Beyond Location-based Marketing: The Enterprise Strikes Back

By Alexander Köppen, Michael Heinzel

Business listings on services like Foursquare, Facebook Places and Gowalla have showcased the effectiveness of location-based marketing. But most enterprises don’t like to be dependent on a middleman when it comes to customer access. So what is the solution? Customizable platforms for mobile and location-based services (LBS) are available and have the potential to become the next corporate standard software.

Location-based marketing and “social” customer relationship management (SCRM) are at the top of most marketers’ agenda. And for good reason: the rise of social check-in apps has added a new dimension to the trend to directly influence consumer purchasing behavior. Businesses now can interact directly with customers and create communities with an added level of engagement based on real-world behaviors.

Undoubtedly, most LBS adoption is still happening in an environment of techies and social media “experts,” but it is also safe to say that location-based solutions are slowly translating to the mainstream. In fact, location-based services and social media have made it to the top of the strategic agenda of many enterprises across industries. Pressing questions include: How does it affect our business model? How can we extend our services? How can we mitigate the risk of being replaced by intermediaries?

However, the outcome of such strategic rethinking – even in somewhat location savvy industries - is often limited for several reasons. The first reason is little-to-no understanding of new business models, user expectations, etc.  Furthermore, most enterprises have no experience or capabilities when it comes to developing accordant solution services and handling accordant industries such as external service providers. In the end the answer is usually to outsource these activities to a firm specializing in social media engagement and interactive marketing expertise.

But with increasing numbers of tech savvy customers and convincing location-based services popping up, many enterprises are starting to build an appetite for more. Why be dependent on others when they can approach their own customer base of several thousand customers directly? Why not extend their own services by location-based aspects instead of aligning existing services with requirements from third-party social networks?

The biggest hurdle so far – actually developing complex and cross mobile platform services for global audiences – has become less daunting. Sophisticated technology platforms currently offer ways to choose from proven and integrated LBS, social media or messaging modules that can be rebranded and fitted to corporate needs. Within weeks, services can be customized, integrated with the enterprise back-end and made available across mobile platforms.

Once a strategic decision has been made to make a bold move toward mobile and location-based services, the work is just beginning. Five key aspects can help to make this journey successful.

1. Challenge your service offering and business model
How can your service be extended by location or social media aspects? How can this change the expectation of a customer who is using mobile services more and more? What are customers actually paying for, and will that change in a mobile and location-based world? Will social media-based network effects be a threat or an opportunity for your business model? Often it is actually about checking whether the existing business model will survive the changes coming with Web 2.0 technologies. To date, Lonely Planet is mainly selling books, but has already realized the importance of content independent of the media. Tomorrow it might make the bulk of its money by owning the access to its customers. Once travelers are in the Lonely Planet community they can be offered all kinds of services. And the travel guide books might be largely replaced by a $100 flat fee to access all global travel content for one year.

2. Analyze your customer base and build communities
How tech savvy is your customer base? Is the adoption rate of smartphones higher than you expected? What are common attributes, characteristics or interests of your customers? Can you connect these customers and create communities of interest? Analyzing your customer base is not so much about technology, but about realizing the context and interests of your customers. And often companies have already established networks like book clubs or car clubs. The same can be done in most other industries. The next step is then to extend existing services with mobile and location-based services.

3. Leverage existing technologies and services
Which platform provider is best suited to extend your service offering by LBS and social media features? Which additional partners should be chosen, for example, for payments, special maps, content like points of interest, etc.? This requires experienced advisors who can point to suitable service providers for content, maps, payments, etc. dependent on planned services, target regions, performance and security requirements, etc. In one word: us grin

4. Build capabilities and partnerships
How can you build a team that is mostly focused on product development, technology watch and partner management? What are the best ways to create an innovation environment that allows for open collaboration with partners, for example, via open APIs, open source approaches, win-win business models, etc.?

5. Integrate with Social Media
Which social networks or similar services provide an added value for your customers? What are useful ways to integrate with these services supporting the core of your service offering?  This is about using existing authentication mechanisms (so that the user of an established social network does not need to re-register), but also pushing messages, photos or certain events to an established social network in order to raise awareness of your own services.

Finally, enterprises can gain a competitive edge by customizing LBS and social media platforms in-house.  Social media players, by definition of their business model, have a severe privacy problem. Enterprises, on the other hand, can leverage their trusted brands and create location-based services that are centered on strict privacy and security policies. While today’s early adopters might be willing to ignore their loss of privacy, future mainstream users might even be open to paying for privacy. So yes, the user numbers of Facebook Places, Foursquare and the like are impressive, but the enterprise will strike back. And if historical data tell us anything – they will most likely strike back with more lucrative business models.


Published Wednesday, July 6th, 2011

Written by Alexander Köppen, Michael Heinzel



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