The need for Location Based Marketing
Coupons served to customers through direct mail yields a response rate of a single digit. On the other hand, mobile coupons served to customers through Location Based SMS produce a double digit redemption rate. Airlines like JetBlue, KLM, SouthWest, Virgin and others use Location Based Social “check-ins”. They added relevancy and context to their customer social media engagement resulting in enhanced customer service and stronger loyalty. The list of food and retail chains that have implemented Location Based Marketing tools, and transformed location information into sales opportunities, grow every day.
I spent the afternoon talking with my friend Monica Z., a sharp marketer living in NJ. I was introducing her to some Location Based Marketing techniques. Her necessary questions and our conversation lead to the following thoughts.
You can infer what type of demographics will watch a certain TV show, listen to a radio show, or read a publication. But you cannot be sure that those specific customers in a particular target market will be present when your message is delivered. You can mail a coupon to your prospect, but you cannot be sure they will have it in their pockets when they are close to your POS. You can promote your brand through many channels, but doing so when the customer is nearby your business boosts the probability of more sales. The 21th century is all about a mobile lifestyle in which immediate contacts OF ALL KINDS are important. Place and time matter.
[message type=”success”]The customers’ location at any given time = occasion = business opportunity[/message]
Your Target Market is Mobile; a change in Location changes everything (including moving from one room to another). Instead of just aiming at the same place, hoping somebody passes by when you shoot, you should add location based marketing to your marketing mix.
Traditional advertising cannot assure that the customer will be there when the message is delivered. Location Based Marketing (LBM) connects the What and Who with the When and Where. It is the right combination of the 4 what makes a marketing campaign successful. “Where” is the essential ingredient that makes your message completely relevant and truly targeted. “Where” enhances the relevance of your marketing message, by delivering it at the right place, at the right time, ALL the time.
But be careful, as location alone does not create relevance. Location is a magnifying agent to relevance; it makes it stronger and more effective. Implementing isolated LBM techniques only lead to magnified empty efforts. If your message has the right “what” “who” and “when”, “where” is the missing ingredient to a perfect recipe for success.
Back in business school, we learned about “The Marketing Concept” as the total company effort to satisfy customer needs at a profit. From a business perspective, I would define the “Location Based Marketing concept” as the company’s effort to integrate consumers’ location information into their business marketing strategy, to better satisfy customers needs in their contexts, to make a profit.
Briefly, Location Based Marketing is: The art of transforming consumers’ shared location information into revenues. Location in the hands of the right artisan multiplies the value of your business marketing plan.
Dissecting the definition of Location Based Marketing
…company’s effort to integrate…: Marketing is a process that goes from business opportunities/products definition to putting those products in the hands of customers, and providing the essential support for making profit. Note that the key word defining marketing is process; therefore LBM might be a PART of your business marketing strategy, but never an isolated factor. Consequently what you need in order to integrate a Location Based Marketing strategy is first and foremost a knowledgeable marketing individual.
…consumers’ location information…: This is the part solved by technology. There are many ways to acquire customers location information, and despite common belief (lack of knowledge I would say) you DON’T necessarily need a GPS in the phone to know the customer location. Therefore you need a person that understands mobile technology, knows most of the available technological solutions, and can identify which one to use for every case.
…to better satisfy customers needs in their contexts…: Notice two words here “better” and “context”. “Better” because location information augments the effectiveness of customer interaction and communication through social media or other channels, by matching the right message and value proposition to your customer context. That means you need to be ready to identify if Location Based Marketing makes any sense to your business.
…to make a profit…. The most important part of the sentence, and ultimate goal of a business. This means that you need to choose feasible and appropriate tools in order to increase sales, and maximize revenues. Remember, ROI is essential in every marketing plan, location based or other.
About tools and artisans
Alexander Greenwood said it nicely “Use the tools that you need – don’t let the tools use you”.
There are many Location Based Services tools available. As much as mastering the usage of MS Word doesn’t make one a poet, knowing how to claim a business in foursquare doesn’t necessarily make one a LBM expert. And that’s what I say to my customers: buying butter, sugar, flour, and eggs is one thing, using the same ingredients in order to bake great pastry is a different story altogether. Would you like to have a bite?