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Location Data Strategy: Dos and Don’ts

Location Data Strategy: Dos and Don’ts

Location data is swamping our organisations and projects. With the ongoing growth of mobile phones, drones and the internet of things, there is a lot to consider in your location data strategy. 

A recent Carnegie Mellon University study found that the average smartphone users’ location data was collected hundreds of times a day, as many as 5,000 times in two weeks. At the end of 2016, 39 percent of the world’s population –nearly 2.9 billion people – owned a smartphone. Consider the aggregation of that location data and the incredible influence it holds.

Businesses and organisations across the globe are clamoring to harness the power of location data, but many fall short and fail to use location data effectively. Every organization has unique needs and goals, so there is no one-size-fits-all solution to successfully use location data. There are, however, a few best practices that every business should incorporate into their location data strategy.

DO Know the Tech of Location Data

There are many effective ways to use location data, the trick is to identify which one will work best for your product and your customers. Here are a few proven location data tactics:

Geo-Conquesting: This tactic requires the use of geofences, which Google describes as GPS technology that creates a virtual geographic boundary, enabling software to trigger a response when a mobile device enters or leaves a particular area. If a geofence is placed in front of your place of business, you can use it to send promotions to your customers’ phones as they pass by. Geo-conquesting comes into play when you place a geofence near a competitor’s place of business and attempt to lure their customers away by sending competitive offers to their phones.

Mobile Payments: Customers are highly motivated by efficiency. If you have an app that uses location data to track users’ whereabouts, consider adding a mobile payment option. This way, when your customers are near, you can remind them of your location and that they can order and pay through the app. This tactic was successfully used by a New York City ice cream parlor called Van Leeuwen. As a result of offering mobile payments, they saw a 5 percent increase in revenue.

Coupons: This is an obvious one, but it is just as important as research has shown that consumers are highly motivated by discounts. Use geofences to send coupons to existing customers, and to entice new customers to enter the store.

Crowdsourcing: The more you share, the more you know. This tactic incentivizes customers to share their location data to increase efficiency of the product or service. A great example of this is the traffic app, Waze. The more its users report information and share location data, the more accurate its traffic reports become. Users are happy to share the information because they want the app to work well… and avoid getting a speeding ticket.

DO Know Your Customer

You probably already have standard demographic information about your customers. What you need to know now is how they perceive location data use, if they typically share their location on their phone, and how they typically interact with businesses that collect their information. According to a study conducted by IBM in 2015, 42 percent of consumers see the benefit of sharing their location with retailers, but only 28 percent are willing to do so. A similar study conducted by Boxever, an Irish tech company, found that 62 percent of consumers do not want to share their location data.

Interestingly, Boxever’s research found that only 2 percent of consumers believe that the stores they frequent know them extremely well. The gap between a customer’s perception of what a company knows and how the company uses the information they do have should be filled with savvy, efficient use of location data, but how? 

DO Incentivize 

Once you have identified your audience, find out what motivates them. IBM’s study showed that personalization is key. Forty-one percent of consumers want store associates to offer personalized promotions based on their purchase history or preferences. Boxever’s study found the same, sixty-one percent of customers want offers tailored to their location while 56 percent want offers based on their interests and needs.

Microsoft’s bi-annual Consumer Data Value Exchange Study broke incentives down into several categories to determine which incentives best motivate customers to share their location data. Cash is king, with 64 percent of respondents claiming they are motivated by cash rewards. Significant discounts were also quite popular with 49 percent of respondents being motivated by discounting. A quarter (26 percent) of consumers are willing to exchange their location data for services that help them discover new ideas, content and products and 26 percent would exchange location information for more streamlined processes.

Microsoft also found that 26 percent of customers would rather share location data than pay for services. This means that a quarter of all consumers would happily share their location in exchange for free use of an app (or other applicable service). That’s an attractive trade given the power of location data.

No matter what the incentive, make it obvious to the customer. According to Microsoft, “Consumers are more likely to see value in sharing data when there are obvious mutual benefits. Inconsistency in data policies and visibility of data usage can make the exchange seem one-sided. In the absence of transparency of information or clear value, the company appears to receive more benefit from collecting the data than what the consumer receives by sharing it.”

DON’T Break the law

Location data is very sensitive and should be secured. Legal protections over this type of information vary by country. DLA Piper has conducted very thorough research in this area, visit their website to learn more about location data regulation in these or other countries.

Australia: Location data use is Australia is governed by the Federal Privacy Act of 1988 and the Australian Privacy Principles. According to Australian law, organizations are not permitted to collect personal information unless the information is necessary for its functions or activities. Organisations collecting data must take steps to ensure that the data is accurate. Once an organisation collects data, they are required to let the individual know who they are and how to contact them, why they are collecting the information, who may ultimately have access to the information and more.

Australia’s six states and 10 territories have their own data protection laws, as well.

Europe: Location data is regulated by the Directive on Privacy and Electronic Communications, passed in 2002. It requires that location data only be used when it is anonymized, although the user may give consent if not anonymized. The user must be able to withdraw their consent at any time. Service providers are required to inform the user what location data will be collected, what it will be used for, and whether it will be transmitted to a third party. It also states that location data should only be used for a specific reason, and only for the duration necessary for the purpose.

There is another law that governs the use of location data in Europe, the EU Data Protection Directive of 1995. It is currently being amended and will likely take effect in 2018.

United States: There are about 20 federal laws that either directly or indirectly deal with location data use. These laws present a great range or requirements, but by and large an opt-out and full disclosure of regulated personal information is required before any organization can collect location data. Opt-ins are required when sensitive data, like health or financial information, is involved.

Individual states have their own privacy laws, as well. California, for instance, has 25 such laws. These laws are typically related to employment and protection of employee information.

DON’T Ignore Industry Trends for Location Data

Despite robust legal protections, the tech industry has stepped up to the plate to self-regulate and keep consumers’ location data safe. There are several industry groups that promote responsible data use. The Network Advertising Initiative is one of the more prominent industry groups that works to foster responsible data collection. They have a comprehensive set of best practices for its members, which include the likes of Adobe, Google, Microsoft, Oracle, and Yahoo. Members are required to adhere to their Code of Conduct, which is considered the gold standard of self-regulation of third party advertising.

DON’T Use Bad Data

Your strategy is only as good as your location data. Adweek recently put out an Audience Targeting Guide that warns against using bad data. There are several things that can make data unreliable, so be sure to scrutinize your data thoroughly before using it to create a marketing strategy.

Data is only guaranteed to be accurate the second it’s generated. People’s lives change. They move, they have kids, they buy a new computer or smart device, and data that was generated in the past no longer represents their lifestyle. Be sure the check refresh cycles to find out if your data is up-to-date. Also, beware of fraudulent data. There are bots that solely exist to create fake data. You want data that was generated by something with a pulse.


Photo Credit: 'iPhone Maps' by Simon Yeo on Flickr. CC by 2-0. 

Amanda Witman

Amanda Witman

Freelance Writer at Upwork.com
Amanda is a freelance writer and editor who lives in the heart of Amish Country, Lancaster County, Pennsylvania. She began writing as a political science student and was soon working in communications for the Pennsylvania Department of Environmental Protection (DEP). After four years with DEP, she began to focus on independent endeavors and now writes for many companies across a wide variety of industries.
Amanda Witman