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If this sounds familiar, you've been the beneficiary -- or possibly the victim -- of customer personalization:
As you disembark from a plane flight, your smartphone comes alive with a cascade of welcome messages: Your hotel provides driving directions and an updated local weather forecast. Your favorite rideshare service offers a discount for your first visit to the city, and your conference provides a text alert that cocktails start at 6 p.m.
An hour later, as you walk past your favorite coffee chain, a $1 off coupon appears in your phone's mobile wallet. Five minutes later, as you walk into your hotel, another alert pops up to tell you that Room 2302 is ready for you, allowing you to skip the long registration line and proceed directly to your room.
All of this is possible with location-based and personalized context marketing. Ideally, as these companies helped you with your trip, each created a stronger bond with you by providing relevant, timely information. And if they didn't help you, it's possible they crossed the line from helpful to harassing.
The more companies know about their customers, including demographics, interests and behaviors, the more they can personalize the experience in order to better serve and market to them. That can in turn translate into better customer satisfaction and loyalty, which can ultimately drive higher customer lifetime value. It can also alienate customers if messaging is poorly crafted, mistargeted or incessant. Customers may balk at the encroachment on their privacy when messages are too frequent, disingenuous or focused more on selling products than on providing value.
From the websites they've visited to the products they've purchased, there's a lot you can know about your customer. Today we'll just focus on mobile context marketing.
"Context is understanding the customer's current state in the moment as they engage with the message," April Mullen, senior marketing strategist at relationship marketing provider Selligent, said. And that enables brands to engage in better mobile moments with customers.
Benefits of context marketing
Context-aware marketing can deliver the following hard and soft benefits to marketers and companies:
- Faster conversions: 65% percent of customers will redeem a location-based, context-aware coupon offer within five minutes of seeing it; 39% of customers will spend more if they receive a personalized coupon, according to a recent study by coupon vendor Koupon Media.
- More effective offers: Outdoor retailer and Urban Airship customer REI tracked customers who had spent time near its stores over time. The company then used that data to create targeted offers, which performed four times better than nontargeted messages.
- Repeat email views: Context-aware emails get far more reopens than static emails. "Whether context-aware, marketing increases engagement or conversion, I only see this as being a good move for marketers," Mullen said
Downsides of context marketing
It isn't all upsides in customer personalization, however. There can be drawbacks, such as the following:
- Data privacy concerns: While customers may be interested in offers, they are also skeptical about relinquishing data about themselves. According to PricewaterhouseCooper's "Speed of Life: Consumer Intelligence Series" survey of 1,000 respondents, only 46% say that they are somewhat willing to share personal information in exchange for certain offers.
- Customer retention issues: Customers are easily turned off by tone-deaf or excessive messaging. According to an April 2015 Forrester Research survey of more than 1,000 respondents, 74% say it's creepy for in-store customer service agents to detect a customer's location based on a cell phone to target them and greet them by name or make a fitting room available.
- App fatigue: Customers may have to download yet another app on their smartphones to participate in loyalty programs or other special offers. While some customers may be compelled, others may feel a sense of app overload. So it should not be a surprise that 58% of app users churn within the first 30 days, according to research conducted by mobile analytics vendor Localytics.
- Time matters: While customers may keep their phones at their sides through most of the day, they do not expect to engage with a brand's app all day. Localytics found that consumers used their smartphones in different ways through the day -- for example, they're more likely to check weather first thing in the morning and entertainment and social media apps at the end of the day.
- Misinterpreting consumer signals: Sometimes, consumer behavior belies consumers' true intent -- or lack thereof. For example, visiting a Web page may indicate daydreaming about a purchase, rather than buying something immediately.
All of this is driven by communication and platform technologies that power and deliver apps, messages, email and more to smartphones. Let's take a look at what's happening behind the scenes.
