them. For instance, is it when they are within a certain area or close to your store?
Whenever you use a targeted approach like this, you increase your chances of getting a higher return on ad spend. This channel offers a more personalized connection to the consumer via their device.
Push notifications can utilize location, geofencing, geotargeting, or beaconing technologies. These are the pop-up messages that appear on your device.
Before marketers start using push notifications, the customers have to opt-in and allow push notifications. After that, you can start sending targeted marketing messages.
Push notifications are a great strategy to engage customers and ensure they keep coming back to your website since they are clickable. The messages you send should be relevant, personalized, and timely for them to be engaging.
Mobile targeting is a broad strategy but you can personalize it by using tactics like geotargeting and geofencing. For instance, you can send messages based on the subscriber’s location through an IP address or based on the city where they are at the time. Mobile targeting can also geolocate to a nearby point of interest like a retail store. For example, Yelp sends restaurant recommendations based on location.
Google “Near Me” Searches
The first place most of your customers go to look for everything is Google. Location-based searches for various terms are steadily increasing without the location qualifier “near me.” Other qualifiers such as zip codes are on the decline. Searchers expect to receive location-based results for search terms such as restaurants, retail, franchises, gas stations, etc. Google does that by showing addresses of businesses near you at the top of search results.
Location-Based Marketing Examples
Many businesses use location-based marketing, even if we don’t realize it. If you’re thinking about using it for your business, these location-based marketing examples can give you some inspiration.
Burger King’s Whopper Detour
Burger King pulled a fast one on McDonald’s using geofences and geo-conquesting. The Burger King Whopper Detour campaign targeted customers who went within 600 feet of a McDonald’s location. Once inside the geofence, they received a mobile notification offering a Whopper for one cent. The app then directed them to the nearest Burger King to get their food.
The promotion resulted in over 1.5 million app downloads within a few days. It also became the most downloaded app on the Apple store for several consecutive days. A user experience based on location is very important, as is the case here. Customers engaged with the digital and physical Burger King stores.
The Burger King campaign shows how leveraging technology and clever marketing ideas can produce excellent results. Geo-conquesting is a low-cost way to engage with your competitors’ customers. For it to be effective, put customer experience first.
Barneys New York
Barneys used beaconing last year when it launched an iBeacon platform together with its mobile app. Once a customer opens the app, they may accept push notifications. When someone enables push notifications, the store can see their location data. Barneys uses the location data to determine if a customer is in or near a store.
On acceptance, customers can receive push notifications based on what’s in stock or their wish list. The app also gives customers recommendations for dining and sightseeing spots in the Chelsea neighborhood.
Customers appreciate this extra bit as it does not push Barneys merchandise, making the store feel more genuine. Offering customers useful information helps you find a delicate balance.
What Works for Location-Based Marketing and What Doesn’t
Thanks to its targeted approach, location-based marketing is a low-cost but effective strategy. It works in almost all industries, but some limitations make it more suited for others, as we will see below.
The best fit for location-based marketing is a business with physical locations. Geofencing allows companies to capture and convert customers within the store’s proximity or another point of interest, such as the competitor’s store. When creating marketing campaigns, marketers can segment and create audiences using location data from visitors to the store.
Location-based marketing is a good fit for these businesses.
- Retail stores
- Grocery stores
- Auto dealers
- Tourism boards
- Other companies with physical locations
E-commerce stores can also benefit though they lack physical locations. For instance, they can target customers entering competitors’ stores.
What Doesn’t Work
Not all brands are appropriate for location-based marketing. Some businesses may have a physical store but may not have great quality or quantity of data. For these businesses, it might be difficult to create effective location-based marketing strategies.
For example, if there isn’t enough foot traffic, marketers will have trouble gathering meaningful data. Also, if businesses are stacked on top of each other, it’s hard to differentiate a customer from other building users. It occurs in shopping malls and buildings with many stories.
If the products you are dealing with are available everywhere, other marketing strategies would be more appropriate. But, if you have high-end products that are only available in a few stores, you can use location-based marketing. Businesses with sensitive data, such as healthcare offices, are not eligible for location-based marketing.
Companies use location-based marketing to grow their sales and increase brand awareness. It is a cost-effective channel to deliver targeted messages to in-market buyers. If you are beginning, you need to measure and analyze the data until you get it right. Pick one tool that applies to your business and if it is not working, move on to the next. Franchises and other brands with physical stores benefit greatly from implementing location-based marketing.
Partnering with a location-based marketing agency like Goodway can help fast-track your efforts, with years of expertise and experience at your disposal.