location based marketing

Location Based Marketing: The Ultimate Guide



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Shep Hyken said: “The best advertising you can have is a loyal customer spreading the word about how incredible your business is.” And one of the best ways to create an amazing customer experience is by implementing location based marketing into your overall marketing strategy. 

It doesn’t have to be complicated, time-consuming, or expensive if you cleverly do this. Targeting mobile device users based on their location can only take a few minutes of your time. PassKit, our digital loyalty solution, allows you to create digital passes such as digital loyalty cards, membership cards, or coupon cards and get detailed data on redemption rates. This data helps you know how many digital passes your customers actually use while at your store.

When your loyalty program is up and running, PassKit enables you to remind customers of their loyalty card or coupon and entice them into your store when they are nearby your own locations. It combines the power of mobile advertising with users’ location data to deliver location based reminders to your customers. If you want to check how it works, you can start our 45-day free trial.

In today’s article, we will explain location based marketing in detail, how it works and how you can use it to compete against larger brands.

What is location based marketing? 

targeting users based on location

Image source: plotprojects.com

Location based marketing is a mobile marketing tactic popular in the advertising ecosystem. Location based marketing companies use location data to target consumers with personalized online or offline messaging based on their physical location, interests, and purchasing behavior.  

It allows you to reach customers at the right time and place, increasing brand awareness and foot traffic. It results in a higher ROI.

These advertisements can include:

  • Notifications of events happening in the area
  • Promotional offers 
  • Sale announcements
  • Discounts on the customer’s favorite product
  • In-store availability of a product they have been considering

Why do marketers these days focus so much on location data and mobile marketing? Let’s look at some stats to answer this question.

Location based marketing stats 

location marketing stats

Image source: grandviewresearch.com

Here are some statistics explaining why location data increases the effectiveness of mobile marketing campaigns:

The statistics are convincing, aren’t they? But if you already have access to the customers’ location data, how can you use it in practice?

What can you do with location based marketing? 

You can use location based marketing for your business in many ways. Here are just some examples.

1. Understand customer behavior and identify trends

Whether you’re planning a new store opening, launching a new product, or trying to reach a new customer segment, location based marketing can be a valuable tool for understanding customer behavior. By monitoring how customers interact with your business at different locations, you can better understand their needs and preferences and tailor your marketing strategy accordingly. 

It is especially true in retail stores, where you can use footfall and sales data to identify peak shopping times and other trends that may not be visible on the surface.  

2. Reach customers and build loyalty 

Since connected customer experience is more important than ever, consumers are looking for businesses that can meet their needs wherever they are.  Location based marketing uses geolocation to target customers on the go.

While location based marketing can be beneficial for businesses of all sizes, it’s valuable for small businesses that want to expand their reach without breaking the bank. They can target potential customers in their area and build loyalty among existing customers by offering them deals and rewards when they visit. 

Online stores can also use location-based marketing to target nearby customers, providing online ads relevant to their particular area.

3. Boost sales and revenue 

Location-based marketing helps you boost sales and revenue by reaching your customers when they are most likely to buy. In addition, you can use data to create customer profiles based on their spending habits and adjust your marketing strategy accordingly. It will help you increase foot traffic, drive sales, and generate leads.

It is important to note that you need to use location data carefully. It is essential to ensure that customers consent to this interaction and understand how you use their private information.

How location based marketing differs from proximity marketing

location based marketing tactics

Image source: blog.aspiresys.com

Despite having some similarities, location based and proximity marketing are quite different.

Location-based marketing encompasses any marketing activity that targets customers in specific outdoor areas using location data. Proximity marketing, on the other hand, is a subset of location-based marketing that employs technology such as beacons, Wi-Fi, NFC, and GPS to track customers’ movements within a building. 

You can use location based marketing for a wide range of purposes, from advertising to collecting data to improving customer service. Proximity marketing is suitable for commercial purposes, such as alerting customers about nearby sales and sending notifications about special offers or discounts. 

So the main difference is that location based marketing helps you target customers in a larger area. In contrast, proximity marketing works better indoors and helps reach users within 50 meters at most, and enables more timely, personal, and relevant communication.

Location-based marketing use cases by industry

When implementing location based marketing, it is possible to create audiences based on previous and current customers. You can entice customers to revisit your business and increase customer loyalty with rewards and special deals. 

Here’s how various industries use location based marketing:

  • Retail stores improve their understanding of consumer behavior, increase brand loyalty, and enhance the in-store shopping experience.
  • Hotels provide check-ins via mobile apps, additional features for room service, and inform customers about special deals.
  • Restaurants use geotargeting with much success in recommending places to eat in the vicinity.
  • The travel industry provides travelers with recommendations of places to stay, restaurants to eat, tourist attractions to explore, and various other services
  • Event industry uses hyperlocal marketing to fill in spots for events such as sports and concerts
  • Auto dealerships attract local customers and divert them from competitors

As you see, you can use location based marketing to achieve multiple goals and increase your profit in the process.

