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Mar 1, 2023

Here’s How Location-Based Marketing Can Enhance a Personalized Customer Experience (CX)

You walk by a storefront and immediately receive a flash sale notification on a product you’ve had your eye on. On vacation, you’re lounging at the hotel pool and your phone buzzes with a two-for-one lunch special at the cabana grill. You arrive at a doctor’s appointment and receive a request to log into your patient portal, where you find an estimated wait time and a check-in questionnaire.

Welcome to geotargeting use cases for improving customer experience (CX). Location-based experiences are becoming popular in retail, travel, healthcare and other industries for helping guide consumers through more personalized customer journeys. When a customer breaks a GPS-based geofence or nears a beacon, a triggered action will be relevant to a customer’s physical location and, used judiciously, has a high likelihood of enhancing the customer experience presuming the action is within the context of an individual customer journey.

Location-Based Experiences and Customer Signals

Geotargeting and the use of beacons wonderfully complement a personalized, omnichannel customer experience, with the caveat that a customer’s current location is only one signal about a customer. A retailer using a store beacon as a flash sale trigger event will ideally tailor the offers based on the entirety of an individual customer’s behaviors. Having neared the beacon or crossed the geofence, the brand knows the customer is in the store, but the trigger becomes much more powerful when used in the context of a customer Golden Record.

A brand that knows the customer has recently purchased a wool coat, for example, perhaps sets the trigger up to offer a matching scarf to match a customer’s recent browsing activity. Or the location-based trigger is only set up for customers who haven’t made a purchase in the last month. Maybe a personalized offer is made to customers who have downloaded the mobile app in the last week. When a customer’s location is considered in the context of an individual customer journey, a location-based experience can be used to both guide the journey as well as accomplish business goals such as lifetime value, reducing churn, retention, optimizing inventory, etc.

This type of segment-based personalization of a location-based experience is referred to as geotargeting, in contrast with standard geofence advertising or marketing where an offer or ad is shown to everyone who breaks a geofence.

To be sure, there are countless use cases where breaking a geofence triggers the same experience for everyone, which may also align perfectly with a customer’s journey. Curbside pickup is one such example, where a geofence may alert store associates when a customer arrives. A mobile app check-out offer is another use case, where a brand offers the service for everyone who has downloaded the app and is currently in a physical store.

Using Location to Better Understand a Customer

While geofencing and beaconing differ slightly in that the former uses GPS while the latter requires control of the physical space, their activation both require knowledge of the customer’s location, usually through a mobile device.

The location-based experience, however, does not necessarily have to instantaneously trigger upon the breaking of the geofence, nor does an offer or message have to be delivered through the mobile app. A car dealership might, for example, set up a geofence around a competitor to find out whether anyone who has visited its lot within a certain timeframe also visited its competitor. Knowing a customer took its luxury SUV for a test drive, the dealer sends an email undercutting the competitor’s price for its luxury SUV.

Burger King employed a similar tactic (albeit on the mobile app) in a clever ploy to steal McDonald’s customers. In the #WhopperDetour campaign, the restaurant offered a $0.99 Whopper for customers who broke geofences set up within a 600-foot radius of McDonald’s locations. The offer, delivered through the mobile app, also included directions from the broken geofence to the nearest Burger King. A restaurant executive said the campaign was 20 times more effective than any previous app offer.

A Lawless Research study commissioned by Factual, a global location data company, found similar rates of success. In the survey, large majorities of companies said that using location-based data helps increase sales (89 percent) and better engage with their customer base (84 percent). Further, 83 percent said that using location-based marketing has provided them with a deeper knowledge of customers’ needs and interests.

Having information about a customer’s real-time location certainly qualifies as possessing a deep knowledge, but when it comes to providing a hyper-personalized customer experience, location-based experiences are best utilized when location is leveraged in the context of the overall customer journey. Well-timed, location-based triggers that align with a customer journey are welcomed and valued by customers appreciative that a brand demonstrates a personal understanding.

Related Redpoint Orchard Blogs

How Retailers Can Increase Customer Loyalty with Contextual Interactions

3 Steps Retailers Should Take to Benefit from the Internet of Things

How to Benefit from the Digital and Physical Retail Convergence

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