Why Location Data is a Must-Have to Win Big in Retail
Was the search campaign, the Facebook ad or the TV spot the most impactful for the sale? Identifying attribution — i.e., which piece of marketing actually helped drive customers into stores and online shopping carts — is a hugely important challenge for Fortune 100 companies and startups alike.
Yet brands aren't shying away from the tough task. According to Gartner’s annual CMO Spend Survey, marketing analytics investments were the single biggest growth area of spending last year, representing 9.2 percent of budgets. Marketers specifically need location data, which has become an irreplaceable intelligence source for establishing a consistent and clear view into what's driving the greatest return on investment.
After all, store visits are a great indicator of whether a campaign is being executed successfully. This is especially true when you consider that 90 percent of retail sales still occur offline. Location insights are more imperative than ever for building an omnichannel attribution model that truly shows what marketing is working.
Powering Holistic Measurement
In many cases, marketers’ investments have already paid dividends. BMW has won accolades for measuring omnichannel campaign effectiveness with location data when it comes to test-drives and sales, as the auto brand has measured foot traffic lifts as high as 113 percent for dealer visits.
It’s becoming increasingly common for fast-food brands to measure campaigns primarily with foot traffic data out of necessity. For some burger or taco slingers, as much as 75 percent of their in-store transactions are cash, rendering credit card data in their CRM systems irrelevant. This reality makes store visit data unusually powerful for understanding the impact of their holistic marketing efforts and closing a data gap — between locally targeted digital promotions and store visits — that would otherwise cause headaches for a chain’s marketers.
True omnichannel measurement is invaluable. For instance, the internet might drive product discovery, as 80 percent of shoppers search products online before purchasing them offline. At the same time, store visits inspire online purchases as often as 55 percent of the time. Whether the path to purchase begins in-store or online, location data can help retailers pinpoint the series of messages and channels that actually drove the sale home.
Acknowledging the Amazon Effect
Here’s what’s at stake with your omnichannel insights: The National Retail Federation projects this year that consumer spending will grow at least 3.8 percent over 2017 and exceed $3.5 trillion.
At the same time, retail competition is fiercer than ever thanks to notable online players that have increasingly invested in physical locations. Amazon.com and Warby Parker are two brands leading the way in that regard, and they’ll almost certainly leverage their omnichannel data capabilities to understand the customer journey at unusually deep levels.
Due to the scale of its e-commerce data and nearly boundless ability to infuse cash into new endeavors, Amazon should be the leader for connecting dots between online activity and in-store visits. The Seattle company reportedly plans to have seven Amazon Go stores open by the end of 2018 after launching its first one in its hometown last year. Here’s the thing: store visitors must first download the Amazon Go app, which allows them to buy groceries in person without cash, credit or going through a checkout line. All they have to do is add items to their shopping cart while the app rings them up.
The app also supplies Amazon with offline purchase insights and location data. That combination will almost certainly be meshed with Amazon customers’ digital shopping behaviors (especially Prime members), creating incredibly rich views of customers. During the next several years, Amazon should leave behind competitors that have siloed, single views into customers’ habits.
Meeting the Omnichannel Challenge
Don’t be one of those retailers that gets left behind. Taking on Amazon should be seen as an opportunity, not as a burden. The good news is marketers appear to be more and more up to the omnichannel challenge. An eMarketer report states that almost 80 percent of brands have increased spend on location data in the last few years.
Location data adds a layer of context that could completely change how your brand markets itself. That is, you may only know how customers interact with your company by looking at what they click on, which stores they purchased something in, what products they've returned, etc. However, if you knew that segments of your customers frequent Starbucks or attend lots of sporting events or music concerts, then you could design smarter campaigns based on that intelligence.
Without location data, you're too often simply left in the dark. For instance, if your digital ads were driving better ROI for your stores than your out-of-home ads, would you know? If your in-store tactics in tech hubs like San Francisco or Boston were producing superb e-commerce sales thanks to particular in-store tactics, would you know? If you were an automotive player and your landing page was spurring an incredible number of test-drives, would you know? Or would you halt an excellent campaign since those in-market car shoppers were showing up in person instead of signing up online? Omnichannel players cannot afford such blind spots.
Marketing pioneer John Wanamaker once famously said, “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half.” Sadly, that quote remains relevant for omnichannel players that don’t invest in enough location data. The good news is, they can.
Rob Jonas is chief revenue officer at Factual, a company pioneering how the world uses data to power mobile marketing, digital consumer products, mobile applications and real-world analytics.