February 22, 2011, 5:01 PM

It’s all about location

A new report suggests ways retailers can use location-based mobile services.

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 6% of consumers are interested in receiving location-based retail offers on their mobile phones and 4% are interested in receiving time-sensitive promotions such as daily specials, Forrester Research Inc. finds.

The poll of 4,186 U.S. online adults 18 and older who have mobile phones was conducted in Q3 2010 and serves as a backdrop for a new Forrester report, “Location-Based Commerce: An Evolution In Mobile Shopping.” The report offers tips for retailers to help consumers warm to location-based mobile offers and services. Most important, the report says location-based services and marketing offers should provide something of value to consumers.

“Retailers today are experimenting more with third-party location-based services including foursquare and Shopkick to roll out location-aware mobile coupons,” report author Peter Sheldon writes in a blog post.  Other retailers, he says, are developing location-aware services in their own mobile shopping apps beyond the basic store finder feature to create new ways to interact with shoppers via their smartphones.

Retailers, including Target, Best Buy, J.C. Penney, Apple and Barnes & Noble, which have dedicated mobile shopping apps that allow consumers to research and purchase products directly from their phones, are adding more functionality such as nearby product availability lookup and pick-up in a store close to one’s current location, the report says. But it says that’s just the beginning of location-based offerings.

Forrester says retailers should use location-based mobile offerings to attract new shoppers and generate more sales. It suggests retailers that have mobile shopping apps ask consumers if they would like to opt in to receive location-based notifications. Then it suggests leveraging users’ preferences and other profile data to understand a shopper’s intent and send her relevant messages and store notifications. But it cautions not to bombard shoppers. For example, a consumer who enters a defined geo-fenced area should only receive a store notification if she has previously made a purchase there in the past six months and the store is currently open, Forrester suggests.

Another tip is to use location-based messages to drive impulse purchases. For example, event organizers can leverage mobile commerce and location to fill empty seats at the last minute by sending notifications to nearby fans, who in turn can instantly use their phones to buy tickets.

It also points out U.K. supermarket chain Tesco, which offers mobile in-store help through an app, enabling customers to locate the exact aisle and shelf location of the products they are looking for. Tracking customers who enter a store via mobile apps such as this one also can provide retailers with valuable insights into consumer behavior, Forrester adds.

Retailers also may want to use location-based mobile marketing to promote in-store events such as a live product demo that is starting within the hour, or to let shoppers know that the in-store restaurant is open and children eat for free.

Lastly, Forrester says retailers can use location-based services for upselling by sending a message such as “Spend over $50 today and get $10 off your purchase.” “These offers can be targeted at shoppers who typically leave the store quickly or to customers who have a history of spending below average,” the report notes.  “Location-based upsell offers should be used to convert customers who may exhibit signs of leaving empty-handed.”


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