Three Ways Location Data Can Benefit Entrepreneurs
Thanks to the ubiquitous smartphone, location data has grown in availability and popularity. In recent years, we have seen organizations become more data driven and rely more on location data. Businesses have emerged providing services based entirely on location data (Google Maps, TripAdvisor and other travel-related Apps) and existing firms are looking to this data to generate new income and gain more intelligence on their customers.
Many start-up owners and entrepreneurs may be attracted to location data yet do not fully understand it. This often leads to two things, either they refrain from using and benefitting from such data or they overpay or purchase data that does not reflect what they really need. Therefore, before we start explaining how location data can best benefit businesses it is important to clarify what location data is.
Location data is the geographic positions of devices (such as smartphones) or structures (such as buildings). This geographic location can include many attributes including latitude, longitude, horizontal accuracy, altitude and elevation, along with a timestamp (date and time).
Without getting too technical, location data can come in many different forms and it is important to understand this before deciding on what to purchase. The key to location data is granularity, this is the term used to describe the level of detail that a particular data set can provide. While there are a number of ways to capture location data (GPS, Wi-Fi, Cell Tower Triangulation, etc.) the most common is GPS location through data-connected mobile phones, which emit an anonymous “ping” on a regular basis, providing a location of the device plus time and date.
If you are an entrepreneur that is looking to enter a new market with a consumer product, your location data needs would be relatively simple. You would want to only target residents of a particular country, such as Singapore. So, location data with limited granularity (one “ping” per day, for instance) yet at a very broad and high scale would be what you would need. If you wanted to target commuters in a specific area, however, you would need more granular data as you would want to know exact location plus time (the time of their commute, for example).Therefore, this data would be higher in granularity but more limited in scale.
Benefits Location Data Brings
Physical locations: Despite being digital in nature, location data can help bridge the digital-physical worlds. If you are looking to start a new retail outlet or café in a certain location it is highly recommended that you access location data of consumers in that area beforehand to understand footfall and movement patterns. Additionally, location data on a larger scale can help identify catchment areas (such as where your customers live or work) which will help to inform Out Of Home (OOH) advertising campaigns. We can even use location data to understand exactly who passed a certain billboard and at what time, and send targeted mobile advertisements to that particular device
Customer habits: As every business owner understands, it is vitally important to know your own customer. While you may know what your customers do in your store, location data provides a level of insight on their habits when they’re not in your store. Insights from location data can help you understand which road or highways your customers take to your store, it can help identify blind spots where potential customer are not being served. Location data can reveal details such as purchasing habits, whether they go to the gym, if they frequent your competition, how often they travel, etc. Combined with other marketing data this can help drive sales or persuade investors to contribute to your next funding round.
Your competition: Understanding your own customers is important and so is knowing your competition’s customers. Location data will be able to provide insights into your competition’s customer details such as catchment area, how far they travel and via what routes. This information can be invaluable, allowing you to tweak marketing campaigns to target some of these customers and potentially siphon some of them off to your own business.
There are a few things to watch out for when it comes to location data. As with most things in life, you get what you pay for and cheap location data may not be accurate. Avoid location data that is sourced from IP Addresses and Bidstream (data collected from the ad servers when ads are served on mobile apps and websites). It is important to understand that large amounts of location data (for example, limited granularity but high scale data) can be difficult, time-consuming and costly to process and can contain errors.
Lastly, beware of fake or duplicated data. There are numerous middlemen in the data supply chain who buy and sell data, sometimes from the same sources. They are unlikely to be transparent about these sources and you run the risk of purchasing two or more sets of the same data, or data that is simply false.
If, as an entrepreneur or business owner, you are thinking of purchasing location data to help your business, then you are making the right decision. However, understanding location data is essential as in knowing what you need it for, what challenges you are looking to the data to solve. One thing is for sure though. As we become more connected, the Internet of Things (IoT) location data is only going to become more accurate. These are exciting times for data-driven entrepreneurs.