Location analytics will “wreak havoc” on current CX strategies

7th Mar 2014

Customer experience professionals should prepare for a world where deep location analysis is central to their planning and decision-making, according to new research from global market forecasters, Forrester.

In their latest study, You Are Here: Location Analytics And The Rebirth Of Customer Experience, Forrester states the draw of being able to paint detailed pictures of customer habits and their purchasing journeys is pushing location analytics technologies into the strategic mindset of many marketers.

And while the invasive and ethical nature of location analytics is still being argued among retail and consumer groups, it hasn’t stopped network providers ranging from RetailNext to Cisco addressing how they can package location-based analytics products to clients, and which markets they should target.

 “As the online and offline realms come together, a significant gap in customer understanding appears,” states Tony Costa, senior analyst and lead for the Forrester study.

“In the online world, web analytics gives companies tremendous insight into customer behaviours —what they search for, where they go, what they do, and how long they do it. In the physical world, however, companies know relatively little about their customers beyond how many of them enter their front door and how much they buy. Between those two points in the customer journey, many companies are flying blind, which is why they’re increasing turning to location analytics.”

According to the research, which uses the US as a benchmark, 49% of online adults (ages 18 and older) now qualify as ‘always addressable’ customers — customers who personally use at least three connected devices, access the Internet multiple times per day, and go online from multiple physical locations, at least one of which is on the go.

In addition, the number of public Wi-Fi hotspots has grown to almost 7m worldwide, while social networking leader Foursquare (which relies on location-based technology) received more than 4.5bn check-ins in 2013.

And if, on first read, that may seem like a collection of unrelated statistics, combined they offer a clear view of the platform marketers interested in location analysis now have in which to work from.

The potential is said to be boundless. With more devices and more open Wi-Fi access, Bluetooth, GPS, video cameras and 3D sensors aligned to collect information, and a public seemingly nonplussed by the privacy issues associated, businesses of all types are able to tap into the data being streamed to get a detailed analysis of how customers behave in and out of physical venues.

In the retail sector, they already are; location analytics specialists RetailNext tracks more than 500m shoppers per year, collecting data from more than 65,000 sensors installed in thousands of shops including Bloomingdale’s, Swatch and Verizon, across 33 countries.  In addition, the number of new installations is growing exponentially, with more than 400 new stores added each month in the US alone.

Having a strategy for understanding how to tap into this data is expected to become key for marketers. Forrester cites a "transformation of every CX discipline" underpinning the push for location analytics, with customer understanding, shop design, culture and governance decisions being driven by the new information made available.

“The ability to microanalyze, model, and predict customer journeys will force firms — young upstarts as well as established stalwarts — to rethink the value of the experience they provide and their allocation of resources,” the report states.

And despite the very obvious concerns, data privacy is seemingly a debate being fought in the shadows while the rest of the world continues to build towards realising the location analytics dream.  

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