How Physical Location Intelligence Can Add Context To Online Behaviour

Mobile Working

With consumers’ primary interactions with a brand increasingly happening through online or mobile channels, speculation about the decrease in the need for physical locations and interactions – whether that’s a cut back in bank branches or retailers’ bricks and mortar stores. While many continue to question the relevance of these locations in today’s digital world, marketers may be asking marketer, why the location of somebody would matter when you can engage with them on any device, anywhere, any time?

However, the decline of physical locations is something that may have been overstated. The fact remains that most of us still like to visit physical locations when purchasing certain products like clothes, where getting the right product first time is key. We like to visit stores to “touch and feel”, to leverage staff knowledge or to compare items. We may still buy online, but the importance of the offline channel increasingly influences the digital customer journey and has a key role in building brand awareness, customer engagement and ultimately loyalty.

Location Intelligence & The Multi-Channel Ecosystem

Online growth numbers often fail to appreciate the interdependency between physical locations and online sales- often referred to as the “online halo” effect. Retailers like Argos, John Lewis and Tesco see their physical stores as “multi-channel hubs” and excel at a seamless offline/online experience.

Here, physical locations work in tandem with their digital presence through services like “click and collect”. Verdict estimates that 68% of online shoppers used click & collect in 2015 and 32% of customers made an additional purchase in store the last time they used click & collect. So, for retailers with an offline and online presence, there is still a huge incentive for them to get customers through the high street door.

This is where the significance of what I call the “new location intelligence” comes in, where knowledge of location and place can create relevancy in the digital world and where the fusion of geography and consumer behaviour can inform, through digital channels, how businesses engage with consumers or how governments interact with citizens.

The key consideration is that our online behaviour plays out over our multiple devices and it’s no longer as important to know how we interact with our digital devices – but where. Knowing “where” immediately adds context to digital data – and context drives information and insight. What you buy is predicted by not just who you are, but where you’ve been, enabling online and offline communication with the consumer in the context of their location at that time.

By combining location data with consumer data such as demographics, geodemographic segmentations and previous purchase history, location is key to making sure that brands are sending relevant content to customers and enhancing their experience. Indeed, without many of us realising it, the concept of location is fundamental to the usefulness of many of the apps that we use on our smartphones as part of our daily lives.

Location-Based Trends

As brands are harnessing the potential and capabilities of location intelligence, we are seeing a number of new trends emerging:

  • Geo-fencing – Digital advertisers increasingly use ‘geo- fencing’ to create a virtual radius around a site and, using a customer’s real-time location data, send offers or information direct to their device if they enter this zone. For example, O2 has used its mobile data to offer geo-fencing capabilities to L’Oreal, driving a promotional message to a customer’s device when they walk near a L’Oreal store.
  • Location based attribution – Retailers struggle with measuring the impact that their online presence has on in-store sales, but knowing where people interact with their digital device based on what they see on the device is helping to measure this impact.
  • Micro location data – As beacon technology develops, applications of micro “in-store” location data are growing. Beacons are devices placed in a physical location to communicate in real time with an individual’s smartphone to send them ads, coupons product or service information. It provides retailers with invaluable data about their customers’ shopping habits, allowing them to make improvements to store layout by identifying store flow, maintaining service standards and operations that benefit customer and retailer. Tesco, Waitrose, Michael Kors, Ted Baker and House of Fraser are experimenting with ways to apply this technology.

In addition, we are seeing the emergence of “next-gen” location intelligence businesses as location aware devices expand and machine learning analytics are applied to find patterns in the billions of location data points being generated. Working at the interface of the physical and digital, businesses such as PlaceIQ and Placed have emerged specifically to extract value from “big location data”.

In a future where data protection regulation will challenge the notion of what is regarded as “personal information”, the aggregation of an individual’s location data to geographies which “anonymise” the consumer but which enable insight from aggregated patterns of behaviour will provide valuable context. In spite of the view of many that the importance of physical location is diminishing, location intelligence is actually becoming more important as the physical and digital worlds merge and consumers engage across a variety of channels.

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Paul Cresswell

Paul Cresswell is head of data strategy, marketing services, at Experian.