How-To Leverage Location-Based Marketing for Your Business

If you own a business with a physical storefront, you may watch people walk by and wish there was a way to entice them to come inside on the spot. Thanks to smartphones with GPS and Bluetooth capabilities, there is. It’s called location-based marketing (LBM).

But what is location-based marketing? How does it work?

Put simply, LBM empowers businesses to leverage the abundance of location data that’s already out there in the ether to draw more customers into their stores, restaurants, and event spaces.

If you want to take advantage of this transformative marketing technology, keep reading.

What is Location-Based Marketing?

LBM is a form of direct marketing that allows businesses to target potential customers based on their locations. It gathers location data from users’ mobile devices.

Once a customer has entered a business’ geofence (a virtual boundary drawn by the business surrounding their storefront), they can trigger the LBM campaigns’ text (SMS notifications) or social media advertisements.

Another successful method of location-based marketing is targeting mobile device IDs via programmatic advertising. Programmatic advertising utilizes automated technology to determine which impression, placement or audience member to bid on, which is the key differentiator between programmatic and more traditional methods of media buying.

Programmatic advertising can be classified into three main platform categories:

Sell-side platform. This is also referred to as a “supply-side platform” and it is used by publishers to offer their ad space for sale to advertisers in real-time. SSPs connect to ad exchanges to place their ad inventory up for bid.
Demand-side platform. This platform allows advertisers to buy ad space across various platforms and ad exchanges simultaneously.
Ad exchanges. This is the way in which SSPs manage their ad inventory to reach the DSPs. DSPs are linked to many ad exchanges, where ad impression prices are affected by the level of competition for that inventory. Think of the ad exchange as the middle-person between SSPs and DSPs.

So how does programmatic advertising work with device IDs? Essentially, you utilize the device IDs to find out when potential customers are near your business and then target them with your ads.

When done right, LBM can encourage immediate foot traffic and conversions. It can even help you secure business before your competitors.

How to Get Potential Customers to Opt-In to Location Tracking

So, how can you gain access to your potential customers’ GPS locations? You just need the right technology and your customers’ consent. As you’ll soon learn, many people are more than happy to give over their location data for the right perks.

One way to track your customers’ locations is by creating a mobile app for your business. You can entice customers to download your app by:

Offering in-app rewards and discounts – According to a survey, 99% of customers say they would share their data for cash rewards. 85% said the same for discounts. By offering these types of incentives within your mobile app, you can encourage customers to download it from their smartphone’s app store.
Using the app to log loyalty points – If you have a loyalty program, you can let customers log their transactions and earn points by scanning their app with you at checkout. Over 65% of customers said they would share their personal data in pursuit of loyalty points.

While some customers may disable your app’s location tracking, many will keep it going. When they do, you can start implementing LBM campaigns that alert these potential customers to your deals of the day, products, services, discounts, promotions, and more.

Benefits of Location-Based Marketing

Some benefits of LBM include its ability to:

Facilitate contextually-relevant promotions – Effective marketing is all about sharing the right message at the right time with the right people. When you know the location of your potential customers, you can ensure your promotional messages resonate with the context of their physical environment.
Increase real-time foot traffic and impulse purchases – If someone is shopping near your store, a notification highlighting your current promotions and discounts could be all the encouragement they need to come inside and start shopping.
Engage customers across all stages of the buyer’s journey – Whether someone is vaguely aware of your business or a devoted customer, LBM can grab their attention and encourage them to take action while they’re in the area. In turn, it can assist with both customer acquisition and retention.
Better allocation of ad spend – Since LBM allows you to target your advertising audiences with greater precision, it can help you limit your ad spend waste and optimize your ROI.

3 Types of Location-Based Marketing

LBM can take several forms. While all types of LBM rely on the user’s location data, they work in slightly different ways.

Here are the three main types of LBM and their major benefits:

Geotargeting – Geotargeting is a form of LBM that uses customers’ IP addresses to determine their GPS location. Once their IP address is identified near your storefront, you can send them promotional messages.Geotargeting allows for high levels of personalization. For example, you can weave current events, news stories, or weather-related details into your messages to make them more relevant.

Let’s say you own a ramen shop. On a rainy afternoon, you craft a notification to entice nearby customers to come in for a cozy meal and a break from the rain. Since your message will likely resonate with the recipients’ current experience, you’re more likely to win over their business at that moment.

Proximity marketing – Proximity marketing relies on Bluetooth-based beacon technology instead of GPS location data. Since beacon technology is more granular, it can pinpoint when potential customers are inside your store, rather than simply in the surrounding area.For proximity marketing to work, your potential customers must have their mobile device’s Bluetooth connection turned on. However, they don’t need to be connected to cell service or the internet. Due to this difference, proximity marketing is a fantastic form of LBM for locations that lack reliable cellular and internet services.Proximity marketing can help you create impactful campaigns that resonate with customers who have already entered your store, restaurant, or event space. If you run a home improvement store, for instance, you can send shoppers real-time coupons for the tools and supplies they walk past during their shopping excursion.
Geo-conquesting – So far, the LBM methods we’ve discussed focus on your storefront’s location. However, you can just as easily set your geofence around your competitors’ businesses. When customers shop with your competition, you can send them promotions that encourage them to patronize your business instead.Whole Foods implemented this strategy to move the needle on its market share. It simply targeted buyers at surrounding grocery stores and sent them timely discounts. This geo-conquesting LBM campaign boasted a conversion rate of 4.69%.

What Types of Businesses Should Use Location-Based Marketing?

Location-based marketing can be a game-changing tool for many types of businesses. Here are some industries that can benefit from it the most:

Restaurants – Restaurants can use LBM to attract people nearby who may already be planning out their next meal. For instance, a taco shop on a busy street in San Diego could use LBM to send out timely Taco Tuesday discounts to people in the area.
Hotels – Hotels that want to keep their guests on-site can use LBM to promote their in-house restaurants, gift shops, events, and activities. For example, a well-timed LBM notification can send vacationers over to a pool bar’s happy hour or coffee shop’s last call.
Local events – From farmer’s markets to sports venues, LBM can entice people to patronize various vendors at local events. For example, a hot dog concession vendor could advertise their food to football fans located in the stands.
Car dealerships – After someone has arrived at your car dealership, you can encourage them to pull the trigger on their purchase at your car dealership through LBM. You can also capture the attention of your competitors’ customers by targeting their dealership locations too.
Hospitals – People at hospitals are often too preoccupied to look up restaurants, cafes, or gift stores in the area. Thus, they may appreciate an LBM notification about these types of services. Your LBM notification may remind them to grab a convenient bite of food or pick up some flowers for a patient they’re visiting.

As you can see, many types of businesses can strengthen their mobile ad campaigns by triggering them when their target audience is currently in a specific location.

Liberty Interactive Marketing: Get Started With Location-Based Marketing Today

Now that you understand the benefits and applications of LBM, you may be eager to implement it in your marketing strategy.

If so, you can get started by working with the digital marketing experts at Liberty Interactive Marketing. With nearly two decades of digital marketing experience, we understand how to create effective LBM campaigns.

Discover how LBM can take your digital marketing to the next level today.