Retailers Go Hyper-Local With Geolocation Data

Customer Experience
Customer Experience
Smartphones are allowing organizations to leverage customers' location data and reach out with offers that are geographically relevant.

The proliferation of smartphones has made customers accessible wherever they are at any time of the day. But apart from facilitating easier contact, smartphones are also allowing organizations to collect a particularly vital piece of data about their customers and prospects-their location.

The potential of personal location data is enormous. A report on Big Data released by McKinsey last year projected that in the next decade this type of data has the potential to create a staggering $100 billion in value just for service providers. As Renee Boucher Ferguson, a researcher and editor at MIT Sloan Management Review, puts it, "geography is making a comeback."

New technology is allowing companies to collect information about their customers wherever they are, notes Colin Haig, program principal at SAP Retail. Luc Burgelman, CEO of NGDATA, notes that there's more pressure on organizations to differentiate themselves by reaching out to customers in geo-relevant ways. However, like with any other type of data, organizations need to be careful not to overstep their boundaries and tread into the realm of Big Brotherish behavior. Such a breach in trust will only lead to customers blocking that particular company from accessing data about them.

In order to avoid appearing intrusive, organizations need to first make sure that customers opt in for location-based messaging and also clearly explain that they will be tracking customers' locations and sending them messages based on where they are. Organizations need to give their customers the ability to select what they want to be contacted about and what they aren't interested in, putting customers in the driver's seat. Further, business leaders not only need to be sensitive to customers' needs and preferences when it comes to the information they want to receive, but also ask customers their preferences on the frequency of communications. While one customer might always want a retailer to send offers when he's in the neighborhood, another might only want to receive communications on weekends or during certain times.

Using Geo-Fencing to Engage With Customers

Another tactic is to only track customers while they're in a particular area, for example within a few miles from a store. Customers might feel uneasy with a company tracking their every move, but are more likely to be comfortable knowing that their favorite brands can only track their location when they're close to a store.

Harvey Koeppel, president of Pictographics Inc, says geo-fencing is quickly becoming a common trend, allowing companies to set up a virtual fence around a particular location, enabling them to determine when customers who have opted-in to be tracked cross into the boundary. Koeppel says companies like Home Depot and Lowes, are using this strategy to send customer alerts when they're near a particular store. Further, adding purchase history to the algorithm will allow companies to send offers based on customers' previous choices. For example, if a customer recently purchased a baby's crib, the company might want to send him coupons for a changing table. Koeppel said going a step further would be adding a customer's social information to find out not only where he is, but also what he's planning on doing next and who he's with.

Geolocation is becoming so precise that nowadays big retail outlets can deduce a customer's interests based on his whereabouts in the store, and then make recommendations or send offers according to this data. Wendy Burden, executive vice president of brand and business development at iViu Technologies, says organizations can build an emotional connection with their customers through extremely relevant information that goes beyond simply sending a coupon, but also offering expert advice based on the section a customer is in.

For example, California-based Hi-Time Wine Cellars is using its customers' location data to communicate with customers with information that's relevant to them, depending on where they are in its store. Tobin Sharp, the company's creative director explains that it's impossible to staff enough members to cover the entire 3,000 square feet Costa Mesa store to interact with each customer. Instead, the company geo-tags different sections within its outlet and is able to push relevant information to customers that pertain to each section over their mobile phones through the iViu app. For example, Sharp explains, if a customer walks into the champagne room, he might get an alert about a featured bottle or receive an offer. In a bid to educate its customers, the company is also sending links to video of wine experts explaining different wine varietals when these are deemed relevant. Further, the company is cross tagging different areas within the store, alerting customers to other products which they might find relevant, for example sending information about whiskey to a customer who is browsing in the cigar section.

Relevance remains essential

Experts argue that one of the biggest mistakes that organizations make is failure to be relevant. Especially at a time when customers are being inundated with coupons and offers, they are likely to disregard anything that doesn't pop up and grab their attention because it's tailored to their needs. Non-relevant information is even more distracting when customers are on the go. "Many companies are blasting the same generic message to everyone, creating a lot of frustration," says Paul Rosario, presales manager for North America at Emailvision. Burden agrees. "You need to listen to customers first and understand what they want," she stresses.

SAP's Haig adds that organizations need to make sure they're offering their customers something of value. "If you offer something that's of genuine value to people, related to what they're interested in and what they're trying to accomplish, they feel like they're in the driver's seat," he notes.

Finally, organizations should go beyond just looking at where a customer is at during a particular moment in time. Emailvision's Rosario says business leaders should also analyze their location patterns over time. If, for example, a customer is close to a particular outlet during the week but not on weekends, it can be deduced that he works in the area. This strategy is also useful for sending relevant information to college students who might return home on their breaks. "Use history to make your messaging more relevant," Rosario notes.