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Location-Based Ads Boost Customer Loyalty

October 18th, 2010 · 1 Comment · All Posts, ReneeWarren

Very often when you make a purchase in a store, the cashier asks the same question: “Do you have your card?”

The cashier’s not asking for your Visa or Mastercard. She’s talking about those ubiquitous reward cards that track how many times you might order a bagel, a latte, an ink cartridge refill, or whatever you happen to be purchasing at the time.

Buy 10 and get one free. Purchase six and get the next at half price. Promotions differ, but the concept remains the same: the store wants to inspire customer loyalty, and it’ll reward you for it.

Some people benefit from loyalty rewards and save money. Others find the cards annoying. Imagine if you could replace the process with something that suits your lifestyle better. Instead of having your card punched at the sandwich shop or scanned at the pharmacy, how would you feel if you received a mobile-based coupon on your smartphone?

Location-Based Ads: A Business Boom in the Making

Businesses are increasingly working to improve marketing ROI. A recent study by the Mobile Marketing Association shows that almost one in four adults use mobile location-based services. Nearly half of those shoppers who saw ads from location-based services took some sort of action.

Few metrics exist on location-based advertising and customer loyalty, but so far, results have been promising. Foursquare, one of the most popular mobile location tracking applications, gives its users the chance to become a location’s “mayor” by checking in frequently. Many restaurants, coffee shops and other locations give their “mayors” discounts and freebies as a reward for customer loyalty. Most recently GAP offered a 25% discount if you checked in on Foursquare. The idea was to encourage store exposure, as friends of those ‘checking in’ would see the deal and would, hopefully, also act on it.

The Proof is in the Numbers

Another great example, Starbucks, offered its “mayors” $1 off any size of Frappuccino. Since beginning the promotion, the coffee haven has experienced a 50% increase in check-ins. AJ Bombers, a burger spot in Milwaukee, reported a 30% increase in sales after offering free burgers to the “mayor” (plus free cookies to anyone who checked in.)

Not wanting to limit promotions to a select few, Foursquare lets businesses provide frequency-based specials to users who check in often. Pepsi has built upon this feature by using Foursquare to give points for each mobile coupon used. Loyal soda lovers can redeem the coupons for music downloads and other Pepsi Loot.

The promotion is designed to increase brand loyalty and also to generate valuable data about repeat customers – where they purchase Pepsi, how often they purchase and what they do before and after they make the purchase. In time, this data may help Pepsi and other businesses make location-based ads even more effective. (It’s all in the data)
Have you ever used location-based advertising to promote your business? If so, how did the marketing effort turn out? If not, do you find that location-based advertising increases your loyalty to other local businesses?

Renee Warren

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One Comment so far ↓

  • Matt Kelly

    Interesting post. There has obviously been quite a a bit of conversation about these services and many new players on the scene recently.

    Who wins the super tri-fecta of this game seems to be undetermined as know one has the perfect mouse trap yet. Lot’s of good ones that service as “features” but no single “killer app” yet.