Alliance Data, Locaid Join Forces to Show Power of Geofencing, Mobile Marketing

Thanks to a relationship that started at the fall 2012 Mobile Marketing & Technology Payments Conference, Alliance Data Retail Services, one of the nation’s leading providers of branded credit card programs, and Locaid, the world’s largest LaaS (Location-as-a-Service) company, joined forces to operate a very successful opt-in geofence pilot program between Black Friday and New Year’s Eve in 2012.

Officials from both companies discussed the program during the spring 2013 Mobile Marketing & Technology Mobile Payments Conference in New York.

“We first met at the conference here last year,” said James Walz, Alliance Data director of mobile strategy and services, referring to Rip Gerber, president and CEO of Locaid Technologies, Inc. He added that while people had talked about the possible potential potential of geofencing and mobile marketing, the concept had never been proven before.

Alliance Data provides marketing-driven private label, co-brand and commercial programs in partnership with many of North America’s best-known retail brands. During the campaign, Alliance Data Retail Services sent over 20,000 opt-in email invitations to cardholders of select branded credit programs, asking them to join in a text message pilot campaign at Easton Town Center, a Columbus, Ohio, shopping mall.

Working with Locaid, Alliance Data implemented a virtual geofence around the mall designed to trigger SMS text messages to participants who had opted in to the campaign when they were within a pre-determined proximity of the mall.

Cardholders were invited to enter to win a $5,000 shopping spree by opting to receive the text messages. When the shopper was within the mall’s perimeter, the cardholder was texted to use the registered card for a chance to win. Initial findings from the pilot revealed that participating cardholders spent an average of 24 percent more in a shopping trip triggered by a text message than the average cardholder. Credit sales were up 2.5 percent over projected sales for the pilot period and up 4.9 percent over projected sales for Black Friday alone.

The proximity-based messages influenced the purchase decisions of 39 percent of the participants; 37 percent reported the messages influenced them to visit a specific brand. Following the pilot program, 68 percent of participants indicated they would sign up for future location-based SMS campaigns.

“Location is becoming an integral driver of any mobile campaign,” Gerber said. “The results of this pilot prove that location increases relevancy and in return increases share of wallet for those retailers using it correctly: to create another level of engagement with their best customers.”

“We have known that text message campaigns are powerful—but when combined with location and personalization, our retailers can achieve real relevance,” Walz said. “These are real, tangible results for the participating retailers. Using location-based text message campaigns can be a strong driver in lifting incremental sales for a brand, but it’s essential the right message is sent to the right person at the right time to truly resonate on a one-to-one level.”

The pilot showed how effective mobile marketing is when combined with location-based services, Walz added. Simply texting someone an offer when they are nowhere near a merchant’s location would not have been as effective. But a relevant, targeted offer made when a prospect is within close proximity has an excellent chance of turning into a sale.

Walz added that merchants could get large benefits out of this type of campaign during the upcoming holiday shopping season.  They could start designing programs in the summer, experiment with them in the fall and have them locked down by the start of the holiday shopping season.