The GPS capabilities of smartphones can be dazzling but I think they could be leading some retailers to overlook a different and potentially more profitable type of location-based marketing. I’m talking about geo-targeted marketing opportunities that have nothing to do with mobile devices, opportunities with more revenue potential than anything currently triggered by GPS.
I wrote about this recently in an article that appeared in All About Retail Online Integration. I pointed out that an overwhelming majority of online purchases are still made from notebooks and desktops. What follows is an updated and extended version of that article:
The fact that smartphones can display information which reflects their physical location is generating a lot of buzz. Marketers are getting positive results when using this capability—made possible by GPS technology—for adverts, offers, and coupons. However, marketers should not overlook the fact that any web site, any online store, can market and merchandise relative to location, without GPS. That’s because, whenever you visit a web site from your desktop or notebook or netbook, the site can determine the general location of your device based on its IP address.
This simple fact of Internet technology creates the potential to market and merchandise relative to location, but…
does it makes sense to do this? And what geo-targeting strategies should you use? The short answers are: Yes and Whatever Strategy Works. At Monetate we have seen strongly positive results from location-based or geo-targeted marketing in four areas: conversion rate, average order value, customer acquisition, and customer experience.
Consider this example: A specialty retailer located on the East Coast achieved a substantial increase in revenue from Western states simply by adding a message to the home page of their online store that said something like: “Seattle’s best source for over 100 brands of X” where X was the retailer’s specialty and Seattle was the metro area of the site visitor.
A different specialty retailer, noticing that sales in some states were lower than others, added a location component to the customer testimonials displayed throughout their site. So when an online shopper visits the site from somewhere in Georgia they see testimonials like: “Great service and fast shipping – J. Williams, Atlanta, GA.” Again, the results were very positive.
I don’t pretend to know exactly why consumers react positively to such things, but in many cases they do. And these examples just scratch the surface. Some of the most exciting possibilities arise when you think in terms of relative location. If you have physical stores you can add their locations to the geo-targeting mix, as well as the locations of your competitors’ stores, your warehouse locations, shipping points, and so on.
Think about a customer surfing your online store from a location that’s much closer to one of your competitor’s physical stores than to one of your own. An added incentive displayed to this customer could close the sale, perhaps some kind of “this visit only” discount or a good deal on shipping. If it works, this strategy wins you more than the sale, it lands you a new customer AND steals market share from the competition.
Speaking of shipping, think about the money you could save by adjusting shipping offers relative to customer location. For example, you could offer faster shipping at lower cost to customers who are nearer your shipping points.
This technology offers something for both multi-channel retailers and online pure-plays. For the latter, geo-targeting can add local flavor to a site that might otherwise seem remote or irrelevant. For brands with brick-and-mortar locations, you can use online visitor location to drive promotions such as free in-store delivery. Depending upon your overall marketing strategy you might want to drive foot traffic to stores with local offers.
By now you might be asking: Does this sort of thing really work? I can honestly say that I’ve seen it work, and work very well. But the answer you really need is the one that your analytics data give you when you test this type of campaign on your site.
How do you get started with geo-location? In practical terms you can develop geo-targeting capabilities in-house, using data from specialist companies like Quova, Maxmind, and IP2Location (try that IP2location link for a quick test of how this technology works).
Alternatively, you can tap geo-targeting features in such on-site marketing packages as Omniture Test&Target and Monetate Real-time Marketer. Whichever path you take there’s a good chance it will deliver improved revenues. As for the overall ROI of this technology, that will depend on the cost of implementation and maintenance. You want something that will allow you to create geo-targeted campaigns quickly and easily, without requiring input from coders and designers.
On other factor to consider, beyond conversion, AOV and ROI, is customer experience. This is harder to measure but you might look at loyalty indicators like frequency of customer visits and purchases, relative to the localization of content. Us consumers are hard to figure out, but many of us find something appealing about a web site that relates to us by adding localized touches (even if that relating is highly automated). And in the highly competitive world of e-commerce, what site can afford to pass up some extra appeal?