Imagine you’re out shopping one Saturday afternoon. You walk into a department store and see a big sign that reads, “Get our app and save!” You love a good deal so you scan the QR code and select “download.” You scroll through a user agreement with about 10,000 words of legalese and click “agree.” Then you open the app and skim through a list of coupons, bookmark one or two and proceed through the store. You spend a few minutes browsing the shoe department and try on a pair. They don’t fit well and you end up leaving the store without making any purchases.
As you walk down the street later, your phone is abuzz with notifications you’ve never received before: a constant stream of ads from each store you pass. You wonder how they’re reaching you, until you realize the department store app is still running — it must connect to other stores.
That night at home, you get an email from the department store. “Still thinking about those shoes?” it asks. “Buy them now!” And below is a form with your name, address and credit card information already filled out.
Proximity marketing — location-based direct marketing in which a business or other organization sends offers, promotions, alerts or other messages to a person's smartphone based on the device’s location — is annoying, creepy and downright invasive in this story. But it doesn’t have to be. When implemented ethically, proximity marketing can provide worthwhile benefits to marketers and consumers alike.
The pros for marketers are numerous. Most proximity marketing is delivered via beacons placed strategically throughout a store that use Bluetooth to communicate with smartphones in their range that have opted into the service. This allows retailers to reach potential customers in the moment, when they’re actually looking at products and considering a purchase. This beats traditional advertising, which connects to consumers before they’re in a store — while they’re sitting on the couch at home watching television, for instance — and relies on them to remember the message later.
Location-based marketing also gives retailers the opportunity to enrich the in-store shopping experience. Doing so is critical as consumers turn away from brick-and-mortar stores in favor of more convenient e-commerce. By using proximity marketing technology, stores can catch up by providing some of the perks of online shopping in person, like easy access to discounts, saved shopping lists and personalized recommendations. Beacons can also help shoppers navigate a big store or connect them to in-store customer service representatives when they need help.
Lastly, proximity marketing tools allow companies to gather behavioral data about their customers, including how often they visit a store and when, how long they stay and what areas of the store they gravitate toward. While beacon communication can come in the form of a basic text message, it’s often connected to an app, which may gather even richer data, such as a customer’s product preferences, demographic information and purchase history, particularly if the app is hooked up to mobile pay.
Retailers are aware of the benefits of investing in proximity marketing technology. This summer, for example, Target merged its “Cartwheel” coupon app — used by 27 million shoppers, saving them more than $1 billion — with the main Target app and incorporated new features. Primarily, customers now have access to a map that shows their location within a Target store and highlights nearby Cartwheel deals. The experience is made possible by beacon-enabled LED lights installed throughout the store. Macy’s, Nordstrom, Wal-Mart and Walgreens are among the other retailers that have taken advantage of proximity marketing in the last several years. Sports and concert arenas; airports; trade shows and conferences; and museums are also using the technology to improve the customer experience — and to boost sales.
Proximity marketing can benefit consumers, too, but whether those pros outweigh the cons may be debatable for some. Is it worth sharing your location with a company in return for a coupon or a store map? Those uncomfortable with the notion should know that the App Store and Google Play Store require that apps get consent to gather and use people’s location data, and in July, the state of Illinois proposed a bill that will make it illegal for companies to “collect, use, store, or disclose geolocation information from a location-based application on a person's device unless the private entity first receives the person's affirmative express consent after complying with specified notice requirements.”
But completely opting-out of proximity marketing — agreeing to all or nothing — should not be the only way consumers can protect themselves. Those who do want the discounts and the conveniences that come with location-based marketing should be able to participate knowing that their data and privacy are safe and respected. Industry guidelines such as the Mobile Location Analytics Code of Conduct, developed by Washington D.C. think tank and advocacy group Future of Privacy Forum (FPF), lists additional best practices for doing just that. Their recommendations include displaying in-store signage notifying shoppers that their location data is being collected, letting consumers opt-out of analytics services, limiting how data is used and never selling personally identifiable data to a third party. Eight location analytics firms agreed to self-enforce the rules. “The code will allow marketers to gather useful information without harming their brand by being regarded as intrusive or malicious,” said Jules Polonetsky, executive director and co-chair at the FPF.
These guidelines are all great in theory, but cynics will point out that retailers aren’t tracking locations and other metrics solely to help their customers; they’re primarily doing so to help their customers make more purchases. And there will always be companies that ignore guidelines, and even break laws.
If retailers want their customers to shed the “malicious” connotation that comes with data tracking, they need to be upfront about how they are using that data, including location. The FPF recommends “privacy notices that are clear, short, and standardized to enable comprehension and comparison of privacy practices.” Content marketers spend lots of time trying to write messages that potential customers will actually read. Why not use the same strategies — infographics and easy-to-read bullet point summaries — in their privacy notices?
So let’s reimagine our scene in the department store: Again, you download its app. This time, the user agreement is a few clear bullet points. The app walks you through a quick Q&A to find out if it can access your location to make your shopping experience easier. It asks if it can share your information with its partners — other stores, whose names the user agreement lists out explicitly — and gives you an option to opt out.
Then the app provides you with coupons to products in real time, as you move through the store’s aisles and consider products. The app tells you when an item you like is in stock in your size. It links up to product reviews. And when those shoes you like don’t fit, it offers to ping a salesperson and tell them exactly where to find you in the store with a similar pair in your size.