The pros of using location based marketing

Here is the list of the most important advantages of location based marketing: 

1. It helps you define a buyer’s persona

Location based marketing helps you create a customer profile by collecting data related to their location, interests and spending habits. You can use this information to create targeted marketing campaigns that resonate with people within a specific area. 

By understanding the demographics of a specific area, you can create a profile of the typical resident, which help inform your campaign strategy. This type of data can be precious, especially for businesses looking to grow their customer base.

2. It boosts brand recognition 

By offering incentives or discounts to customers who visit their location, businesses can boost brand recognition while attracting new customers. It can be particularly effective if your business is in a busy area with high foot traffic. 

By creating an incentive for customers to visit your business, you can increase brand recognition and boost sales. Similarly, by using location-aware advertising, you can tailor your ads to specific areas or demographics and reach a wider audience that you otherwise wouldn’t.

It can be particularly beneficial for local businesses trying to compete against well-known brands.

3. It increases foot traffic 

It is a great way to get people into your store, restaurant, hotel, salon, or gym and make it more visible. You can even track how many people came into your store after receiving a notification. It can give you valuable insight into your marketing strategies, and what types of messages are the most effective. You can also track how long people stay in your store after receiving a time-sensitive deal.  

4. It helps you drive customers away from competitive locations  

There are several ways you can use location based marketing to attract customers away from competitors. First, you can offer incentives for customers to sign up for your loyalty program and reward them for visiting your store. 

You can also offer discounts to customers who visit your store during certain times or on certain days of the week. Additionally, you can use social media to promote special offers when people are nearby. By taking advantage of location-based marketing, you can drive customers away from competitive locations and increase your profits.

The cons of using location based marketing

Location based marketing is very effective, but the strategy is not always easy to apply. Here is a list of barriers you may encounter:

1. Consumers’ privacy concerns 

Customers may feel uneasy about having their personal information tracked and collected by businesses. In addition, some companies may share or sell this data with third parties without customers’ knowledge, potentially resulting in identity theft or other kinds of fraud.

The best way to address these concerns is to educate customers on how your business uses location-based data. By clearly communicating your policies and giving customers the option to opt-out, you can build trust and respect among your customers.

2. Non-smartphone users  

Location-based marketing strategies often exclude not-smartphone users, who may not have access to the necessary apps and software. It creates a significant barrier for businesses that want to implement this type of marketing strategy, so it may be necessary to include some traditional forms of advertising and marketing to reach all your prospective customers.

3. Inappropriate targeting

Location based marketing can bring results if you do it in the right way. Finding an audience in a specific area and serving ads doesn’t guarantee success. You need to segment your audience first and then send them personalized marketing messages to get conversions. 

4. Inaccurate location data

Location marketing needs accurate location data to be effective. If you’re using third-party data sources to determine your user’s location, there’s a chance that those data sources may be inaccurate or out of date. It can result in users being shown inaccurate or irrelevant content. 

Additionally, if you’re relying on IP address data to determine location, you run the risk of showing users different content depending on the network they’re on, which could cause confusion and frustration.

Despite these disadvantages, using location intelligence to advertise your products and services is a highly effective tactic. But how exactly does location based marketing work? Let’s break down three main components of this strategy.

3 main components of a location based marketing strategy

Companies approach location based marketing in different ways. Here are the main methods of location based audience targeting:

1. Geofencing

push notification location based marketing

Image source: econsultancy.com

Geofencing uses GPS technology to create a boundary within a specific area. When target users enter the area, they get a notification about offers, discounts, or other messages from the brand encouraging them to pay an in-store visit.

Marketing teams use geofencing to target users within a large area like an event space or shopping mall.

For example, Starbuck uses real-time location data for advertising drinks to target consumers. If a customer typically orders Vanilla Latte, Starbucks will send a notification to their mobile device enticing that customer to step in for their favorite drink.

2. Geotargeting

Geotargeting uses the IP address to determine user location. When in proximity to a store, the user may get personalized messages or push notifications if they have previously allowed the app to access their location data.

For example, Uber uses geotargeting to notify its app users about cars available in a city where the user has just landed.

The significant advantage of geotargeting is that it helps you deliver personalized ads, increasing customer experience. Using data specific to user location, you can target customers more effectively. Knowing what influences customer behavior, you can show promotions that match their needs.

3. Geoconquesting

Geoconquesting means sending location-based ads to customers visiting a competitor to attract them to your business.

For example, Whole Foods Market used geofencing to reach shoppers around competing supermarkets. People in those locations received offerings with significant discounts encouraging them to visit Whole Foods, which has fewer physical locations than its competitors. The campaign brought amazing results: the post-click conversion rate was 4.69%. In comparison, the national average is 1.43%.

But how can you employ geolocation marketing to your business most efficiently and affordably? The solution is PassKit. Let’s explain.

