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What Starbucks can teach you about location-based marketing

2-minute read

Josh Hall

26 October 2010

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Like it or loathe it, since its inception Starbucks has consistently explored new marketing techniques and technologies. The coffee juggernaut directs a significant proportion of its revenues into marketing – and the benefits are clear to see.

True to form, Starbucks last week revealed itself to be at the forefront of the location-based marketing revolution. It has entered into a deal with mobile network O2 to deliver marketing messages to opted-in customers that enter specific geographical zones.

So what does this mean for location-based marketing, and how can your business use these techniques?

What is location-based marketing?

Location-based marketing is a new and potentially very exciting field. Marketers are constantly struggling with the problem of targeting. How can you make sure that your message is being seen by the people most likely to be interested in it? Location-based marketing aims to tackle this problem.

An increasing proportion of people are now constantly connected to GPS services through their smartphones. This means that mobile providers and, by extension, marketers, can now get invaluable information about the location of potential customers.

What have Starbucks done?

Starbucks have teamed up with O2 to develop a new location-based marketing technique. O2 customers who have opted into the service will receive coupons through their smartphone giving them 50 per cent off certain products. These coupons will be automatically delivered when the customer is near a Starbucks store.

This project represents a new exploration of the potential demonstrated by location-based marketing. It has major implications for other premises-based businesses. For example, restaurants might send coupons to individuals nearby during or just before lunchtime. Similarly, retail businesses might use the technology to let people know about offers they are running at the time.

That sounds expensive. What can I do on a budget?

To begin with, it is worth noting that this technology will rapidly drop in price if there is sufficient take-up amongst businesses. That said, it is currently beyond the reach of all but the largest companies.

The concept, though, has implications for businesses of every size and with every budget. Location-based marketing will become increasingly important as smartphone usage continues its stratospheric rise. The growth in popularity of location-based sites and services like Foursquare also underlines the potential importance of this new marketing channel.

Geo-targeting is a great way to improve your marketing ROI. Many businesses rely on passing trade, or local customers. Targeting your marketing efforts by geographical location can therefore significantly improve your return.

While the technology enjoyed by Starbucks might remain out of your reach for the time being, you can still use mobile devices to geo-target your marketing. Foursquare is a good place to start. Consider offering incentives to checked-in Foursquare users to encourage new custom. You might also think about using Foursquare as an opportunity for upselling. For example, you might offer a discount on one of your higher-ticket items when a customer makes a certain number of visits. Click here for more information on Foursquare for your business.

The new Facebook Places service, while still in its infancy, also presents potential opportunities for businesses. At the very least you should make sure that you ‘claim’ your business on Facebook, and merge it with you Facebook Page. Although the service does not currently allow for incentives, it is widely presumed that Places will soon take on many of the characteristics of Foursquare.

Finally, you should consider the potential for geo-targeting in PPC advertising. Google offers a suite of geo-targeting tools, and these can help to boost ROI for local businesses. Look out for more information on geo-targeting Google ads soon.

Isn't this just another fad?

Some people think so. But it is worth remembering the potential benefits off increased geo-targeting in marketing. The ability to send marketing messages directly to customers within your geographical ‘catchment area’ could be hugely valuable. With this in mind it seems highly likely that marketers will continue to explore geo-targeting – and, as a result, these tools will become more widely available, and more technologically advanced.

Location-based marketing looks like it is here to stay. A remarkably large proportion of businesses seem to be sceptical about new marketing technologies. But any tool that helps you to better target your marketing efforts, and hopefully therefore increase your marketing ROI, should be welcomed and embraced.

The tools with which Starbucks are experimenting are currently beyond the reach of most small businesses. But the new emphasis that is being placed on location-based marketing and geo-targeting can be a lesson to businesses of every size.

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We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

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