The True Effectiveness of Location Based Marketing

Though location-based technologies are still relatively new on the market, research is beginning to show their success. One particularly glowing report from Factual and Lawless Research surveyed 700 location data buyers⁠—536 of which were consumer brands⁠— and found that a vast majority were succeeding with location-based marketing strategies. Key stats from that report are highlighted below:

All in all, these statistics paint a very promising picture for brands considering the effectiveness of location-based marketing. Based on the potential for success, it would make sense for every retailer to experiment with location-based tools⁠—and to prioritize solutions and applications that lessen the inherent challenges of this channel.

Surpassing the Challenges of Location Based Marketing

Push notifications are the most valuable player in the game of location-based marketing⁠—but they’re also the biggest challenge. Push notifications have been found to increase app engagement by 88%. But a significant number of users choose to disable notifications in an effort to preserve privacy, productivity, or digital minimalism. How can location-based strategies succeed when only a percentage of smartphone users opt-in? 

Successful Location-Based Marketing Campaigns

Getting customers to accept a push notification when they are within a quarter-mile of your store is powerful. Incentivizing them to complete in-app video ads and actually pick up your products in store aisles? That level of engagement is priceless.

The following brands partnered with Shopkick to enhance their location-based marketing strategies and achieve game-changing results.

#1: Augmented Reality

AR technologies broke onto the retail scene back in 2016 and have been rapidly expanding ever since. These tools offer an exciting new experience for customers, who get to experiment with new products from the convenience of their smartphone screens. AR has shifted the way customers purchase clothes, furniture, beauty products, and even cars (as you can see below).

#2: Frictionless Checkout

Self-checkout is standard—but “no checkout” is the future. When Amazon Go launched their first register-free stores, customers poured in by the thousands to experience a new level of convenience. A combination of computer vision, machine learning, and sensor fusion technologies created Amazon’s “Just Walk Out” formula, which automatically tracks and charges customer purchases and eliminates the need for a register, cashier, or queue. Frictionless shopping is the experience all customers crave, and the retail industry is moving rapidly to accommodate.

#3: Shoppable Social Media

Retailers have been marketing items extensively across social media platforms for years—particularly on image-heavy platforms like Instagram—and consumers have long been clamoring to purchase items seamlessly from within those platforms. Today, Instagram hosts its own checkout platform, YouTube offers a product carousel option, and Twitter provides “Buy Now” functionality. Burberry was one of the first major retailers to take advantage of shoppable social technology, but they certainly weren’t the last. Today’s customers now expect innovative shopping experiences to extend from stores to their social feeds and beyond.

#4: Innovative Rewards Apps

Loyalty programs are also getting a facelift in today’s retail revolution. While sales, discounts, and coupons are still some of the most common strategies used by retailers to entice returning customers, many brands are innovating with rewards apps that don’t eat up profit margins. Proprietary loyalty programs can now be combined with third party apps like Shopkick, which turns an everyday shopping trip into a rewarding and exciting scavenger hunt. Innovative rewards apps like Shopkick drive sales, increase market share, and boost customer engagement for a wide variety of retail brands, including the following:

#5: Small Format Stores

Small format stores are rapidly changing the face of retail going into 2020—especially those that are storefronts for digital native brands. Bonobos and Modcloth both recently opened innovative small-format stores without carrying inventory. Customers try on the clothing and simply have their purchases delivered later. More recently, the small format store has extended beyond the pop-up shop and the niche retail space. A large group of retailers, including Target and IKEA, are heeding customers’ call for small format shopping experiences. Both of these brands launched small format stores this year with limited inventory and significantly increased customer engagement.

#6: In-Store GPS

Mobile connectivity has solved one of the greatest customer pain points in big box stores: they don’t know where to find things, and they can’t find an employee to ask. Home Depot launched in-store GPS functionality with voice and image search to lead customers directly to their target items straight from their mobile app. In a similar vein, the Lowe’s Innovation Lab recently experimented with a pilot project for LoweBots—AI-driven customer service robots that can answer questions and guide customers through the store. Talk about an innovative shopping experience!

