Geotargeted Marketing: Using Location Data to Engage Customers

Banks and credit unions have yet to harness the power of location-based data lurking in consumers’ mobile devices. Even if they had access to it, most probably wouldn't know what to do with it. But it’s time financial institutions start experimenting with geo-targeting, because megabanks on the leading edge are already eyeing all the ways they can leverage location-based data to drive greater engagement and marketing ROI.

Starbucks has been using mobile location-based data for several years. They say that this kind of geo-targeting significantly increases the percentage of consumers stopping by for a latte. Could banks and credit unions increase sales and loyalty as well? Absolutely.

Think about it. Someone drives up to the drive-thru window of your branch and their phone sends them a text, welcoming them to your bank or credit union. Or someone visits a car dealership and gets a text informing them of your current promotional interest rate on an auto loan. Or after leaving your branch, they receive a prompt for post-visit survey on their mobile device.

According to data from Accenture, about half of all consumers say they want banking providers to play a supporting role in the purchasing process of non-banking products, such as a house or new car. They say banks and credit unions could assist with these important decisions by sending helpful contextual information based on their location, price range and other personal preferences — e.g., the best mortgage rates, or deals on auto loans or insurance. A Cognizant study had similar findings.

Consumers are becoming increasingly comfortable with location-based marketing. Starbucks allows consumers to place orders based on the closest store. In fact, Starbucks says that using targeted ads based on a consumer’s proximity increases the likelihood that they will enter a store by a factor of 100%.

It’s just one point in a growing body of evidence suggesting that such strategies are working. Marketers are prepared to spend big bucks on location-based mobile marketing. Indeed BIA/Kelsey predicts U.S. marketers will spend more than $20 billion on geo-targeted mobile ads this year alone.

But if banks and credit unions want to use location-based marketing strategies, they better be sure the offers are personalized. Survey respondents told Accenture that in return for sharing location data, the advice and product information had better be relevant.

How Can You Leverage Location-Based Data?

“Today, instead of who and what, it’s about the where and when that is driving a lot about what a bank can ascertain about a person.”
— Jim Burnick, Managing Director of Global Financial Solutions for Pitney Bowes

Banks and credit unions can use mobile location data to uncover patterns in consumer behavior, explains Ron Shevlin, Director of Research at Cornerstone Advisors. “Mobile location data can help a bank develop profiles and segmentation around shopping behaviors and branch visitation patterns,” he says.

Banks and credit unions can use location-based data at the individual level — such as sending an offer to a specific group of consumers within a “geofence” — or at the macro level.

Here are a few examples of using location-based data at the individual level:

  • Provide customized notifications to consumers as they enter a branch, including their account balances and last transactions.
  • Provide cardless entry into ATM lobbies.
  • Assign a queue number automatically as a consumer steps into a branch.
  • Text consumers the location of the nearest branch or ATM.

If you could identify a segment of consumers who visit a branch every Friday during their lunch hour, you could send an email to them Friday morning inviting them to schedule an appointment with an investment rep.

“You might reach unique segments at exactly the right time and with extremely relevant offers,” explains Shevlin.

Location intelligence is especially useful in helping institutions understand how to prioritize
their services and direct those of lower value to lower-cost channels like digital and
mobile. “If you’re in a high net worth area, you obviously would want a personal banker in
the store that could talk about wealth investment and pension and 401(k) plans,” says Jim Burnick, Managing Director of Global Financial Solutions for Pitney Bowes. “Whereas if you’re in a very rural, check-cashing, high-volume area, you may have a kiosk that allows a consumer to walk in and dial in to a personal banker.”

Using data at the macro level removes some of the “creepy” factor, since it doesn’t refer to knowing precisely where someone is at any particular moment — it just shows you know they were in a particular area at one point in time. For instance, you could send a text message saying, “We see that you walked past our branch today. Next time why not stop in and [insert call-to-action here].”

Here are a few ways to use macro-level location data:

  • Track changes in branch visit volume after launching a campaign to see if the campaign was successful.
  • Track the busiest branch times and how long consumers are waiting.
  • Look at competitors’ data to benchmark your own performance.

Say you want to structure some co-branding promotions with third-parties. If you know where consumers shop, you can make a much better and informed decision about which brands to partner with. Or if you want to test a marketing campaign, you can target the offer to consumers in a specific geographic area and analyze branch activity before rolling out a full campaign to everyone.

Read More: The Power of Location-Based Offers

Mobile Behavioral Trajectory

What if you send an offer for an auto loan to someone you tracked to a car dealership, but the they were only there for their 20,000-mile service? Not good…

The best use for mobile location data isn’t just a single point in time — like a consumer waiting for an oil change — says Cornerstone. Its real usefulness is in creating a “behavioral trajectory” (as Shevlin puts it) that includes four components:

  1. Place – Where do people go?
  2. Persistency – How frequently do they go there?
  3. Period – How long do they stay there?
  4. Path – Where do they go next?

