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Using the secret sauce of mobile location-based services

Location-based services offer a powerful new way to deepen customer loyalty and up-sell to consumers. But companies still have a distance to travel with LBS.

Recently, I visited a nearby sporting goods superstore to buy sneakers. The store had row, after row of boxed sneakers neatly stacked underneath sample sneakers, with nametags. That was it. There was no other information;  no special features, no uses -- such as jogging or basketball, among others -- nothing. The store didn't even have an associate on hand to answer questions. While I was there, I even visited the sneaker company's website, but didn't find any information there either. I walked out with a pair of sneakers, but the experience left me questioning whether I'd buy my next pair there.

Mobile location-based services (LBS) enable companies to combine information about a customer's location -- using geolocation features on a mobile device -- with other data about the customer, such as demographic and preference information. Using location data to better target offers and information to consumers can be a powerful, new way to deepen customer loyalty and up-sell to consumers. But companies still have a distance to travel with LBS.

Connected ecstasy. If this retailer had exploited LBS, the shopping experience might have been different. With LBS on my smartphone, as I head into the store, the retailer's iPhone app would chirp with a welcome message -- perhaps pointing me to the week's specials. And as I walked over to the sneaker section, a flash-sale coupon could've appeared on my phone, enticing me to make the purchase before leaving the store. 

LBS marketing campaigns should be part of your broader omnichannel marketing strategy.

Once I had spent a few minutes browsing sneakers, another message could've asked if I needed more information about the product, prompting me to browse a mobile website with additional details, reviews and videos, as well as suggested complementary products like jogging socks. Then, at the register, I'd bring up the coupon and pay with Apple Pay. Later, the retailer might send me a satisfaction survey, where I would indicate that the company was at the top of my sneaker list.

Meanwhile, at the retailer's headquarters, the merchandise team would tweak its merchandise plan based on the time that I and other shoppers spent looking at sneakers. Perhaps the jogging sneakers need to move to the front of the row for greater visibility. Or, maybe they need to add new promotions to get customers to look at the basketball sneakers. Mobile location-based service experiences like this can benefit consumers, retailers and brands.

The potential of LBS

LBS is still in the early stages, but it's growing. For example, 37% of large retailers plan to deploy iBeacons -- one of several LBS technologies -- by the end of 2015, and 56% plan to deploy by the end of 2016, according to mCommerceDaily in April 2015.

So, what's driving this growth? Apple's entry into the space has driven a cascade of new, independent software vendor products. But fundamentally, growth is happening because LBS enables marketers to provide seamless omnichannel experiences; know more about customers and prospects; and measure and optimize marketing in new ways, well before the sale takes place. Let's survey LBS’s benefits.

Understanding consumer context. LBS uses location-based context to achieve a more complete understanding of customers, and then deliver personalized and relevant experiences based on that data. For example, if I'm standing near a particular sneaker, I am exhibiting a potential intention to buy a pair of sneakers.

Personalized experiences at scale. Once you know a consumer's context and potential intent, you can deliver relevant, personalized content and interactions that drive purchases and build customer loyalty -- cost-effectively and at scale.

Offloading repetitive tasks. Because apps handle repetitive tasks so service staff can focus on higher-value customer interactions, LBS apps can help reduce expenses.

Seamless customer experience. Once a consumer has installed the smartphone app -- in advance of shopping -- and consented to share his location, the experience is relatively passive for him: The consumer receives alerts and offers rather than having to search for them. No check-ins are required.

Faster reporting, faster action. Better experiences are just the beginning. Just as marketing automation platforms (MAPs) capture and report on online prospect behavior and campaign results through the marketing funnel or buyer's journey, so too can LBS marketing platforms. Rather than waiting for sales results to come in, marketers and merchandising teams can track and optimize the intermediate steps in the funnel or buyer's journey.

If heat maps show that too few people see a display on the showroom floor, the retailer might move the display, change its design or add a promotional coupon. Retailers can make these tweaks even before the sales numbers begin to come in.

Deploying LBS beyond retail

Don't restrict your thinking to retail. Mobile location-based services are also being used in service industries where knowledgeable and fast service translates to a superior customer experience, such as hotels, restaurants, packaged food brands, event venues and more.

