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Location based Marketing – a new paradigm in digital marketing?
Is Location based Marketing really a new paradigm in digital marketing? For answers to this exciting question, Prof. Dr. Hans-Christian Riekhof is the perfect contact. He is the sole shareholder and managing director of UNICconsult Strategieentwicklung GmbH, also a professor of International Marketing at the PFH Private University of Göttingen, organizer of the Göttingen Marketing Day and publisher of books on topics such as strategy development, personnel development and retail. In addition, he is the founder of locandis, a startup that specializes in Location Based Marketing.
In an interview with Anna-Lina Köhler, who dealt with Location Based Marketing as a student at the PFH Private University of Göttingen, the marketing specialist provides interesting insights.
Anna-Lina Köhler: What do you think of the statement that online is the marketing channel of the future?
Professor Riekhof: This is only partially true in this form. Of course, traditional media will continue to lose importance – even if they cannot be imagined out of the media landscape in the coming years. But what is important is that the online channel is supplemented and also replaced by the mobile channel. People can be reached everywhere, the smartphone is a constant companion and thus also a decisive communication channel – if you master the rules of the game.
Anna-Lina Köhler: The term “relevance” is increasingly used these days. What does this mean in connection with Location based Marketing?
Professor Riekhof: In our empirical projects on Location Based Marketing, we have been able to demonstrate that push messages on the customer’s smartphone attract high interest and undivided attention when they are related to the location where people are currently located. For example, at the documenta 2017 in Kassel, we delivered information about certain works of art directly at the object – with very high opening rates for the message. The right message in the right context and at the right place: this is the formula with which relevance can be demonstrably generated.
Marketing will be even more data-driven in the future
Anna-Lina Köhler: What role does Location Based Marketing play in the marketing of the future?
Professor Riekhof: I assume that we can speak of a new paradigm for marketing here. Marketing will be even more data-driven in the future than it is today. What we already have are customer-related data, e.g. from the CRM system. This is where classic target group-based targeting comes in. In addition, we have learned from Amazon (which companies like the Otto Group of course always knew) that past purchasing behavior is an extremely reliable predictor of future purchasing behavior. That’s why Amazon is superior to Google in the long run: Amazon knows the purchases, Google only knows the searches. But what is now being added is a third data source: location-related information allows setting up targeting that opens up the spatial dimension to marketing.
Anna-Lina Köhler: What do you conclude from this?
Professor Riekhof: My personal assessment is that we have information here with very high predictive power. Where I am in the shopping mall, which areas and shops in the city center are of particular interest to me, is of course highly exciting for targeting.
Anna-Lina Köhler: How useful is Instore Navigation actually? Can’t the staff simply serve as a contact person for the customer?
Professor Riekhof: Instore Navigation makes no sense if you run an ice cream shop or a lottery acceptance point. But think about the situation in a hardware store: find a contact person who tells you where the dowels and seals for the bathroom fittings are. Instore Navigation helps enormously to find the products. We have found in our LBM projects that Instore Navigation significantly increases the acceptance and use of digital customer cards. And ultimately, it relieves the staff in retail if customers are supported in their product search via the digital channel.
LBM with WLAN alone too imprecise for localization
Anna-Lina Köhler: Wouldn’t it theoretically be enough to simply send the customer an SMS via WLAN in stores?
Professor Riekhof: Some retail groups make it a bit too easy for themselves. They install a WLAN accessible to customers in the stores, and then they theoretically have the possibility to send push messages to these customers in the store. In my view, this is not even Location based Marketing 1.0. Because the localization precision with which the campaigns are delivered at the right shelf is simply insufficient. If I’m standing at the red wine shelf, I don’t want a 15% coupon for dog food.
And a second aspect is very important to me personally: WLAN-based Location based Marketing cannot deliver campaigns to defined target groups. This is only possible if I as a consumer have downloaded the digital customer card, have registered and have given permission to receive coupons. Retailers should make sure that they do not advertise typically female products to men and vice versa.
Anna-Lina Köhler: Can the advertising effect be measured by Location Based Marketing, if so how?
Professor Riekhof: This is a very good question, because it focuses on the core of the topic. Location Based Marketing is extremely measurable: I can determine whether push messages were delivered at all, whether they were opened, whether coupons were redeemed, whether cross-selling campaigns were successful and whether customers stayed in the store longer. This goes as far as the economic effects: each individual campaign is completely transparent in terms of its costs, the effects on results of possible price discounts and the effect on sales. Comparable transparency in this form is only available in online retail. The effect of the large marketing budgets in traditional media is not measurable in this precision at all.
Professor Riekhof, locandis founder, in conversation with Anna-Lina Köhler