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Retailers beware: Location-based marketing “like the Wild West”

15th Apr 2014
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Shopping outlets experimenting with location-based marketing should prepare themselves for entering an unknown frontier, according to Aimia’s VP of global digital strategy, Martin Hayward.

With the sheer volume of retailers readying themselves to join the location-based marketing bandwagon, Hayward predicts that the current lack of regulation and customer understanding could lead to a damaging environment, unless marketers are willing to place their customers fully in charge of their own involvement.

“We’re on the cusp of a period of exceptional activity in the location marketing space, and the great unknown is really how much a part the customer wants to play in the game,” says Hayward. “Right now it really is very early days in terms of people responding to location data via offers and messages, and being asked to interact with their devices in-store as well as out. But in trialing this we’ve all got a hefty learning curve to go through, in order to work out the right way to interact with customers in this environment.”

At present, location-based marketing, in which shops can track customer smartphones via a selection of services such as in-store Wi-Fi, Bluetooth, iBeacon and NFC, before providing real-time offers and coupons based on their movements, is in its earliest stages in the UK.

However, in the US, where location marketing is more evolved, reports have highlighted incidents in which customers were not being wholly informed when their phones were being tracked, as well as other breaches of privacy. And Martin Hayward thinks this proves there are potential banana skins for those UK retailers that try to force location tracking onto customers, without getting to know whether they deem it acceptable first:      

“I fear that we may go through a wild west with location-based marketing for a while,” he suggests. “There’s so much interest from retailers, I fear the customer is going to become overwhelmed by the sheer volume of messaging and requests they are going to receive once this gets going, leading to possible questions around intrusion. There will be a mixture of people doing things to customers, which isn’t good. The approach needs to be doing things for and with customers; it’s an important distinction in this space and one that will build trust as opposed to destroy it.”

Aimia, which provides the Nectar loyalty card scheme for Sainsbury’s, BP and a host of retail chains, is itself currently trialing location-based marketing methods, including an option within its mobile app that reminds customers of offers they’ve already opted into when they’re in the vicinity of certain stores.

“Location offers us a new set of capabilities to interact with and talk to customers while they’re actually shopping and in-store, which is extremely exciting,” Hayward explains. “But we’re treading extremely carefully, and letting the customer lead us in terms of how we use the technology.

“It’s still just one of many variables that we have to get right though; customer location. It’s still important to maintain an understanding of a lot of other things about our customers; like have they got time to deal with us; what kind of messages are they interested in….it’s one part of a much bigger jigsaw.”

Hayward’s concern is that an over-proliferation will occur in the UK, as a result of shops experimenting too freely with location marketing. Could this lead to customers refusing all location-based advances though, even when offers are being thrown at them as they walk down the high street?  

“The problem could end up being that customers end up in a situation where they’re turning different systems on and off in different stores,” Hayward adds. “That’s going to be very confusing and they just won’t buy it. It will need to be a more explicit opt-in process where the customer has said ‘yes, I’m happy with this’ in advance. It will have to be a more formal communication before the customer gets to the store. No one is going to be interested in managing their preferences as they walk down the high street. If we end up with that, everyone will be constantly walking into lampposts.”

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