The goal is to track behaviors to create enhanced consumer profiles. Sure, a bank or credit union has demographic data and perhaps income data from transactions like direct deposits, but they typically don’t know much else. Mobile location data can help banks and credit unions learn:

  • Where consumers work
  • Where they shop
  • Where they spend money
  • Where else they bank
  • Where they spend their time
  • How far they commute

Burnick with Pitney Bowes says location intelligence and analytics can furnish contextual data about the areas where customers work, play and shop. “This banks make better decisions, not only about site selection but also about product and service offerings across digital and physical channels, with lower-value activities directed to low-cost channels,” he explains.

Read More: Five Geotargeting Advertising Tips for Financial Marketers

Data Collection and Privacy Issues

About half of consumers are happy to share their location with their bank or credit union. So why aren’t more financial institutions using geotargeted marketing strategies based on mobile location data? One reason is that banks and credit unions don’t have this data at their fingertips.

The data that banks and credit unions currently have doesn’t give a complete enough picture about consumers’ financial lives to make personalized and customized offers, explains Shevlin.

“Banks and credit unions can’t collect mobile location data internally. They typically have to buy it from third-party data providers that capture device ID, geography, dwell time and location frequency from users’ smartphones,” Shevlin says. “Because their bank’s app is on the smartphone, these providers can identify who the device’s owner banks with.”

But because financial institutions typically never purchased this data before, they don’t know what they would do with it, and that keeps them from bothering to spend the money to acquire the data, adds Shevlin.

Banking Providers Lagging Behind

Few banks or credit unions are using location-based data in any capacity. Cornerstone Advisors notes that only about one-third of financial institutions use mobile-related data at all. A study by Unicast shows just how much financial institutions lag behind other industries (and to be quite frank, the notion that 35% of financial institutions are using geo-locational data seems totally implausible).

Several megabanks are either using- or experimenting with location-based data. Bank of America used mobile data to identify locations for banking centers in low-income neighborhoods. The geographic analysis helped the bank gain important insights into target markets. The proximity analysis cut audit times by 25% while helping the bank boost its CRA compliance score.

Citibank ran a pilot program with mobile data platform Gimbal to find ways to offer a more personalized mobile experience for customers, depending on the time of day. The program looked at secure ways to open ATM doors for customers, and alerts for staff when VIPs walked into bank branches. Citi also used beacons with geofencing technology to message customers who were near sponsored events such as the “Citi Summer Concert Series” in New York City co-hosted with The Today Show.

Barclays tested a beacon service called “Barclays Access” which notified staff when a customer with an accessibility need enters the branch. Customers were able to opt-in to the service and outline their requirements via the bank’s mobile app. Customers could upload a photo making it easy for staff to identify them as soon as they entered the branch.

Although technically not a bank, Visa rolled out mobile location confirmation several years ago as a way to minimize fraud and increase convenience for traveling consumers. Visa compares the credit card transaction to the consumer’s mobile phone location. If they match, the charge is approved. Consumers have fewer “false positive” declined charges and don’t need to inform their financial institution when they are traveling abroad.

In late 2017, U.S. Bank announced it was adding the Visa mobile location confirmation. Customers can opt in to the mobile location feature through the mobile app. It’s part of U.S. Banks customer convenience strategy. “We are looking to add as many new technologies and capabilities to our mobile banking app to give the customer the most convenient experience,” says Jason Tinurelli, SVP/Retail Payment Solutions at U.S. Bank.

Taking The Next Step

Cornerstone advises banks and credit unions to experiment with mobile location data before their competitors do and ignore the nay-sayers who believe that location data isn’t accurate enough to be useful.

“Poor data is a lousy excuse to not explore opportunities with mobile location data,” says Shevlin. “First of all, it will never be 100% perfect. And second, if you wait until all the kinks get ironed out, your competitors will have a huge head start figuring out how to use the data.”

To get started, Cornerstone Advisors suggests that banks and credit unions invest in the following:

1. Mobile location data to augment existing third-party data. Demographics and psychographics are still important, but data that creates a behavioral trajectory will deliver the most value by predicting consumers attitudes and behavior.

2. Staff. You may not need “data scientists” but you do need staff who understand what data is available and what to do with it.

3. Integration. Integrate mobile location data into data warehouses and apply business intelligence and analytics to this data. And don’t silo this data—share it with all the lines of business to get their monies worth.

“As financial services providers look for ways to improve customer experience across physical and digital channels, location data and intelligence is an important tool for improving banks’ understanding of their customers,” summarizes Burnick with Pitney Bowes. “It can be used to support better decision making about site selection and how and where to prioritize product offerings, as well as to improve mobile marketing and support top-of-wallet efforts to reach and influence customers as they are on the physical path to purchase.”

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