Communication and platform technologies
Mobile phones send location or proximity data back to a central server or data hub. Depending on the use case, proximity data may come from a nearby low-energy Bluetooth beacon or Wi-Fi signals that the phone picks up or the broader location's latitude-longitude coordinates coming from the phone's GPS. Those coordinates may be part of a geo-fence, a virtual geographic boundary such as city blocks, a ZIP code or a metropolitan area, among others.
The server, or data hub, then analyzes the location and may determine whether the device just passed into, is still present in or has left a particular geo-fence.
To create a complete omnichannel view of the customer, that live data is joined with the customer record and history. This could potentially include preferences, demographics, behaviors, app usage, purchase history and previous locations from the mobile engagement platform and other systems.
Using that data, predetermined business rules decide the next action. That decision is communicated to the mobile engagement platform, which sends a push notification, message, email or other information to a mobile device.
Mobile-first companies, or those that have embarked on a path of developing apps for mobile often use these mobile engagement platforms as their primary CRM systems of record. Other companies will choose omnichannel marketing platforms or will use mobile engagement platforms integrated with other CRM and marketing automation systems. Either way, many platform vendors offer software development kits so that apps can easily talk to their platforms.
Mobile device apps, wallets or messaging?
Marketers can engage with customers using standalone branded mobile apps or mobile wallets, Kim Stuart, chief operating officer of mobile wallet app firm Atlas Rewards Corp., said. Wallets are convenient for storing boarding passes and coupons, but they collect less data about the consumer.
A dedicated application can be good because it stores more data and provides a tailored experience. But if you can't deliver value in your app, you're better off using wallets and alerts.
Marketers also employ messages, alerts and dynamically updated and mobile-friendly emails -- none of which requires an application to be installed on the phone. Most of the mobile device technologies can be used by themselves or in connection with any of the others.
Measure the impact of customer personalization
Regardless of whether context marketing directly affects the bottom line, you should plan to measure effectiveness, level of engagement, uninstalls and more. And, if you can, measure conversions and the impact on the bottom line. "With context-aware marketing, marketers have an added layer of understanding of a target [customer]," Meghann York, director of product marketing for Salesforce Marketing Cloud, said.
Nonetheless, contextually aware messaging may not create a direct line with ROI. "ROI is challenging because contextual moments that brands are creating are not always about conversion," Mullen said.
Tips to get started with context marketing
Context-aware mobile marketing is gaining traction -- but before you jump in, consider how it fits with your overall strategy, current technology stack and in-house skill sets. You should also take time to make sure you're doing the following:
Provide value. First and foremost, start by providing value to users -- for example, providing useful information or coupons instead of focusing on only what's in it for your company. Personalize the mobile experience to maximize relevance. Apps that don't deliver value don't get used, and users will banish them with a one-click uninstall or by opting out of an email list. Similarly, sending the same alerts to everyone in your database, ensuring irrelevance for many, is sure to drive opt-outs to those messages. Instead, consider how you can provide value like the marketers mentioned earlier in this article. And tailor your message to the user based on whatever you know about them. Most mobile moments are not financial exchanges, but rather value exchanges where customers give data in exchange for offers or other information.
Manage privacy. Privacy is one obvious caution. "It's a very fine line between just enough and 'Whoa -- that's too much,'" Stuart said. Many, but not all, consumers realize that the more they share with you, the better their experience could be. Privacy concerns vary by country. Beyond legal concerns, you can allay many privacy issues by being transparent with users -- e.g., as a consumer installs your app, tell them how you will use their data to prevent surprises later.
Decide if customer personalization means more content. Tailoring the experience to a user may require the marketing team to create more content for different segments and types of campaigns. When that becomes a challenge, Bill Schneider, senior director of product marketing at mobile engagement platform vendor Urban Airship, advised companies to prioritize the most valuable segments and lifecycle stages.
Provide a continuous omnichannel experience. Translation: Be prepared to move data back and forth between a mobile platform and other internal systems to harness all of your data and provide the most seamless experience across channels.
Take different approaches. Consider the approach that is right for you. Remember that you can start small, with email or text alerts, expand into mobile wallets and then into apps -- if they make sense for your business.
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