Privacy-friendly location-based marketing: Giving customers the control

March 31, 2014

By Eric Newman

VP of products and marketing, Digby

For generations, retail and brand marketers have had the difficult task of finding new and unique ways to communicate and engage with consumers and turn them into loyal customers. In recent years, thanks to the significant increase and popularity of mobile shopping, retailers and brands have quickly identified indoor and outdoor location-based marketing strategies as the perfect vehicle to send consumers the right message to the right person at the right place and time.

These new marketing initiatives have, however, seen much scrutiny in the national press over the past year. The controversy has even made its way into the political arena, as evidence by U.S. Sen. Al Franken (D-Minn.) who has openly pressed an analytics firm to stop using shopper smartphone MAC addresses to track their movements without permission. In his letter, Senator Franken commented, "It's one thing to track someone's shopping habits through a loyalty card or credit card purchase; folks understand that their information may be collected. It's another thing entirely to track consumers' movements without their permission as they shop, especially when someone doesn't buy anything or even enter a store."

Most recently, The Future of Privacy Forum and The Wireless Registry have announced a partnership to launch a new website where consumers can opt-out from having their location tracked at retail stores, airports and other places. Even though this industry movement was created to encourage retailers and brands to implement best practices for location tracking, the fact that consumers who do not want to be tracked must actually go through the process of opting out of a solution, only adds more fuel to the fire.

Here's a tip: Don't put the opt-out burden on your customers. Instead of using MAC address based solutions to track shopper's movements, adopt an opt-in model.

In the recently published Location-Based Marketing Playbook, we outline the importance of developing a privacy policy that clearly defines a retailer's location strategy and implementation. Crafting a non-invasive, privacy-friendly location policy is key to keeping customers from opting out of push messaging or location awareness. The easiest way to accomplish this is through a branded mobile app with the option to "opt-in" to location tracking.

We have identified the following best practices to help retailers and brands create a privacy-friendly location-based marketing plan:


Think of the mobile app as the next generation loyalty card. Loyal customers are the most likely to download a mobile app, and they are likely the most interested in receiving push notifications (complete with personalized offers) from their favorite retailer or brand. To further affinity, retailers also need to turn the whole notion of customer loyalty on its head. At a recent SXSW Interactive Festival panel, a representative from WPP told attendees, "Loyalty needs to be redefined in the current marketing and technology environment. Rather than the consumer being loyal to the brand, the brand now needs to be loyal to the consumer."


Being transparent is more than just developing terms and conditions. Transparency is achieved when your privacy policy is easy to understand and outlines an opt-in model of engagement. Customers must be aware that the location tracking is not continuously tracking their device as they move around, rather it allows them to opt-in and gives them the choice to have their device be "announced" when they arrive at a store location.


In order ensure that customers do opt-in to a mobile app, retailers and brands must stay relevant. For example, retailers must only set up geofences around their locations, and leverage those geofences to message customers upon entry or exit and while in the store. These geofences are designed to monitor consumers' shopping habits in and around store locations in order to dynamically improve customer satisfaction and increase store traffic. Also, messaging must be relevant and not overload the app experience with too many or otherwise irrelevant messages as the consumer moves from location to location.


Customers are more willing to share personal data when they receive something of value in return. Retailers must entice shoppers with financial or loyalty incentives and an improved customer service. For example, upon entry into the store, a book retailer could send a push message offer for 5 percent off a shopper's entire store purchase. To help increase engagement without being bothersome, the retailer could also send a push message to the shopper reminding them of an upcoming book signing.

The conversation around customer privacy and location tracking is just getting started, and those at the center will continue to stay under the microscope, unless they implement privacy-friendly policies that will ease the masses. Retailers must give their customers 100 percent opt-in control. It must be the customer's decision to decide whether or not they want to receive messages from retailers and brands, and if their information can be collected.

In marching down the path of location-based marketing, retailers should remember that consumers are individuals and many individuals expect the undivided attention that location-aware mobile apps are making possible today. However, retailers should provide them a service that respects their privacy, adds value and keeps them in control of their own data.

(Photo by anemoneprojectors.)

Topics: Consumer Behavior , Marketing , Mobile Retail , Omnichannel / Multichannel , Point-of-Purchase / POP , Technology

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