Unlike GPS, LBS provides a fine-grained location of the mobile device that works well indoors. You can select from several different LBS approaches based on Bluetooth LE -- low energy, long-life beacons -- Wi-Fi, cameras and more. Here's an example using Apple iBeacon, which is based on Bluetooth LE beacons.

  • A retailer might place anywhere from a few to several hundred low-cost iBeacons around the location, depending on the size of the store and the LBS strategy.
  • One or more iBeacons emit signals with their ID number that are picked up by a consumer's mobile device, such as an Apple iOS, Android smartphone or tablet.
  • The mobile device passes distance and ID data to an app on the consumer's mobile device, which passes that data to a server in the cloud.
  • The cloud server uses that data to determine the mobile device's micro-location and/or range from a single iBeacon, and triggers the appropriate action -- such as a coupon -- in the mobile app.
  • Note: iBeacons emit, but do not receive signals, so the beacon itself does not capture data about the user or device.

Planning for success

Strategy first. Before you do anything with mobile location-based services, consider how it fits into your business and marketing strategies. Then, conduct pilots to test both the technical and marketing effectiveness of the hardware, software and LBS marketing platforms. Only then can you decide whether LBS makes sense for you, and, if so, how to deploy it.

Marketing campaigns. LBS marketing campaigns should be part of your broader omnichannel marketing strategy. Don't just consider what happens on location with a prospect. Rather, consider the entire lifecycle before, during and after the LBS on-location consumer interaction -- as they discover, buy and share experiences with new products. Finally, consider how LBS can improve the customer experience to drive revenue and build loyalty; how you can use LBS to learn more about your prospects and customers; and how you can harness LBS to improve marketing campaign performance.

Think system, not components. It's easy to become enamored with a new technology like mobile location-based services. But these services come in many shapes and forms. Consider how you will construct a complete and working system that is integrated into other marketing systems. And ensure that your system includes a layer for beacon management.

Privacy. Enable consumers to control their privacy. LBS mobile apps can put the user in control by requiring opt-in for the app itself and for location tracking; apps should also provide clear terms and conditions about how consumer data will be collected and used. Further, iBeacons emit one-way signals, so they cannot collect consumer data in the location. Finally, for consumers to want the app in the first place, they must believe that it delivers useful, value-added features -- such as nearest locations, coupons and discounts, social sharing capabilities and more. The app should enable a more enjoyable and productive shopping experience.

Security. As with any wireless or Internet of Things system, security is a consideration. Some beacons can be spoofed -- for example, the address can be cloned and used elsewhere -- or piggybacked -- hijacking the beacon to be used in an unintended manner, for example, to promote a competitor's offering. Companies use various security approaches, such as comparing the beacon's location against the GPS coordinates or Wi-Fi to ensure that it's where it's supposed to be, or rotating beacon IDs to prevent detection. Obviously, you will want to ensure that your LBS systems do not provide an entry point into other corporate systems. Regardless of what you do, consider the security ramifications to your LBS initiative, as well as your broader IT infrastructure.

LBS systems offer the potential to provide powerful, relevant experiences. If deployed well, location-based services can transform the consumer relationship, drive revenue both today and in the future, and provide valuable new insights.

Next Steps

Beacon technology spawns privacy concerns

Several different CRM tools can lead to more customer engagement

How to create "addictive experiences" and drive customer loyalty

Find the right marketing KPIs to track

This was last published in July 2015

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Do you use mobile location-based services? How?
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We kind of make (limited) use of LBS in an application we developed for finding conference rooms in our different locations. Based on user preference, the application either uses the GPS on the person’s mobile device to provide a route from their current location or uses the person’s information to map a course from their desk to the desired location.
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Great - thanks for sharing Mike!  
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We've developed a way of making LBS marketing more effective by geo-targetting by minute rather than miles e.g. 15 minute drive away, 10 minutes walk away - it means it can be personalised to transport mode as well as time of day
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I think one of the biggest issues companies will have is in making LBS convenient and relevant without making it too intrusive. I think of it like a good waiter or waitress. They tend to your needs, and are there when you need them, but are unobtrusive the rest of the time.
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