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In part one of an article on geofencing, we explored how companies are using the technology to identify customers' location and target specific ads and offers to them based on data about their preferences.
In this section, we explore how geolocation technologies could predict the future.
For retailers, geolocation-based apps present greater opportunity than just sending customers special offers when they walk in the door. The technology can go further.
The data that retailers collect can also shape future marketing campaigns, rearrange floor plans, improve product placement and more, say observers in the technology and marketing industries.
Companies have long had access to data that explains the who, what and when of customer behavior. They know that, say, a customer bought a plaid shirt on July 27, and that it was the fifth plaid shirt he's purchased in two years.
Geolocation data adds the where, completing the picture. The retailer knows how long the customer walked around the store before he picked up that shirt and what areas of the store he missed.
Melissa Tait, vice president of technology at Primacy, a digital marketing agency, said retailers can use information about traffic patterns to better configure stores and shift products so they are more visible. Geolocation provides information that can be used to improve future customer engagement, she said.
Retailers can also use the data they collect on a customer's past visits to shape their targeted marketing efforts.
According to Bill Schmarzo, chief technology officer of the global services group at EMC Corp., which sells computer storage and other IT products, the more detailed data a company has on a customer's patterns and habits, the better it can send more valuable offers that lead to higher conversions.
"You've got to change the mentality to think about, 'How do I build individual [customer] profiles?'" he said. "In the modern data warehousing world, I can do that."
But exploiting the data collected can be an uphill battle for retailers. Data integration, governance and quality issues -- which have always been problematic -- extend to geolocation-based marketing, Schmarzo said.
And there's the perennial issue of customer buy-in. To collect enough data on a customer to establish patterns and shape future marketing, customers have to feel comfortable enough with the brand to download the app and enable location services.
Tait said education and time are key. Industries like banking faced some resistance when they first rolled out mobile apps because of security concerns, but attitudes have changed, she said. "A lot of people were hesitant to use a banking app [on] their phone, so it took time for people to start using them," she said.
A September 2013 Pew Research Center report on location-based services shows the following:
- Location-based tagging on social media is increasing: Some 30% of social media users now tag their posts with their location. This is up from just 14% in 2011.
- 74% of smartphone users get directions or other information based on their current location.
- As of April 2012, 35% of adult smartphone users said they have turned off the location-tracking feature in their smartphone because of privacy concerns.
- Local advertising investment in digital is expected to grow from $30.7 billion in 2014 to $35.3 billion in 2015 -- an increase of 14.9%.
Here's what data from a September 2013 Forrester survey shows:
- Half of U.S. smartphone users ignore in-app mobile advertising
- Of U.S. smartphone users, 43% think in-app mobile ads disrupt the customer experience