Location Data Isn't Just for Advertising. Here Are 5 Ways to Use It to Grow Your Business. Better understand your customers and the markets in which you operate with location data.
By Jeff White •
Opinions expressed by Entrepreneur contributors are their own.
When you think of location data, you probably think of proximity ads that suggest a cup of coffee when you're near a Starbucks, or offer a discount on bowling when you walk by the local bowling alley. While it's true that location data informs and fuels an ever-growing raft of advertising and marketing initiatives, what's often overlooked is the broader, strategic business power that location data can provide -- beyond advertising.
Related: Forget Third-Party Data. You're Already Missing Out on Most of Your First-Party Data
Since you probably already rely on many other data sets to inform your strategic business decisions, consider adding location data -- the places consumers go and the events they attend -- to the mix. Worries about concerns like user privacy and data quality are valid: Know that it's important to source location-informed insights from opt-in data that is thoroughly cleansed and, most importantly, aggregated and anonymized (the Location Search Association recently published a valuable landscape report analyzing the key providers in the space). Be sure to work with a data provider that adheres to emerging industry best practices, including use of data sourced only from apps with specific user opt-in (like Apple is now mandating), and complies with country-specific regulations, like GDPR.
The power of location insights stretches from macro to micro: You can tap into actionable intelligence, trends and patterns at 35,000 feet -- or get granular, narrowing it down to a distinct geofenced location. Whether you zoom in or out, location data provides the richest source of information about consumers, telling the stories of where they go and what they do there. Armed with these insights, you can better understand the markets in which you operate, the behaviors and motivations of your customers, communities and prospects, foot traffic patterns around neighborhoods, and benchmark against your competition.
Here's how you can start:
1. Research
Insights from location data can shed light on blind spots and reveal untapped opportunities that might otherwise go unnoticed. The most successful businesses are those that truly understand their customers, but if your decisions are based solely on purchase history, you could be missing out. Location data can provide a stronger context of your target audience to better activate consumers. Beyond just marketing what you already have, it can also help reveal opportunities for products or services that you've not yet developed or marketed. For example, Domino's recent delivery service to outdoor "hotspot" locations is a prime example of using location data to expand your business model.
Related: From Online to Offline: How Brands Use Big Data to Figure Out Where Their Customers Will Shop
Though location data reflects real-world movements, it can still be strategic for online businesses. Uuse it to create lookalike audiences and, from that, learn more about your customers. Online meal kit businesses, for example, might discover that their target customer is also a luxury traveler, opening up avenues for growing business through potential strategic partnerships and loyalty programs. Location data reveals all these important nuances about people, their lifestyles and purchasing habits, so you can not only understand your target audience on a deeper level, but also develop new products, events, messaging and services that will appeal to them.
2. Competitive intelligence
Want to know how frequently your customers (and prospects) shop at or visit your competitors' businesses? Do they tend to spend time at discount or big-box stores more often than niche, up-market or independent brands? How far do they travel to your competitors' locations -- and where do they go en route? This wealth of insight about where people go in the real world and, in particular, how they interact with your competition, is invaluable intelligence to your business and can help inform decisions about everything from pricing and inventory to in-store promotions and staffing levels.
3. Acquisition and investments
Asset managers are increasingly turning to location data to inform their investments, according to a recent report from Optimas. Given this trend, location data should most definitely be part of your due diligence when evaluating any prospective investment or acquisition. Evaluate the foot traffic patterns in and around the business you're considering and think about what it might reveal. How does traffic compare to the businesses and amenities nearby? And what can you learn about the people that frequent or live in that neighborhood? Do they commute for large portions of the day? If you're thinking of opening a fast food franchise, maybe it'd be wise to know first if the folks spending the most time in that area are health nuts or fitness fanatics.
Related: How a Subscription-Box Founder Is Using Data to Survive -- and Thrive
4. Real estate and development
If you're making decisions about leasing land or office space to develop and build a new business, location data is critical to the decision-making process. Important things to factor in are how far people generally travel to those kinds of locations, neighborhood foot traffic patterns, whether it's on the cusp of gentrification or if it's a bedroom community that's empty during the day. Layer on top of that behavioral insights about your target employees or customers and you'll see whether the location makes business sense, before you sign any contracts.
5. Operations
Location data can help you understand where you can hone and optimize operations so that your business and events run smoothly and the experience your customers receive is flawless. For example, retailer H&M has taken a similar approach with big data -- granular insights to better inform how to stock its shelves regionally and cut down on unsold inventory. But, location data can take this approach a step further. For example, it can reveal when and where there are queues or empty spaces, helping you determine where, when and if you need to add or displace stock, resources, staff or amenities, and also identify opportunities for promotions, signage or even co-marketing partnerships.
With a strategic approach, anonymized location data can help businesses across any industry continue to evolve, enhance services, address challenges, plan for the future and, ultimately, impact your bottom line.
