The way gurus talk about location-based marketing, it sounds like the panacea for the retail industry as we know it. And it might be—with geofencing, beacons, proximity marketing apps, and augmented location data, we have the potential to target customers more specifically than ever before, in the very locations where they’re likely to be most receptive. Location-based marketing seems like selling umbrellas in Times Square during a rainstorm.
However, by taking a more nuanced look at location-based marketing strategies, we’re forced to admit that there are significant challenges involved—namely, the massive problem of consumer buy-in. With technology as it stands in 2019, push notifications and in-app messaging are the primary tools that execute on location-based campaigns. Without customer engagement in these specific areas, even the strongest location-based marketing strategy could fail.
If your brand is preparing to invest further in location-based technology, be prepared to meet these inherent challenges head-on. The studies explored below illustrate how successful these strategies can be for retail brands across multiple categories—and by pursuing innovative solutions, you can ensure the effectiveness of location-based marketing in producing a positive ROI for your brand.
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:
When asked how these companies used location-based data to reach these success metrics, 65% responded with “ad targeting” as their highest priority. Other high-ranking applications included location-based offers, customer experience/personalization, and audience engagement. Surprisingly, heavily-discussed categories like beacons, weather-based ads, and event marketing came out near the bottom.
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?
According to a study from Accengage, only 43.9% of iOS users opt-in to push notifications. (The rate is much higher for Android users, who are automatically enrolled.) Beyond the point of download, the same study found that one weekly push notification inspires 10% of users to disable notifications and 6% to uninstall the apps altogether.
This could be attributed to the fact that, according to research from PushCrew, 31.37% of surveyed users don’t like getting push notifications at all. Of those who do, the vast majority prefer them to come from social media only.
In order to maximize the effectiveness of location-based marketing strategies, brands have to find a way to get a wider audience to opt-in. The answer is to launch app touchpoints that add value far beyond what consumers normally get from retail brands.
Mobile proximity rewards apps provide a unique solution to this problem. Rather than slashing prices or offering coupons, an app like Shopkick gamifies the shopping experience and makes errands more like rewarding scavenger hunts. Users opt-in for the adventure, and are continually rewarded for engaging with targeted content in store aisles. When customers are engaging with a proximity marketing app regardless of push notifications, you know you’ve won.
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.
Purina used the Shopkick app to send proximity messaging to users when they entered Target stores, which effectively kept their brand top of mind during the shopping trip. The brand then followed up with targeted content that inspired consumers to break habitual shopping patterns and trial their products instead.
85% of shoppers reported that Shopkick motivated their decision to purchase, resulting in a significant increase in incremental sales for Purina.
Rimmel-London also capitalized on the power of proximity messaging to drive customers into Walmart, Target, Ulta, K-Mart, and drugstore locations. Direct product engagement through Shopkick’s trial-in-aisle program helped Rimmel-London shine through the clutter of the cosmetics aisle and gain new customers.
Through their campaign with Shopkick, Rimmel-London stole 14% of market share from their next competitor and earned a 5:1 ROI.
Household Cleaning Company
A leading household cleaning company used the Shopkick app to launch proximity messaging that greeted and rewarded customers for entering retail locations at Kroger, Lowe's, and Bed Bath & Beyond. In-app promotional content drove users to scan products in store aisles and purchase bundles for even bigger rewards.
Shopkick’s promotional unit days brought 92% increased sales and 232% increased foot traffic, with 58% of customers motivated to purchase by in-app content.
According to projections from Bia/Kelsey, location-based ad spending is slated to reach $38.7 billion by the end of 2022—growing from a mere $17.1 billion in 2017. Based on the growing array of location data applications and technologies available on the market today, your company could spend an incredible amount on location-based marketing tools alone. Make sure that you’re allocating spend wisely and investing in innovative solutions that will mitigate the challenges of this channel and further your brand’s long-term business goals.