3 Reasons Proximity Marketing Might Leave Your Retail Startup In The Dust

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A new paradigm of marketing is taking over, with one principle at its core: Consumer Relevance.

Marketers have moved from shotgun blasts to laser-targeting. Our systems can know as much about a person as their closest friends, maybe more. This level of data means marketing messages can be tightly relevant to a customer’s interests and their ever-changing context.

Proximity Marketing makes money with these principles. It makes use of where someone is and what they’re interacting with to figure out what would be the most effective message to bring to their attention in that moment.

Unfortunately, some retailers will be left behind. Some will irritate or bore their customers away with the same technology that others are using to increase profits.

Here are the three main ways proximity marketing will leave some retailers behind:

  1. Loyalty programs suck, and they are getting worse as they go increasingly digital.
  2. Customers will come to expect marketing messages that are highly relevant to them.
  3. Data on customer behavior will increase, becoming a burden to some while others reap massive rewards.

#1 Loyalty Programs

Weak loyalty programs are everywhere.

Many retailers think giving someone a discount card is enough to earn their loyalty. This is akin to trying to fix a marriage by buying flowers every day. It’s charming at first, sure, but soon it becomes become the new norm, the new expectation.

The sad truth is this: Most loyalty program members are promo-hoarders.

They walk around with a fat wallet, stuffed with loyalty cards from places they would go to anyway. They’re not likely to change behavior. They’ll just take advantage of promotions wherever one presents itself. In an article for Business Insider, Taddy Hall of The Cambridge Group admitted to a loyalty card collection so large it was hard to manage. He didn’t feel “loyalty” for any of these companies. He just took advantage of them when and if it was convenient.

Why Digital Is Making The “Loyalty Program Problem” Worse

The physical space required for this many loyalty cards used to limit to how far a hoarder could go. The digital revolution has lifted that cap.

Who amongst us has become more selective with our photo collection, for example, as our images became digital? I certainly haven’t!

Proximity marketing is making loyalty programs and coupon promotions frictionless. You used to need to scan a QR code. Now, you just need to stand in the right place and press “accept”.

Many savvy shoppers will have a digital “loyalty” to every shop on their high street. Consumer engagement (online or offline) from the average loyalty program will drop to almost as low as the regular customer.

How To Make Loyalty Programs That Actually Change Customer Behavior

There is only one way I see to fix this worrying trend: Realize that people aren’t loyal because of discounts. People are loyal because of experiences (check out the 6 must-dos to increase engagement for more).

They’re loyal because of their feelings towards your brand. Specifically, loyalty comes from a mixture of respect and affection. They have to both trust and enjoy your brand to be truly loyal. If you try to evoke these feelings with more discounts, you’ll only train your customers to expect this treatment, effectively driving your prices down.

Use discounts like a spice.

The question then becomes: How do you create feelings of respect and affection for your customers?

There are many creative ways to do this without discounting everything they touch.

The Backstory Method

You could send them backstories of the same products they handled in-store. If you source a material for some of your clothes in a socially responsible way, then people who looked at these clothes in-store would be pleasantly surprised to learn about that the next time they check their email inbox. It’s easy to do with “nearables” (tiny proximity beacons that sense when a product moves and who moved it).

The Behind The Scenes Method

Give loyalty members an inside look into re-stocks of branches they recently visited, highlighting the kind of products they’ve shown interest in before. If something unexpected or dramatic happened in the background operations of the company, make a blog post out of the story. “How We Do It” pieces work well with most audiences.

The Event Method

Create special in-store events that gives loyalty members a discount for a very limited time, say for one week. This is using discounts as a spice, combined with another compelling reason to come to the store. Consider bringing in a line from an independent or up-and-coming clothing designer, and making a big deal out of the “craft clothes” they’re bringing to the table. Make their clothes available for limited time only, and make sure all your loyalty members know about it.

Attention Needs To Be Earned

Does it sound like more work than a simple price drop? It is! In a world of unlimited content vying for limited attention, you need to be creative to survive. Pretty soon, your customers will have an unmanageable library of digital loyalty “cards” on their phones. Only the brands that actually improve their experience will be awarded with their attention. The rest will be forgotten – until they find themselves in the shop anyway, at which point they’ll whip it out for the cheap price.

#2 Customer Expectations

As marketing messages become more and more relevant to each individual they touch, customers will expect interactions with your brand to be relevant to them and their context.

Why does context and relevancy matter so much?

Think of the worst possible type of salesman. You’ll likely imagine a street seller who’s peddling something you don’t want. He steamrolls through your objections and attempts to end the conversation. He’s not listening to a word you say and doesn’t care how you feel.

The street is not the right context for being sold something, usually. You’re on your way somewhere else. Add to that a product that has no relevance to your life, and your mind will be racing to find a way to escape.

Now, imagine the kind of selling possible with proximity marketing:

  • A customer browses through your store, and while in the shoe section their phone bleeps with a notification of shoe coupons that are available this week only to members of your loyalty program (check out the Ultimate Call Tracking Guide for more).
  • A customer receives an email with information about products similar to items they have browsed, that week.
  • A customer gets content about the sustainable manufacturing process of a product they looked at yesterday.

What About “Stalker Marketing”?

Are you concerned your customers might find your detailed insight into their lives creepy?

The statistics show that 53% of consumers are okay with sharing their location data to get more relevant advertising. What’s more, 62% of consumers like to share nearby deals with their friends.

As a retailer, it’s time for you to engage more deeply with your customers, and the only way to do it right is to interact in the proper context.

The Caveat…

Don’t hand too much trust in proximity devices. Understand their limits. In small spaces, accuracy becomes increasingly difficult, and while a helpful and perfectly timed message is charming, getting 10 notifications about products you’re simply walking past in the isle is nothing more than a new and innovative form of SPAM.

Many retailers will misuse this new technology and ruin the chances it brings. Don’t be that guy.

#3 Data Analysis

Do you ever look at a product display in your store and wonder if another product would do better there? It’s frustrating to have to guess these things.

Proximity technology like beacons and nearables allow you to analyze which products are getting the most attention, not just the most sales.

Every person that ever walks through your door could send you data about customer behavior. Sounds exciting, but for many retailers, it will just seem like a lot of work.

Just as all businesses have needed an accountant (or at least a guy who keeps the books), for a long time, the same is now true of data analytics. The good news is that software will make it relatively easy, but you’ll still need to be familiar with some basic principles to read your data correctly.

  • People sometimes move in certain ways for reasons other than interests in products. For example, people from countries that drive on the right-hand side of the road typically browse stores in an anticlockwise motion, and vice versa.
  • You need to reach statistical significance when you’re testing anything. It’s very easy to get excited by promising data and stop your test before the results are really in.
  • Be aware of seasonal differences.
  • Correlation doesn’t equal causation. Just because people are handling a product a lot without buying, that doesn’t necessarily mean it’s too expensive. It might just look good from afar, and close inspection turns people off. Every assumption should be tested.

It may seem like a lot of work, but so is keeping your books. It’s becoming a necessity to stay competitive, so you’d better figure it out!

Don’t Get Left Behind!

Beacon technology and location-relevant software actions will soon become the norm. The world will wonder how it lived without it, just as it has with mobile phones and the internet.

Any retail startup that doesn’t bother making their marketing location-relevant will gradually become more and more irrelevant.

Think of how we feel when we want to pay with our card, and the shop doesn’t accept them. “Are you serious?” is my usual reaction. In a few years, we’ll feel the same way about shotgun marketing messages that have to relevance to our lives.

In my opinion, now’s the time to get proximity-savvy.

To learn more about data-driven marketing, check out our MAN Digital blog.



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