Location-Based Merchandising Without GPS

The current buzz about GPS-based marketing on smartphones may be obscuring a whole slew of location-based marketing opportunities for retailers: namely, geo-targeting opportunities that have nothing to do with mobile devices. That's because an overwhelming majority of online purchases are still made from notebooks and desktops, and the general location of these devices can be determined by IP address.

This simple fact of internet technology means any online store has the potential to market and merchandise relative to location. But does it make sense to do this, and what geo-targeting strategies should you use?

The short answers are yes and whatever strategy works. I've seen strongly positive results from location-based or geo-targeted marketing in four areas: conversion rates, average order values, customer acquisition and customer experience. Consider this example: A specialty retailer located on the East Coast achieved a substantial increase in revenue from Western states simply by adding a message to its homepage that read: “Seattle's best source for over 100 brands of X,” where X was the retailer's specialty and Seattle was the location of the site visitor.

Another specialty retailer, noticing that sales in some states were lower than others, added a location component to its customer testimonials displayed on its website. So when online shoppers visited the site from somewhere in Georgia, they saw testimonials like the following: “Great service and fast shipping — J. Williams, Atlanta, GA.” Again, the results were very positive.

I don't pretend to know exactly why consumers react positively to such things, but they do. These examples just scratch the surface. Some of the most exciting possibilities arise when you think in terms of relative location. If you have physical stores, add their locations to the geo-targeting mix, as well as the locations of your competitors’ stores, your warehouse locations and so on.

Think about a consumer surfing your online store from a location that's much closer to one of your competitor's physical stores than to one of your own. An added incentive display to this consumer could close the sale — perhaps a “this visit only” discount or a good deal on shipping.

If it works, this strategy wins you more than a sale: it lands you a new customer while stealing market share from the competition. And speaking of shipping, think about the money you could save by adjusting shipping offers relative to customer location (e.g., faster shipping at lower cost to customers near your warehouses).

Still skeptical? I can honestly say that I've seen this strategy work, and work very well. But the answer you really need is the one that your analytics will give you when you test this type of campaign on your website.

In practical terms, you can develop geo-targeting capabilities in-house, using data from specialist companies like Quova, MaxMind or IP2Location. Or you can tap geo-targeting resources in such on-site marketing packages as Sitebrand's Segment&Serve, Omniture's Test&Target or Monetate's Real-time Marketer. But whichever path you take, there's a good chance it'll deliver excellent return on investment, not to mention teach you a lot about your customers.

Stephen Cobb is a marketing evangelist and blogger for Monetate, Inc., a Philadelphia-based provider of real-time marketing software and services. Reach Stephen at scobb@monetate.com.