What is geomarketing? How does it work? Why has it become critical for retailers and neighborhood stores? That’s what we’ll answer in this post.
The COVID-19 pandemic has disrupted our personal and social habits, our economic systems, all manufacturing sectors, and especially the world of commerce. In short, the world in which we are immersed is no longer the world of “yesterday.”
Beware, however: There is no greater mistake than that of remaining immobile and regretting the past. It’s time to start gearing up for the world of “tomorrow,” spotting the trends before our competitors, and seizing the new opportunities.
Marketers know very well that this is the way to survive and succeed. We want to be very concrete.
For this reason, we summarized the new marketing trends for retail – the 3Ps (Proximity, bookability, personalization) – in a previous post. We have emphasized how even the future of local “neighborhood stores” will be increasingly linked to a mix of “physical” and digital, which is already opening up enormous possibilities and opportunities for marketing and loyalty of customers, both actual and potential.
It’s important to highlight from the outset that these “3Ps” are intimately related. But now we want to focus on the first one: Proximity, or, more precisely, the “new proximity.”
The starting point: What is geomarketing?
Let’s start from the very definition of geomarketing, which some prefer to define as “Proximity Marketing.” It is defined as a type of digital marketing, based on Big Data that is closely related to the geographical location of the target, the so-called geolocation.
This information is collected by brands and retailers through services or applications that, of course, ask for prior consent from their users. We’re talking about maps, navigators, social networks, apps dedicated to sports, Travel and Tourism, weather, and much more.
In short, we’re talking about services that are now part of our everyday life.
There are three key points of this data collection:
- a person’s geographic location, recorded in real-time
- the user’s places of interest (selected through preferences, past behavior, and various other metrics)
- nearby services and activities, which might fall under the preferences and interests of the individual user
And it’s a key element in the transition from offline to online marketing.
Here, the themes of data-driven predictive marketing and, above all, personalization begin to emerge.
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We’re talking about digital marketing approaches that have the ultimate goal of one-to-one, tailored, and – precisely – “proximity” communication. Innovative ways of integrating the physical and digital worlds are made possible by specialized companies like Doxee.
It is important to underline another aspect: This proximity is not limited to the “surroundings.” We’re talking about something that increasingly acts (and interacts) with the physical store itself.
Think, in fact, of how our habits have changed when we find ourselves inside a store. If, for example, we find ourselves in an electronics store and we are interested in buying a new television, we all search online, on our smartphones, for the characteristics of the various devices. We inquire about performance, read opinions, reviews, feedback; we compare prices; we search for the best offers.
According to a recent survey, as many as 31% of users are influenced in their choice of a product by searches on their smartphone while they are already inside a store (source: Digital4Biz). Of course, this percentage is even higher among younger people.
Finally, never forget this other data, which gives the measure of how decisive geomarketing and proximity marketing can be for the future: there are 5 billion smartphone users in the world (source: Statista).
In addition, the amount of time that we spend using a smartphone is constantly growing. Estimates for 2021 indicate an average of 3 hours and 54 minutes per person each day (source: eMarketer).
Types of geomarketing and enabling technologies
Proximity marketing is being integrated into the offline to online marketing strategies of almost every type of business, from the neighborhood store, to large retail chains and supermarkets, from the restaurant industry, to tourism, to real estate… and more.
For one simple reason: it works! But in which modes does it work?
- Bluetooth: In some cases we refer to this mode with the term “Beacon Marketing” (for more details see, for example, here).
- WiFi: Having an efficient WiFi network available is not just a plus, but a requirement that everyone expects. Sure, it’s useful for customers. But it’s also useful for retailers, who can have great control over navigation data and use it to build marketing, engagement, and loyalty campaigns in real time, that are calibrated on the characteristics of the individual user.
- RFID/NFC: behind these acronyms are Radio Frequency Identification and Near Field Communication technologies. Without getting too technical, these are technologies that allow communication with smartphones, even in the absence of a WiFi network, exploiting – for example – the proximity between “smart barcodes” and customers’ devices. It’s an interesting field, because it allows companies to create interactive shopping experiences and also new and interesting modes of digital payment.
- GPS: In this case, it’s about something a bit more familiar. We all use GPS-based geo-targeting systems daily on our smartphones. Here, we’re talking about a wider proximity than that offered by Bluetooth, WiFi or RFID/NFC systems.
Advantages and opportunities of the transition from offline to online marketing
The advantages of implementing a geomarketing strategy for your business are many and they are enormous.
First of all, there are the possibilities to intercept very specific targets using digital tools. If you have a restaurant in the province of Florence, it doesn’t make sense to have your lunch menu advertised to people living in another province, unless it is nearby or a place where citizens typically visit on holiday or for work.
Up to here it is all very intuitive. But there is much more.
If it is true that loyalty is the real goal of every business, geomarketing is the best ally to achieve it. With the right tools, it’s possible to build truly personalized experiences and customer journeys that move from the physical store to the digital world, with touchpoints built in an omnichannel perspective.
There are also enormous possibilities for upselling and cross-selling.
Here again, digital can and must be very surgical. It’s no longer a question of aiming for the masses with offers and one-to-many communications. Instead, companies must increasingly push toward a real one-to-one dialog, with offers built based on the individual user, his characteristics, his preferences, his past behaviors, and his potential needs.
The interesting and decisive aspect is that this triggers a virtuous circle. The more you know your customer, the more you can intercept him in the best way, and the more you can profile him even more deeply.
This is always done with the utmost attention to privacy and informed consent.
Three quick and concrete examples of success
Not to limit ourselves to theory, here are three examples of very different brands that have successfully implemented the transition from offline to online marketing in their strategies.
Ulta Beauty, the American cosmetics chain, implemented a geomarketing campaign to promote the opening of new stores. Stores, where this type of campaign was implemented, reached the average weekly target of visits 43% faster (and 26 days earlier) than stores where the campaign was not activated.
Let’s move on to Turkey, to Istanbul. Here, McDonald’s experimented with a geomarketing campaign that relied on a well-known Turkish loyalty app (Shopping Genie). The multinational provided this tool to 15 of its stores in the city. The objective was to send a promotional coupon via Bluetooth to those passing through the area. The conversion rate was truly remarkable: 20%!
Let’s close with a last example, of the European retailer Carrefour, which implemented a proximity marketing strategy inside 28 of its supermarkets in Romania. The objective was to provide additional information on products, conveying personalized offers based on the characteristics of individual users, using the brand’s app.
Also in this case, the results were impressive: An 400% increase in the engagement rate and 600% growth in registered users in 7 months.
These are very significant examples, which show how geomarketing and the “new proximity” can offer enormous opportunities for retail players, from large chains to small retailers who want to embrace digital transformation.
Such opportunities also have a positive impact on customers and their shopping experience.
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