What is proximity marketing and why is it used?
Proximity marketing is a communication strategy that businesses use to maximize engagement with customers in real-time within a targeted space. Real-time comms used in proximity marketing will often consist of advertising campaigns, customer support options, as well as many other engagement strategies that adopt a ‘right place, right time’ feeling.
Additionally, these campaigns are delivered to audiences by utilizing their mobile devices, specific mobile uses depend on the chosen strategy.
What are the different types of proximity marketing?
Proximity marketing contains a large number of marketing strategies that work around the location and actions of desired audiences, but what are these strategies?
Proximity marketing strategies
- QR (Quick Response) codes
- WiFi (Wireless Fidelity)
- NFC (Near Field Communication)
- RFID (Radio-frequency identification)
- BLE (Bluetooth Low Energy) beacons
We’ll find out more about these later in the blog!
How does proximity marketing work?
Proximity marketing relies upon multiple technologies working together in tandem. For successful marketing to take place a multitude of steps must work together for a strategy to perform accurately. Here’s a quick overview of the technologies required when using each proximity marketing strategy along with their pros and cons.
Besides the end-users mobile device, a collection of location-based technologies (LBS) is needed to successfully utilize proximity marketing.
Proximity marketing facts, benefits, and predictions
So now we know what proximity marketing is and how it works, let’s find out some useful facts and benefits before taking a look at strategies and technologies used.
Prediction: The proximity marketing market is expected to be worth $52.46 Billion USD by 2022!
Benefit: Increased app engagement and user retention – Successful proximity marketing can result in a bundle of influenced actions when it comes to customer-facing apps such as reward schemes or online shopping. As visitors begin to engage with apps and make return visits, proximity marketing can continue to influence customers to continue using the app with additional push notifications.
Fact: Business Inside reported that across 100 U.S. retailers an additional $44 billion USD of sales were made and influenced using proximity marketing strategies.
Benefit: Proximity marketing creates a personalized experience – The main objective of proximity marketing is to deliver unique and relatable experiences for the desired target audience. This means that the content delivered should be eye-catching as well as including impactful messaging, and as the collection of data increases, marketing will become easier and more personalized over time with the use of customer segmentation.
Benefit: Proximity marketing gives businesses a competitive advantage – Proximity marketing enables a competitive edge for businesses looking to get ahead and stand out. Retail parks, shopping malls, and even marketplaces, multi-vendor locations are always fighting for the attention of the public to influence consumers and gain loyal customers, and what better way than speaking with them directly?
Benefit: Proximity marketing opens the door for more conversions – As we’ve already mentioned, app engagement and use can be increased with the right messages and for many brick and mortar store apps, there will be an online path to purchase. For physical venues, daily, weekly or seasonal offers can be promoted to passers-by influencing foot traffic and in-store purchases.
Types of proximity marketing strategies
Just like the traditional barcodes, QR codes contain a mix of alphanumeric values. A standard barcode contains only 20 values horizontally, whereas the 2D QR code contains up to 4000 values both vertically and horizontally.
QR code strategies rely upon target audiences engaging with the code via their mobile phone. For example, iPhones have code scanners embedded within the standard camera, creating a seamless method of delivering messages and offers to customers.
The ease of this strategy is fairly straightforward as it doesn’t require a lot of technology. A QR code can be quickly generated online and a destination applied for users that scan. The downside to using the QR code strategy is getting users to make the initial interaction and additional print material may be necessary.
- A customers mobile device
- Digital displays/print-offs for QR code
Businesses can utilize their free WiFi offering as a new channel for marketing directly to customers. When customers log in to free WiFi their contact information and other data can be collected which in turn creates a digital profile for the business.
Businesses can segment their WiFi users and deliver personalized communications which are highly relevant, increasing the chances of additional revenue and customer retention. When customers return to business venues it is possible for them to receive communications that influence in-the-moment purchases or engagement.
For customers that don’t sign into the guest WiFi, access points are able to pick up the MAC address of each device within its vicinity meaning stores are able to get an accurate daily foot traffic count, over time this allows businesses to identify trends such as the busiest days and hours in a week, month, and even season.
