Chapter 6 - Location Based Capabilities
The defining characteristic of mobile computing is in its name: mobile. The device accompanies its user at virtually all times and to virtually all locations (except in the rare instances when the device is intentionally or accidentally left behind or switched off), and with location-based services the user's location can be detected by service providers to provide content germane to the user's present location.
Marketing in Place
Knowing the user's physical location enables a business to provide relevant information.
One example provided is of a mortgage company who provides an application people can use when shopping for a house. While browsing a property, a customer can retrieve information about it from other sources, and in exchange the customer learns which properties the shopper is viewing for the purpose of offering them a mortgage.
A more prosaic example is an application that enables customers to find a retail location nearby - but which could also be enhanced with additional information including any promotional offers. With more granularity, the mobile application can also help the customer navigate the store to reach the merchandise they are seeking, provide information germane to their location within the store, enable them to summon assistance from staff, etc.
(EN: All of this is speculative, and there's a lot more that's possible, but the main hurdle at the present time to in-store applications is the lack of granularity in GPS. Even with WAN triangulation, the location may be off by a few aisles.)
Brick and Mortar as Asset
In the early days of the Internet, physical stores had a great fear of the Internet because online retailers, without the overhead costs of physical locations, could always beat them on price. For commoditized products, this has certainly been the case - where the customer knows exactly what he wants and the same item is available from multiple buyers, the only differentiating factor is its price. A customer who can wait a few days for delivery can save a significant amount buying online.
Mobile is perceived as an extension of the Internet thread: customers can visit the store to inspect merchandise and make a buying decision, then place an order from an online retailer rather than buying at the store, or browbeat the retailer into matching the lowest competitor's price. There is also anecdotal evidence of shoppers scanning a barcode, finding a better price at a nearby store, and promptly leaving to buy the item elsewhere.
(EN: I do wonder how much of this is reality and how much is urban legend. The difference between retail and online is often undone by the cost of shipping, and even when there is a comparison between retailers, the difference in prices tends to be negligible and the customer must face the risk that the competitor may not have the item in stock, or that the online price will not be honored. There have always been cheapskate customers who invest lots of time and energy comparison shopping - poring over sales tabloids and driving across town to save a negligible amount, but this is borderline obsessive-compulsive and highly irrational when you calculate the time and cost of bargain shopping. My sense is that it is the exception rather than the rule for consumer behavior - as most customers will pay a price that they consider to be fair, even if it is not the lowest available, and often value their time and convenience over money, within reasonable tolerances.)
The author suggests that brick and mortar stores can become an asset "if handled with the correct policies," but does little to elaborate: salespeople should be trained to recognize mobile shoppers, the store should set a policy regarding price-matching, and the store should seek to understand what information might be available on mobile.
In some instances, mobile can be leveraged to augment the in-store experience: by providing an app that customers can use while shopping the store, the retailer can control the information that users receive and at the same time discourage them from using other applications (by virtue of the limitations of the platform and their own laziness). As an added bonus, the retailer can be aware when customers enter the store, review their profile, and dispatch salespeople who are familiar with an individual customer's tastes, preferences, and shopping history.
(EN: What's missing here, I think, is a consideration of the value-add that is provided by the physical environment - people put effort into visiting a physical store rather than shopping online because they recognize the value it provides, which may be psychological comfort, a need for immediate possession, a desire to physically inspect merchandise, the need for a knowledgeable clerk to assist them in making a selection, and so on. Mobile cannot do some of these things at all, and presently does some of them very poorly, and addressing those gaps is the real value of having brick and mortar locations.)
The mobile device also has tremendous potential as a research instrument. Those test subjects who are willing to be monitored or proactively participate can provide a wealth of data about their actual shopping behaviors (rather than the alleged behaviors they claim in focus groups) on an ongoing basis, which can better inform business decisions.
The tendency of research subjects to speculate and confabulate may not be entirely overcome, but your ability to survey them at the right time reduces the likelihood of having gaps in memory. For example, a survey conducted at the end of a meal is more accurate than one that is conducted a few hours or a few days later.
The ability to detect a person's physical location and to ask them questions at the right moments are both highly valuable. The author is also focused on tracking movements - the path that a person takes over time, the speed at which they are moving, and their habitual patterns are also valuable, and are often overlooked. Some examples:
- Knowing what time of day customers visit a store can be helpful in planning promotional events.
- Finding that most customers who visit one store drive past another store on the very same route may help identify unnecessary locations.
- Recognizing that a lot of people who work late and get take-away orders on a given day of the week may identify the potential for restaurant delivery
- Noticing that the most loyal customers tend to visit the store on specific dates and times can help plan the timing of incentive programs (or revisiting whether existing programs are necessary)
A particularly innovative approach used by some firms is conducting research in competitors' locations: determining when one of your customers shops somewhere else for something they might have bought from you, and asking them the reasons they chose to do so. In effect, mobile enables you to send an agent into your competitor's store to gather intelligence, which would be difficult to do otherwise.
