Finding the Sweet Spot for Location-Based Marketing

We might seem to be living in an age in which geographical divides are dissolving. With smartphones in our pockets, humanity is more connected as a species than ever. Communities no longer need to form in a geographical position and we can collaborate and communicate across continents and oceans. But as Mindshare Futures announced in its report of the same name last week, ‘Location Matters’, still. As the report asserts in its introduction, “as society has become increasingly fragmented, where we live often provides a fault line for divided opinions.” Essentially, people are different and where they live is still of vital importance to brands looking to understand and connect with consumers in effective ways. And with ever more data to inform them thanks to the devices in all our pockets, brands are experimenting in location based marketing with intense curiosity.

With this in mind, one session at the Location Matters launch event in London last week turned to three brands for a panel session discussing how they do this and what they’ve learned on the subject so far.

UK telecommunications company Three is a brand that knows the value of location. With over 300 stores across the UK, its marketing strategy can’t be one-size-fits-all. “The behaviour of people across those stores is really very different,” says head of direct response Chris Gillett during the panel discussion. “If you walked into a community store in the North East [of England] you would see something very different to if you walked into our flagship store on Oxford Street. There we might have the iPhone on a £50 tariff at the front. In the North East it may be a SIM-only journey. We get insights to try and deliver location-based marketing.”

Another high-street brand, with almost 1,000 stores in the country, Marks & Spencer has found some strong practical applications for location data. One is simply ensuring that products being promoted in marketing are actually there when you go to buy them. “You know the frustration,” says M&S head of digital marketing, loyalty and CRM Jane Stiller. “Often you’ll see something in advertising and you go to your local store and for whatever reason it’s not there. So we want to make sure availability links through to our digital experience as well.”

Weather is also key to which marketing is targeted to which location. “If it’s really hot down south but really rainy up north we flex our creative and channels so we are showing the most relevant product,” explains Jane.

These seem straightforward applications that are hard to complain about as a consumer. They don’t get too close, which is a serious risk in the world of location-targeted marketing. “Going too granular” repeatedly raised its ugly head in the morning’s discussions. It can feel creepy when brands know too much, everyone agreed.

“With all these dimensions you can potentially localise to the Nth degree and personalise ever further; it’s quite a challenge working out where to stop,” admits Chris.

He admits that Three has found that out the hard way, inviting people into specific stores to see specific members of staff. “It gets to a point that people would think that’s too much. We’ve been down that road a little bit, but we’ve definitely taken a step back from that. When you go too close, it feels uncomfortable for people.” The key, the panel agreed, was to find the sweet spot of familiarity before it morphs into creepiness. 

Treatwell, the beauty treatment booking app startup, has been experimenting with its marketing to find this sweet spot. “We wanted an out-of-home campaign in Paris where we wanted to feature haircuts and styles and connect with the community,” says chief customer officer Inés Ures. They began to run campaigns so targeted that they recommended specific stylists in hair salons to people whose location data showed they were in the local neighbourhood. “That campaign didn’t do very well,” says Inés. 

They later ran a campaign that targeted a larger area, without being too granular, and it performed much better. “We realised we didn’t have to make it too difficult. We just needed to talk about cities or boroughs and forget about the specific salon owner’s name.”

M&S store managers have occasionally found some of their location-based marketing creepy, says Jane. “We send a lot of stuff inviting our customers in to meet specific store managers,” she laughs. “And they get annoyed with us because people come in saying ‘Hi David! I’ve seen you on email!’ We’re making people celebrities against their will.” 

Sifting through mountains of location data for useful insights takes a lot from brands, particularly if they’re looking for things that might inform creative ideas in helpful ways. “There’s nuance between different audience segments that might mean you might need to shoot the creative in a different way,” says Jane. But to get there isn’t easy. “That volume of data requires quite a Herculean effort from the brand teams working on it. The complexity for the return isn’t always there.”

For M&S, the big challenge is the complexity of the quantity of data. As Jane says, it’s “being able to make sense of it and use it in a tangible way that benefits our customers” that takes up resources. 

In June, the company announced a big AI partnership with Microsoft to try and help with this challenge. “We’re always looking at how we can do things more efficiently. We know we’re sitting on an absolute gold mine of information that our customers give to us. They’re consenting for that data to be used in multiple different ways. We therefore have a responsibility to use it and generate value for our customers through using their data in quicker ways, so absolutely we want to be considering AI and machine learning for the future.”

AI may eventually be able to find those incisive local insights that lead to more effective creative, but for now brands are keen to keep a human element in this process. Chis stresses that “right now the human override is important because the AI would go down that creepy route.” 

Location data has to be understood to be useful. “New brands are not successful because they use data,” says Ines. “They’re successful because they find the human connection with a group of people and we should not forget that.”

“As with any data it enriches your understanding and knowledge and you really have to have a bigger picture of what you’re trying to achieve as a brand,” says Chris. “If you rely purely on location data for how you market to people in that region without that human bond, then you are going to get yourself down a rabbit hole of spreadsheets and more data that will not reflect where you need to be as a brand.

“Some of the best store staff at Three know best what customers want, so if we went down the route of using everything we learn from AI and data we would lose that. They are our best strategists.”

Jane gives an example in how people feel about individual M&S stores they visit: “We send a lot of [marketing] that’s trying to be local, but our data points show just the store you shop in most frequently. It doesn’t necessarily mean it’s your favourite. We’ve come a cropper quite a few times as representing something as local when actually the data points we’ve used to get there can be quite crude and interpreted in a number of different ways.”

Three is tuned into this too. “I work in London but I live outside of London,” says Chris. “If you were to serve me a message to tell me the latest offer in the Mayfair store, I’m not going to be purchasing my phone there. I’m going to go back home on a Saturday and so that messaging is irrelevant to me. Location is very nuanced between users’ lifestyles.”

Ines backs this up with the specialist insight that Treatwell has on beauty and wellness: “People pursue beauty and wellness in a very specific way - either close to where they work or close to where they live. Think about when you get a last-minute haircut or a last-minute wax. You’d probably do that next to your office. 50% of our waxing treatments are booked last minute.”

The panel’s ultimate conclusion was that brands should take care with their strategic goals before they gorge themselves on location data. “You’re not improving the experience for the customer and you’re just taking all the information you have and serving it to them,” says Chris. “It’s really easy not to take a step back and ask what you’re trying to improve for the customer in the long term.”

Jane agrees. “Being really clear about what your objectives are and your KPIs for what you’re trying to achieve [is key]. You can get stuck in a rabbit warren of data. There’s always more that you can learn. But having that true north of what you want to achieve helps you filter out some of the crap and really understand what it is that you should be doing to benefit the customer and therefore benefit the business.”

The second component to this, Jane adds, is having a robust measurement framework against those KPIs, so a company can know whether it’s succeeded or not and therefore whether it may want to roll out a trial or increase investment in a particular strategy. 

“Don’t start from the bottom. Start from the top,” advises Ines. “Don’t go to granular data before you look at insights. The second part is on the creative side. I’ve found that targeting is important but what I’ve found more important is that the creative needs to fit the targeting.”

Listening to these brands talking on the subject, there’s no doubt that brands are fascinated to explore new ways of using location data to reach consumers in more effective and relevant ways. But it’s also a tool that needs to be treated with respect, and the most successful brands will think about why they want to use it before they do.