The location-based services market is expected to reach $4 billion by next year, with eMarketer even showing that while 9 in 10 U.S.-based smartphone owners currently use location-based services, there’s actually a lot of potential for growth there as well. Smartphone users are increasing by 7-8% in the U.S. and even faster in other markets (i.e. Asia Pacific), and as they come on mobile, they tend to adopt location-based services at the same 9 in 10 rate as above.


Sephora’s embraced mobile as a part of the customer in-store experience.

This is all logical in some way: one of the great promises of mobile was always direct contact with, and information about, potential customers on a device they tend to have with them all the time. Knowing their locations, patterns, and habits allows for better targeting — as we’ve seen with the rise of geofencing programs — and more experiential relationship-building. Virtually all digital growth now is coming from mobile (cool!), but many companies still haven’t mastered this location-based services part. 49% of retailers — a healthy number, but still less than half — are reporting using some location-based services in their stores, with 81% of that bucket reporting notable increases in customer experience as a result.

81% of retailers using location-based services in their stores report improved customer experience.

“The most transformative aspect of a brand’s marketing strategy” is how one CMO described location-based services in a 2017 trends piece.

What do mobile marketers need to understand in order to effectively compete with location-based services?

The role of data.

The core of mobile analytics is about specific information, not long-form browsing. And, in 2016, mobile Internet usage surpassed desktop usage for the first time. Many people live in a hyper-busy, go go go mindset. Their phone is almost always with them. Their laptop may be back at home or at the office. Mobile is the preferred search and research tool. In terms of location-based services, users are looking to see if your brand is near them, them and quickly. A short time-on-site/app or high bounce rate can actually be positive mobile metrics in this type of ecosystem. If a user quickly knows your product is two blocks away, or has a direct way to contact you and does that, those are good behaviors. If you had those metrics on desktop, it would be a concern — but mobile and desktop are inherently different, and that needs to remain top of mind for you.

How your audience likes to access your products or services.

Location-based services let you target quality consumers in real-time. These types of offers have proven to be a huge component for smaller brands such as the drug, dollar, and convenience category. These small-format retail options outgrew large-format (i.e. Wal-Mart, Target) by 400 percent in 2015-2016. Not surprisingly, these traditional big-box retailers (like Target and Whole Foods) are exploring small-format stores, especially in dense urban neighborhoods. The smaller stores are targeted to the neighborhood demographic and allow them to expand in-store pickup, another mobile and location service-friendly feature.


CVS uses location services for targeted offer, and in its curbside pickup service.

The paradox of location-based services security.

Many people don’t use location-based services because they fear security issues — like if you check in at an amazing California hotel, does that mean your home back in Connecticut is soon to be robbed? But as MarketingLand notes, location-based services could keep us more secure. What if your laptop, keys, or bank card can only work if they’re in the proximity of your smartphone? And what if that smartphone can only be accessed via biometrics? In such a context, if you consistently have your smartphone, it would be nearly impossible for a third party to hack your house or bank. Increased security measures on location-based services (and corresponding consumer trust) are the only way it will continue to grow as a marketing option at its current rate.

Your takeaway? During your app’s onboarding experience, explain how your app uses location services to benefit the user, as well as how you safeguard their security.

Screen Shot 2016-11-29 at 11.01.04 AM.png

Target clarifies the benefit to location services, and makes their privacy policy easily available.

It might seem like we’re talking about location services a lot these days–mostly because we are. Location services allow your app to better personalize your app user’s experience, and it’s that kind of personalization that delights them. Where your user is at that moment gives them insight into their mindset–and that’s what every marketer strives to better understand.

How do you plan to use location services in your app this year?