Geomarketing – the holy grail of retail marketing
- Forward-looking businesses are using location technology to drive more customers to their stores.
- Several leading retailers rely on geomarketing strategies to reach new customers at the right place and the right time
- IKEA uses time-based algorithms and traffic data to show customers how to get to its store in the quickest way possible
- Barneys New York installed beacon tech in its flagship store to target customers near the store with customised messages
- Thanks to location-based ads, the supermarket chain Whole Foods had a 4.69 per cent increase in its post-click conversion rate
- And after implementing location-based marketing, Urban Outfitters experienced a 75 per cent increase in conversions, as well as a 146 per cent increase in revenue
It’s apparent that customers today have more power than they used to. Their expectations have changed, and they’re the ones who decide when and where to engage with brands. As a result, businesses are finding it increasingly difficult to reach their customers. Although it seems like a rather straightforward process, targeting customers at the right place and the right time is a challenge to both small- and large-scale businesses.
Since most consumers today don’t go anywhere without a smartphone, this dependency creates opportunities for retailers. For instance, retailers can use innovative location marketing, or geomarketing, to find potential customers and target them with special offers and recommendations. Of course, it’s important to keep their marketing strategy balanced and simple. Otherwise, bombarding consumers with push notifications might turn them away.
How does geomarketing work?
Geomarketing is all about location. Based on consumers’ location, brands can effectively reach new customers without spending too much time and money. Here’s how it works. Imagine you’re in a shopping mall. While you browse through your smartphone, you see an ad for a 50 per cent discount on all clothing in a specific store. The offer is fantastic, but the bad news is that the store is miles away from you, so you carry on and ignore the ad. But what if the ad was featuring a discount for a store nearby? In that case, chances are you’ll probably visit the store and buy something. This is what today’s consumers expect. For instance, statistics show that 67 per cent of smartphone users and 72 per cent of tablet users would like to receive ads based on their location. Though location-based marketing isn’t a new concept, with recent advances in technology, it’s become a lot easier and cheaper.
IKEA’s campaign resulted in a 300 per cent increase in store footfall
IKEA would probably agree. This furniture retailer partnered with a media company called Xaxis Indonesia to release a new store campaign. The campaign is based on using distance data to target customers and suggest ways to get to the closest IKEA in as little time as possible. By harnessing the power of traffic data in Jakarta, and thanks to time-based algorithms, IKEA’s technology reaches its customers based on proximity. Since IKEA stores are quite large, they’re usually located in urban areas that are considered hard to reach. Add to that busy traffic, and it’s easy to see why consumers in Jakarta were bypassing IKEA’s store. But thanks to its new campaign, the company witnessed a 300 per cent increase in store footfall for customers who saw the ad.
This isn’t the first time that IKEA experimented with geomarketing. A few years earlier, it released a Facebook ad campaign that targeted customers based on distance data. The campaign was launched in the city of Cardiff, and it was created in collaboration with a social agency called Isobar. As a result, IKEA’s store in Cardiff experienced a significant increase in store traffic. Retail Dive reports there’s been a 31 per cent increase in the number of consumers aged 22 to 25 and an 11 per cent increase in the number of 26 to 35-year-olds.
Barneys New York relies on beacons to target potential customers with customised recommendations
Barneys New York is also jumping on the geomarketing bandwagon. The company has installed beacon devices across its flagship store in Manhattan. Beacons are small devices that rely on Bluetooth to send notifications to mobile devices nearby. Once customers enter the store’s geofence, their smartphone will start receiving targeted messages through Barneys’ mobile app. To keep customers in the area, Barneys also sends recommendations for restaurants close to the store. This way, customers can use Barneys’ store as an information hub, too. This tech is currently available only in Barneys’ Manhattan-based flagship store, and it’s not revealed whether the brand will equip all of its 26 outlets with the same feature.
Location-based ads improved Whole Foods’ conversion rate
Just like Barneys, the supermarket chain Whole Foods is another retailer eager to improve its foot traffic with location-based tech. The company developed a location service to target customers with mobile ads. By creating geofences around the store, Whole Foods was able to detect when potential customers are nearby and connect with them instantly. These ads were sent during weekends, which is usually the time when most consumers do their grocery shopping.
The Whole Foods campaign had two main objectives. The first one was to increase the store’s foot traffic, while the second goal was to “drive mobile traffic to the local Whole Foods Facebook pages”. Whole Foods managed to accomplish both of these goals. This supermarket chain was able to improve the store’s traffic and reach a 4.69 per cent increase in post-click conversion rates, which is three times higher than the industry average.
Location data helped Urban Outfitters to gain valuable consumer insight
Thanks to location-based marketing, the fashion retailer Urban Outfitters achieved even better results. In collaboration with another firm, PlaceIQ, this retailer used mobile data to understand consumer behaviour and gain valuable insight. Urban Outfitters used dynamic audience filters created by PlaceIQ to filter messages based on consumers’ location. This retailer used the tech for its cocktail dress promotional campaign. The mission was to reach women who like nightlife venues such as bars or clubs. Based on customer behaviour data and real-time location, Urban Outfitters would send in-app messages, push notifications, and emails featuring its party dress promotions.
Moreover, thanks to a solution developed by Appboy, Urban Outfitters was able to track when a notification turned into a purchase. And the results are impressive. As revealed by Marketing Dive, Urban Outfitters had a 146 per cent increase in revenue, along with a 75 per cent increase in conversions.
Targeting customers based on their real-time location is set to change brick-and-mortar retail. Although the concept seems simple, many retailers are still falling behind when it comes to implementing the right geomarketing strategy. In a competitive retail environment, this needs to change. Not only will geomarketing help retailers to capture the attention of potential customers, but also fuel interactions, and most importantly, drive sales.