#7: Subscription Services

Companies like Birchbox and Fab Fit Fun may have launched back in 2010—but they’re booming now thanks in part to aggressive influencer marketing strategies and the public’s desire for innovative shopping experiences. Subscription services aren’t just for beauty brands anymore. Gwynnie Bee, Stitchfix, and thredUP all offer apparel options, while companies like BarkBox and Dollar Shave Club are making the rounds in more surprising categories. Even HP offers an Instant Ink subscription service to alleviate the hassle of purchasing refills. Subscription services combine the elements of personalization and surprise—both of which are both highly lucrative in today’s retail market.

#8: Experiential Concepts

Experiential retail is a valuable extension of the small-format trend, and has grown so popular it deserves its own mention here. Concept stores have cropped up in the last year from brands as small as Flowerboy Project all the way up to household names like Nike and Adidas. The goal: to provide such an innovative shopping experience that thousands of customers will be attracted into the store just to witness it for themselves. There is nothing more exciting in today’s retail market than the experiential concept store—and executives are behind it as a money-making strategy for retailers looking to expand into new markets. We’ve highlighted some groundbreaking examples below.

#1: Use Mobile as an In-Store Assistant

Convenience is key in the endless retail aisles that consumers must contend with to find the products they need. These individuals tend to become rapidly frustrated when they can’t locate an item or find a sales assistant to answer their questions. Offering mobile guidance eliminates that confusion and keeps brand affinity high. 

#2: Engaging Shoppers in the Moment With Location-Based Strategies

With mobile, brands can send location-specific advertisements, details, and offers to consumers. This helps to connect with the consumer on a more personal level, as the offers have the potential to reach them at the right moment while they’re near a store. Location-based advertising can also create an exclusive experience that boosts sales. 

Starbucks is famous for offering location-based advertising that drives consumers to enter the store and make purchases. Consumers passing by will receive offers for discounts or reminders about specific events that places the company top-of-mind even if they hadn’t previously considered stopping in. The coffee company’s mobile app is among the most popular customer loyalty program apps because it provides location-based offers that consumers can use to: 

#3: Personalize the Consumer’s In-Store Experience

The ability to personalize the consumer experience in retail is a strong sales driver, as it creates a deeper connection. It’s also a crucial aspect of marketing as 40% of consumers report that personalization is a major purchase driver for them. However, with the volume that a popular brick-and-mortar location sees every day, this may seem an insurmountable task. Some retailers look to rewards programs to create this personalized experience.  

Target recently announced its plan to roll out a rewards program that creates a greater personalized experience for shoppers. Through Target Circle, consumers can enjoy personalized offers on products, rewards on their birthdays and overall savings on purchases. As an added benefit, consumers will be able to vote on Target’s giving initiatives. Through their program Target enjoys several benefits, including:  

#4: Reward and Incentivize Purchase Path Behaviors

Retailers that want to direct consumers once they’re in the store can use mobile rewards programs to do so. This is a marketing strategy that’s also been proven effective for CPG brands, as it can be used to get consumers to check out specific items in a brand’s catalog.  This was a strategy Kraft leveraged when the brand wanted to increase sales of its baking products in Walmart locations during the holidays. Working with Shopkick, they established a tiered program that drove interest, directed consumers to products and improved purchase intent. The strategy worked in three stages: 

#5: Follow Up After the Purchase

Following up after the consumer makes a purchase makes them feel valued. It can also act as a form of remarketing that encourages consumers to return to the retailer and buy more. Mobile apps make this possible by providing data from the consumer’s shopping trips, as well as contact information to send emails, rewards, coupons, and marketing messages. Mainly, there are four categories of messages that retailers can send to consumers after they leave their store, including: 

Mobile Options for Leveraging the Most Effective Marketing Strategies for Retail

Mobile is a key component in all the above methods as it allows the retailer to travel with the consumer through their trip and strategically influence their shopping behaviors. However, this type of marketing requires permissive use, in that the consumer has downloaded an app and opted into receiving messages from the retailer. To establish this permissive use, the retailer has two options; proprietary app creation and third-party partnerships. Both strategies have their pros and cons which brands must consider.