Location-Based Marketing & Your Small Business
We are kicking off a series of blog posts reviewing alternative marketing channels that your small business should give serious consideration to. We’ll be publishing these posts for the next five weeks, so be sure to check back frequently! Today we are introducing location-based marketing (LBM), a type of marketing form that Borrel Associates has forecast advertiser spend to grow from $34M industry (last year) to $4B by 2015!
What is Location-Based Marketing?
In the simplest terms, location-based marketing is a marketing technique that utilizes technology to engage with customers based on their geographical location. Let’s take a step back for a moment to learn more about the process. The largest location-based service providers today are FourSquare (3 million users), Gowalla (400,000 users) and Loopt (3 million users). These services allow users to interact with their friends and other users on the network by sharing their locations and or physically meeting up at these locations with one another for events, to leave reviews and ultimately unlock rewards which distinguish them on the individual services. Other location-based services to keep in mind are Facebook (who just launched their location service, Places), BrightKite (network that recommends local venues based on previous activity), Yelp (reviews of local venues such as restaurants and services) and SCVNGR (location based gaming platform).
Let’s look at a simple example of why someone might use a location based service. Joe, visits his favorite local coffee shop. Upon arriving at the location, Joe uses his cell phone or other wireless device to “check-in” and share his location with his friends and followers on FourSquare. This process is made possible due to the Global Position System (GPS) within his phone. So as Joe “checks-in,” his friends become instantly aware of his location. Just for “checking-in,” Joe receives badges, points or other rewards that distinguishes himself from other users on FourSquare. The majority of the services have leader boards that identify the top users by venue and even by location. It’s important to become familiar with how these location-based services work prior to launching any campaign. So sign up for the free accounts on any or all of these services, install the apps on your phone and start experimenting.
How Small Businesses Can Use LBM
Location based services follow the same logic as social networking sites when it comes to providing the ability to extend a businesses’ brand awareness. Millions of people power these sites by the interactions they have with one another, on a daily basis. Positioning your brand in front of the crowd who keeps your business in business is the rationale approach. Word of mouth marketing has been around since the dawn of human kind, but there is a greater emphasis on its viability as the world has now been connected through the advent of the internet and new technology. The need to pay and now the cost of paying to position your small business in front of millions of individuals has been drastically reduced due to these new forms of marketing. The users become your marketing evangelists spreading the good word of your organization to their friends and network of followers.
The location-based services themselves make it as easy, fun and some believe addicting for their users to “check-in” over and over again. The reason being, that they rely on their users activity levels to stay in business. The services grow when two things happen: their use base grows and their user base becomes more active. Simply put these location based services encourage their users to return to your business by rewarding them with incentives which typically carry no monetary value. A small business can leverage these services to reward and or recognize the users who frequently visit their location and encourage new users to visit. Ultimately this should increase in-store visits and foot traffic.
People are coming through your doors to check-in, you might as well offer them something right? Brick and mortar businesses from around the globe are using location-services as a means to increase their monthly revenues. The options are limited only by the creativity of your marketing team and vary from easy to implement to more strategic. Small businesses have the opportunity to deliver exclusive coupons or messages to mobile users in the area, they can display local ads and offer other incentives for location-based activities.
Location-Based Marketing Case Studies
J&R Music & Computer Store (Manhattan) – Builds loyalty by entering everyone who checks-in on Foursquare into a sweepstakes to win a $100 gift card.
Robbins Diamonds Jewelers (Boston) – The jeweler teamed up with SCVNGR to launch the “Robbins Diamond Dash,” which was an interactive city-wide treasure hunt that sent 300 couples around the city in search of a hidden diamond engagement ring. The eight hour game involved over 600 participants and captured more than 2.5 million impressions.
LongBoards Ice Cream (Orange County, CA) - The local ice cream shop teamed up with the OC Register to create a Gowalla “trip” that highlighted mus see locations and venues in the O.C. Users who checked in to at least 20 of the venues mentioned in the list were invited to an exclusive party where prizes were given away.
Gap - Loopt users can check into various locations for discounts and prizes. If a user checks into a Gap location twice they can receive a 25% discount coupon on the 2nd visit.
Starbucks - The coffee shop chain launched a nationwide program that rewarded Foursquare mayors (user with most check-ins at a particular location) with a single $1 off frappuchino coupon.
Golden Coral – Foursquare mayor’s of local Golden Coral restaurant chains can eat free once per day. There is also opportunities to win other prizes and participate in contests just by checking-in.
City Sports – A specialty sports store rewards customers who complete challenges on SCVNGR. Customers collect points which they can redeem in the stores for discounts and other prizes.
Four Seasons (California) – Gowalla teamed up with the hotel chain to create a “Best of” guide that highlights local attractions. When Gowalla users stay at a Four Seasons hotel and check-in they receive access to the guide. Here is the kicker. If the Gowalla user visits at least three of the recommended attractions during their stay, they’ll receive a $100 voucher to be spent at the hotel’s spa or restaurant.
Whole Foods – Rewards Foursquare users with exclusive discounts and rewards after their tenth check-in.
Categories: Business Tips