A few examples are provided of insights that would be difficult to have gathered otherwise:
- People who visit Dunkin Doughnuts for their morning coffee are 33% more likely to dine out than those who take their morning coffee at Starbucks
- People who visit fast food restaurants for breakfast are 50% more likely to engage in fitness activities
- Half of people who visit health-food stores also go to a grocery store in the same trip
- Few people who visit a Sears department store shop at another department store, but many people who visit other department stores often shop at other stores as well
If it were not for the mobile device, it might never have occurred to the marketers at a restaurant to reach out to customers at donut shops, for fitness clubs to reach out to people who eat fast food for breakfast, for grocery stores to seek co-marketing campaigns with health food stores, etc.
In all, mobile research has tremendous potential and because it is not being widely exploited, retailers have an opportunity to gain significant advantages over competitors who are slower to adopt mobile research.
Driving, Keeping, and Converting Customers
Back to mobile marketing, the author attempts to categorize marketing efforts into three categories:
- Location Drivers - Attracting a customer to a physical retail location
- Location Magnets - Getting a customer who is already at a store to purchase
- Location Activators - Getting a customer who has purchased to plan to repurchase
In effect, mobile enables you to separate these three tasks so that you can send the right message at the right moment to the mobile user.
(EN: Scanning forward, it occurs to me that the author tends to keep everything focused on the mobile channel - but there is likely more power in being flexible: mobile may be the trigger for a message sent via another channel or vice-versa rather than trying to marry trigger and message to a single channel.)
Location Drivers are marketing efforts intended to coax a prospective customer to visit a physical location. Most retail advertising (as opposed to manufacturer advertising) is primarily geared to doing this: while the promotion may be for a specific item, the intent is to bring the customer into the store and the advertiser's hope is that they will purchase more than that item advertised.
The author delves into coupons, suggesting they aren't "just for weekly groceries" and then presenting the most popular product categories for which customers use them, all of which are grocery and drug-store items. While coupons are very popular with certain age and demographic segments, the need to clip, sort, and carry them are often cited as reasons customers don't use them.
(EN: I recall reading a study that explored this, and which found that the "wages" of avid coupon users come out to about $5 per hour in savings, given the amount of time they invest in collecting and organizing coupons, including many of which they don't end up using. Also, given the low rate at which coupon-clippers purchase a brand without a coupon, this suggests that they are ultimately unhappy with the quality of the items that they purchased for the sake of saving a little money. I expect the author can address the first, but not the second.)
The Internet improved couponing by enabling promotions to be stored in digital archives, eliminating the need to gather an manage paper coupons such that customers could easily search for and print out the coupons they needed for offline purchases and obtain discount codes for online ones. Companies like coupons.com and coolsavings.com experienced a boom in popularity (EN: I recall that both those firms were hiring like crazy and then had sizable layoffs off a few months later, so I wonder if the popularity was sustained.)
The author suggests that mobile marketing is "poised to transform" the coupon experience, enabling customers to receive and apply discounts while in the store, as easily as scanning the barcodes of merchandise they add to their cart. (EN: The potential is there, but there is little evidence that retailers are having success or that customers are using them. Again, there was a brief boom when social media site Foursquare offered coupons and discounts for visiting, but that came and went. Few retailers offer such deals anymore.)
The author qualifies this statement: when a coupon is offered to someone who is already on-site, it falls into his "magnet" category. It is only when a coupon is offered to someone who has not yet visited that it is a "location driver" - though it could be argued that mentioning the in-store coupons can turn a magnet into a driver.
Marketers have long coveted a technical solution that would push deals to consumers - to proactively send an offer to a person who was walking or driving by a store location - but this has never gained acceptance among consumers, who were not pleased at the prospect of being constantly distracted by promotional offers as they go about their daily business.
The author refers to the "Grocery IQ" application, which remains popular among customers: the application enabled customers to enter their grocery list, presented information and deals from merchants near their location, enabled shoppers to scan barcodes to keep a running total while shopping, and various other useful functions.
The author does concede that using mobile for shopping has not caught on with customers yet, and speculates it is because people are not very organized in their shopping behavior. He speculates that when the system is integrated with other functions, such as menu planning and cooking applications, the convenience and value will be greater - but at the present time the various services are fragmented and incompatible.
He also mentions that there are tremendous challenges in deploying mobile technologies at retail, many of whom do not have their own inventory, point-of-sale, and marketing systems integrated and are certainly not prepared to integrate consumer applications. The potential conflicts with customers when there are discrepancies in pricing, as well as other drawbacks such as liability that may arise if a cashier drops a customer's smartphone, are prohibitive - but ultimately technology and innovation may overcome them.
