October 12, 2011, 12:47 PM

Mobile Commerce Forum Report: Checking out the value of check-in and location-based mobile apps

Best Buy lets some smartphone owners receive reward points when they visit stores.

Lead Photo

Margarita Labhard

Best Buy Co. Inc., one of the first major multichannel retailers to implement a mobile location-based marketing program with vendor Shopkick, had such success with an initial nine-month test of the program that in May it rolled it out to Best Buy stores nationwide, Margarita Labhard, strategy and business development at Best Buy, told attendees today at Internet Retailer’s Mobile Commerce Forum in Houston.

The program lets smartphone owners with the Shopkick app receive reward points when they visit a Best Buy store. The customer providers her cell phone number to the cashier to receive discounts or other Shopkick rewards. Shopkick supplies each store with a small box, not much bigger than a cell phone, that sends a signal to engage shoppers with the Shopkick app when they enter the store.

Labhard did disclose the incremental foot traffic or sales the program drove at Best Buy, No. 11 in the Internet Retailer Top 500 Guide.

In the same session, Shopkick chief revenue office Doug Galen said the model of location-based shopping rewards delivered via mobile phones addresses store retailers' No. 1 problem:  driving more foot traffic into stores.

With more foot traffic come more sales.  In surveys of customers who use the Shopkick app 43.9% said they’d visited a store more often after using the app; 52.6% said they’d bought something in the store that they had not intended to buy.  At one Shopkick retail partner Galen did not identify, the average basket size of Shopkick app users at $52 was double that of customers not using the app at an average basket sixe, $25. Shopkick is now implemented by 10 major retail chains and in 3,000 retail stores and 250 mall locations,

A third session speaker, Melissa Parrish, interactive analyst at Forrester Research Inc., said that check-in services such as Shopkick’s program with Best Buy represent just one among many ways for retailers to deploy location-based services.

“It’s an emerging area,” Parrish said. “Marketers are thinking about it, but it’s been established technically for some time, so the opportunities are numerous.”

Parrish cited Forrester data showing consumers’ increasing awareness of location-based services. Among consumers surveyed by Forrester in the third quarter of this year, 70% said they were not familiar with such services, down from 84% last year.  14% said they were familiar with the applications though they had not used them, up from 9% last year.  The number of consumers who had used location-based shopping apps doubled to 2% this year. While that’s a small percentage, Parrish said the growth rate suggested strong prospects for future consumer uptake.

Parrish cited additional Forrester data showing consumer interest in a variety of location-based mobile interactions beyond simply checking into a location. 19% of consumers surveyed used their mobile phone to get direction from their current  location, 6% looked up the nearest shop to their location that had an item what they wanted to buy, and 4% received coupons that could be used in a store they already were in. “Location-based services are more than just check-in,”  she said.

As an example, she cited Kmart’s Scvngr hunt program, in which in-store shoppers use their mobile phones to take a photo of an item–for instance, an alarm clock–and upload it along with a note on why the item would be indispensible to them. Participating shoppers got rewards in the form of discounts.

“The important common themes of successful location-based marketing are immediacy, simplicity and context; smart targeting with clear opt-in/opt-out; great partnerships and offering valuable deals,” Parrish said.

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