- WiFi access points
- Customer’s mobile device
- Data collection and segmentation tool
- Marketing automation tool
RFID & NFC
RFID tags, also known as Radio-frequency identification tags, are commonly used as a method of product tracking and measuring accurate levels of stock for supply and demand over time. RFID tags work by using active and passive radio frequencies that interact with readers when in range, this means for a clothing retailer any products taken into a changing room will be identifiable.
NFC or Near-field Communication has evolved from radio frequency identification (RFID) technology and operates as one-half of a wireless link. You could have just used NFC yourself by making a purchase with your mobile device.
As written in the paper, the ‘Application of NFC technology in proximity marketing’ by Lubica Gajanova & Jana Kliestikova of the University of Zilina – “Proximity marketing is a tool for creating a personal relationship between a customer and a vendor at the time of a customer’s physical purchase at the store through modern, personalized, timely, and relevant communication.”
NFC tag uses don’t stop at the point of sale system, in fact, the knowledge gained from each purchase and interaction further improves the insights businesses have, meaning over time, customer segmentation and messaging become more focussed.
- Consumer mobile devices
- NFC / RFID tags
- POS (Point of Sales) system
The definition of geofencing in proximity marketing is defined as the ability of a company to micro-target people based on the places they go. In order to target the desired audience, creating a geometric digital radius around a company’s venue, campus, or even entire retail parks is required.
Before 2018 marketers could send proximity marketing advertisements directly to all members of the public who entered areas that contained beacons, which meant that those with compatible devices could be served ads without having to provide consent.
Today, geofencing works in an almost completely different way. Rather than having a defined location scattered with beacons, businesses create geometric radiuses that contain the area in which their desired target audience may be.
For example, a sportswear brand may want to target those at a sports event and so will draw their geometric radius around the venue of the event. Patrons that attend with their devices ‘location-enabled sensors’ settings turned on are allowing their GPS to share their location data with their service provider (SP).
The GPS data collected by service providers can be used by programmatic advertisers (that work with SPs) for up to 30 days, allowing them to have a pinpoint focus when serving advertisements and deals. Geofence marketing will likely come in the form of PPC or push notifications can also come as texts or emails if companies are able to collect contact information.
- Customer mobile device with GPS capabilities (location-enabled sensors must be turned on)
- A geofencing software tool – See the ‘Best Geofencing Software’
- Database for collected contact information
BLE (Bluetooth enabled) beacons
As we just mentioned in the Geofencing section prior to 2018 marketers were able to abuse their ability to push advertisements directly to customers without consent, beacons were part of the issue. The average BLE beacon can transmit actionable BLE signals for up to 80 meters, and with many objectives for beacon campaigns being the influence of consumer purchasing it this strategy had a great low-cost solution for delivery. This is formally known as Beacon Marketing.
However, with the changes to advertising regulations and software updates from companies such as Google, BLE beacons can be used as an addition for WiFi and push notification strategies.
But that’s not all! Just because the old use of beacons is no longer an option, and only seems like an addition to make other methods more effective, proximity marketing also includes methods for gaining market research. One example of this is by convenience store, Nisa.
The convenience store chain attached BLE beacons to trolleys, and baskets to track customer movements when entering, leaving, and moving around its stores. With the movable and planted roof beacons in place, Nisa was able to accurately collect a large pool of geometric insights that fed into one central cloud for further analysis. From these gatherings, Nisa will have been able to understand customer dwell times and see which product aisles were most popular.
- Bluetooth-enabled mobile device
- Enough BLE beacons to cover desired proximity range
- Data collection software and/or service
The future of proximity marketing: Geo-loyalty
A large amount of success has been achieved using the different methods of proximity marketing, but what’s next?
One of the hardest-hit industries due to the Covid-19 pandemic was retail, from small stores to giant malls, many retailers have seen a negative impact in one way or another. As countries make the “return to normal” there are a lot of positive signs that physical stores aren’t dead, meaning businesses will have plenty of opportunities to utilize the above proximity marketing methods. However, that’s not all!
Geo-loyalty is a method of utilizing proximity marketing methods to boost customer loyalty and drive app usage for higher conversion and engagement rates. This development for proximity marketing will enable retailers to optimize the customer journey and how they’re marketed too, creating a full loop understanding of post-Covid-19 of consumer behaviors and shopping traits, whereas before, retailers only found out this insight once a customer was at the till.
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