Naturally, the author mentions groupon, which adds social networking to the retail equation by aggregating buyers and negotiating deals with retailers. (EN: However, froupon was another flash in the pan. The novelty wore off quickly, the IPO was tragic, and the company is still running in the red. Extinction seems inevitable.)
Location magnets focus on getting individuals who are presently at a physical location to take some action (generally to make a purchase) before they leave.
A common example is on-the-spot offers that are made to mobile users who are on site. The example of Fourquare, a social media application enabling people to "check in" when they visit various places, is mentioned: at one time, retailers offered rewards for checking in, but the novelty of the application wore off and few retailers continue this practice.
The author mentions proactive magnets, such as enabling travelers to plot a route for their travel and plan stops at gas stations, restaurants, hotels, and attractions along the way (EN: Though this is really more in the nature of location drivers because the customer has not visited yet.)
Location mapping can also be successful in getting customers to have a deeper in-store experience by offering an internal directory. A mobile application can offer an "internal map" of a theme park, shopping mall, airport, convention center, or other facility that enables users to find facilities and services on the property.
(EN: This is a great idea for large venues, but is often problematic in smaller ones due to the lack of granularity to determine exactly what aisle or department in which a customer is presently standing. I expect that future improvement may overcome this, though there are arguments that more granular positioning is a concern for security and privacy.)
The value of internal mapping is that marketers can reach customers "closer to the moment of purchase than ever before" at the critical moment in which the customer is selecting items to purchase. A mobile application can offer a deal to overcome hesitation, assist customers in selecting merchandise, make a bundled offer, cross-sell or up-sell, etc. (EN: This is not a new capability, but it does automate functions provided by in-store staff. I expect there are some things at which mobile will be better, and others at which it will be worse, than store staff.)
The author provides some information about the use of mobile by companies that operate shopping malls, and have developed mobile apps that allow customers to use their smartphones as enhanced mall directories, showing not only the locations of shops but also the merchandise on offer, including any deals.
(EN: This seems more like a location driver, because the customer has not visited the retailers yet - but more importantly, this remains a maintenance nightmare for the malls and their stores to keep the information in the system up to date as stores and inventories change. It becomes even worse because each store likely has its own information systems, so it's not an easy effort to develop and maintain a system to aggregate all the data and keep it updated.)
Lastly, the author considers the potential for mobile to be a shopping assistant to consumers in a store, enabling them to locate merchandise on the sales floor, plan an efficient shopping route, learn about special offers, review product information, etc. while on-site. For the store manager, having a real-time map of all customers in a store can enable them to more efficiently manage clerks, salesmen, cashiers, and other staff.
Location Activators are used during the buying process to cross-sell, up-sell, or bundle merchandise for immediate purchase, as well as to provide incentives for the customer to return or repurchase after the present transaction is completed.
A few random ideas for ongoing engagement after the sale are provided: following up with customers to ask about their purchase satisfaction or to complete surveys in exchange for promotions, facilitating and encouraging them to advocate to their own network of contacts through social media sharing, supporting points-based reward systems and other loyalty programs.
There's also an oblique reference to third-degree price discrimination: using mobile in the store enables the merchant to offer or negotiate an item's price with each individual customer, or offering them an on-the-spot incentive for taking some action (e.g., social media sharing).
The author finally mentions the holy grail of location-based marketing: the ability to track a customer's physical location automatically. That is, after consenting to be tracked, the customer does not need to check in, launch an application, or do anything else at all to permit the merchant to track them.
The author mentions Shopkick, an independent research company that is experimenting with automatic location. Some participants agree to be monitored constantly, others limit it to when they enter a given location, in exchange for receiving deals and incentives as well as earning "kickbucks" that can be redeemed for merchandise.
(EN: I saw a presentation on Shopkick at a conference in 2013 and apparently the firm is still going strong, and had a very robust revenue model from selling aggregated research reports and has partnerships from some significant national retail stores. In this instance, I share the author's enthusiasm, so long as they can retain the interest of participants.)
Right Place, Right Time, Wrong Mood
Thus far, location-based marketing has considered space and time. The author speaks of a more ambitious form of location, which he terms "psycholocation" - referring to the mindset of the customer: their mood, intentions, and somatic state.
Location-based services may tell a marketer that a person is within 500 feet of their restaurant at noon, but it does not tell them whether that customer is actually hungry; or it can tell a store manager that they are in the same mall as one of their shoe stores, but not whether they need a new pair of shoes. As such, the marketer who sends messages based on location and time alone is likely still sending messages to people who are unlikely to buy, and who may find the messages noisome rather than helpful.
There is no real indication of how it might be possible to peer into the mindset of the customer, though observing their behavior over a long period of time and referencing the information they have shared via social media and other services might reveal clues as to their psychological state.