How to use PassKit to deliver location-based reminders 

PassKit is a digital loyalty platform that allows businesses to create and distribute Apple Wallet and Google Pay passes. It helps you enhance your digital loyalty program by rewarding your customers for their online and offline interactions with your brand. 

PassKit also allows you to track redemption rates with advanced analytics, helping you get actionable insights you can use for further improvement and optimization of your marketing strategy.

How to create a digital pass with PassKit

The process of creating a loyalty card with PassKit is very straightforward and intuitive. You need to follow a few easy steps:

  1. Create a free account on the PassKit platform
  2. Name your project and select the type of card that you want to create (loyalty, membership, or coupon card).
mobile users digital passs
  1. Modify the card template according to your liking:
  • Define colors and add images like your logo and hero image 
  • Add all the necessary information and useful links (social media profiles, official websites, etc.) 
  • You can also add a QR code or barcode if you want the pass to be scannable
  1. When you are happy with how your card looks, save the design and start distributing your passes.

Once you create your digital membership card, coupon, or loyalty card, PassKit allows you to distribute the cards in multiple marketing channels like email, SMS, social media, with QR code on the receipt, and many more. With a single tap, customers can add the card to their digital wallet (Apple Wallet or Google Pay).

The digital loyalty card allows customers to collect points, track their rewards and use them instead of a traditional plastic loyalty card in your store, restaurant, hotel, or gym. With just a few taps on their phones, they will be ready to load more points or exchange points for rewards.

What is the connection between PassKit and location based marketing

You can also use PassKit to deliver location based reminders to motivate customers to redeem their coupons. Once the customer has installed the pass, they can receive a lock screen notification when they are close to your venue.

location based reminders on sensitive locations

Apple Wallet pass allows you to encode 10 GPS locations and 10 Beacon UUIDs. If you create several passes, each of them can contain ten different areas that are the most relevant to the customer.

With Google Pay, you can encode an unlimited number of locations for each pass to use with GPS technology.

PassKit also allows you to use beacon technology to deliver location based reminders. Our passes are compatible with any beacon hardware providers.

The possibilities to create personalized messages with PassKit are endless. You can deliver content to target users based on their preferences, demographic, and behaviors. Also, the lock screen notifications you send can be the same for all pass holders. Still, you can also alternate the messages for different segments of your audience or even send personalized messages to individuals.

To further encourage you to use this strategy, let’s look at some effective location based marketing examples.

Examples of successful location based marketing campaigns

Companies around the world use location based marketing with a lot of success. Let’s discuss some of them.

1. Van Leeuwen

location based marketing campaing Van Leeuwen

Image source: dijiazhao.wordpress.com

Van Leeuwen, an ice-cream brand with New York and Brooklyn stores, is prevalent only in the local area. That’s why the company decided to use a location based marketing strategy to engage more clients. 

The customers were encouraged to install the PayPal app on mobile devices to pay for their orders via the app. Then the PayPal system enabled Van Leeuwen to check the geolocations of the customers and deliver ads with special offers and deals whenever they got near the store. 

The app also enabled the customers to order ice cream. As a result of the campaign, the number of mobile payments in the store has increased.

2. Sephora

location based marketing campaing Sephora

Image source: sailthru.com

Sephora delivers a personalized experience to customers through its email marketing program, website, and app. Their location based mobile messages include notifications about products available in certain stores sent to users who live in the local area. 

Beyond that, customers who come near a store location receive relevant messages like notifications about events in the store, product recommendations, or deals exclusive to mobile-app users.

Wrapping up

The number of companies that target location based audiences raises every day.  

This marketing strategy is not only for big players on the market. Small businesses with lower budgets can implement location based marketing. It helps them better understand their customers, create exceptional customer experience, boost their brand recognition, and increase foot traffic at their physical location.

Creating a loyalty program with PassKit is an upgrade for your business that enables you to conduct location based targeting and serve your customers more relevant ads near your coffee shop, hotel, salon, or gym. You won’t need heaps of money, coding skills, or employing marketing teams to conduct location based marketing campaigns. 

At a small monthly fee, PassKit will provide you with everything necessary to launch your digital loyalty program and send location based reminders to your target audience. Visit the PassKit platform to create your free account and start your first successful campaign.

Location based marketing FAQ

What is location data?

Location data is geographic information about objects or devices present in geographic space.

How is location data collected?

It is possible to locate i.e. find the position of mobile devices such as smartphones and tablets when they receive signals transmitted by cell towers, GPS, WiFi, and beacons.

How would a retailer use location based analytics?

Retailers can use location data in various ways, for example, to:

  • Improve customer service – by having access to demographic data in a given area. The retailer can better decide what products or services to offer to serve the specific audience.
  • Deliver targeted messages – to drive foot traffic and increase revenue. A retailer can use location based marketing and deliver push notifications and other targeted messages to customers in close range of the business and entice them to visit by using special offers or discounts.

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