why location is the next big thing: location-based services for churn reduction and revenue growth

8/3/2019 Why Location is the Next Big Thing: Location-Based Services for Churn Reduction and Revenue Growth

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Why Location is the NextBig Thing: Location-BasedServices for Churn Reduction

AND Revenue Growth

by Tim Young

Location has always been a tremendously importantaspect of business. We all know the old clich aboutits importance in real estate, and that same battle-cryof Location, Location, Location has found its wayinto countless other industries, from advertising toentertainment.

However, the growth of location-based services (LBS)

underscores the changing nature of location as aconcept. Subscribers are more mobile than ever,and their constantly changing spatial orientation

is fabulously useful information. Once concrete,location is now dynamic.

These mobile consumers provide considerableopportunity for smart service providers, in part

because they have demonstrated, through theirusage patterns that location-based services are of increasing interest. Furthermore, location-basedservices provide a rare opportunity for proactive,positive interaction between the provider and theconsumer. The overall customer experience can beenhanced through the smart leveraging of location.

Location-based services, as a concept, are exploding.The growth has been much more rapid than analystsforecast a few years ago. Back in 2006, In-Stat

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Subscribers are moremobile than ever, and theirlocation is fabulously usefulinformation.
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predicted that by 2010, some 1.1 million Americanswould be subscribers to mobile location-basedservices. Fast-forward to 2010, and Foursquare,alone, accounts for 2.5 million active users, withGowalla approaching 400,000. In addition, GoogleTrends reported in August that Foursquare sees5.5 Million unique visitors per month, and Gowallagenerates another 830,000. And these numbersare just coming from two services. Google Latitude,Brightkite, MyTown, Loopt, and other services are alsoout there, generating substantial numbers.

And where there are that many users, theressigni cant opportunity for revenue increases. Thatmuch we know. Juniper research estimates that thelocation market will be worth $12.7 billion by 2014.

Thats a particular interesting number, because itappeared in a report that came just 8 months aftera report by Frost & Sullivan that the LBS marketwould be worth $3billion by 2013, indicating that

the optimism for growth in the LBS arena is gaining speed with considerable rapidity. The precise dollargure for LBS services isnt a known quantity, but thepotential for growth is clear.

Beyond Increased Revenue

However, theres more to the picture than justrevenue increases. Location-based services have

the potential to go a long way towards achieving avery distinct level of service differentiation for savvyservice providers. That is, in part, because in addition

to the general location-based services listed above, theres a brand new breed of LBS thats beginning toemerge that is focused, speci c, and incredibly usefulfor certain subscribers.

In a recent interview with the BBC, Dr. John Bates,CTO of Progress Software, outlined the possibilities of location, which he declared the next big thing in the

telecom space. Therein, Bates notes that location isvaluable for service providers especially when used inconjunction with context about the speci c customer.

Bates notes that Progress is working with a majorentertainment group, who is planning on offering LBS

to visitors to its amusement parks. The system cankeep track of where visitors are, keeps an eye on linesat speci c attractions to minimize wait times, andmakes recommendations for the next ride to visit, allwith the intention of making the experience personal

and optimal for the visitor.

GPS, like Social Networking,is both popular andwidespread.
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In addition, Bates references Lufthansas location-aware social networking solution, in which you can

tell the service what your interests are and it will uselocation to create connections with other users onyour behalf. The service, known as MemberScout,was developed by app developer Match2Blue using Progresss Apama Business Event Processing

platform.

While these are both enterprise examples, the levelof visibility that wireless services providers havecreates an even more compelling business case for

the utilization of location as a customer retention andexperience optimization tool. I spoke with SanjayKumar, Industry President for Communicationsand Media at Progress, and he told me that severalEuropean service providers are already using Progresss Location Based Promotions solution tocorrelate customer location, usage patterns, and

customer preferences to send subscribers relevant,real-time offerings. This is a present-tense example that is sure to be replicated by providers around theglobe.

The impetus for this connection is summarizedpretty well in a list of the top ten telecom predictionsreleased by Progress in mid-December. Itemnumber three includes language that sums up themotivation for service providers to use location as acustomer satisfaction-based service differentiator.As competitive forces continue to build, wirelessoperators will need to provide customers withunique, interactive experiences to build strongerloyalty by tapping into customer call patterns andlocations, correlating with customer preferences andproviding value added services to customize eachcustomers experience in a unique way.

Bates also, however, notes something of utmostimportance when considering the growth of location-based-services, especially if the central motivationis customer experience maximization: Theseservices must be opt-in. Privacy concerns are of utmost importance, and while subscribers havedemonstrated that they are more than happy torelinquish a degree of privacy in exchange for speci cvalue, services that strike the consumer as invasiveor heavy-handed are counter-productive, at the veryleast.

However, provided that services remain fully opt-in, there are a number of reasons why location-basedservices are primed to emerge, increasingly, over thenext few months and years:

Ubiquitous GPS

Once relatively uncommon, GPS is becoming derigueur for smartphones (which are also becoming more and more widespread) and even less-sophisticated handsets. Berg Insight estimates

that GPS was present in some 15% of handsets inEurope in 2010, but that the percentage is expected

to increase to over half by 2013. In fact, someanalysts project the compound annual growth ratefor GPS-enabled handset sales to hit the 20-25%range between 2010 and 2013. Whereas consumerGPS was a specialized technology, often relegated

to car-based black boxes just a few years ago, it isincreasingly becoming table stakes in the mobilecommunications realm.

Continued Social Networking Growth

Likewise, just as GPS was once highly specialized,social networking is becoming increasinglywidespread. Though the speci c programs may ebband ow somewhat over time, the overall conceptof sharing personal information like location with

the wider world is no longer strange for a growing portion of the population.

Value-Consciousness

The above is particularly true when there is a de nite

Providers and enterprisecustomers can leverage

location as a tool forcustomer retention andrevenue growth.


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and concrete value to the service being offered.Take Groupon, for example. Founded in Chicago inNovember of 2008, the collective buying site featuresdeal-of-the-day offers to its growing pool of users(which measured more than 35 million at last count).It is now active in more than 150 markets in NorthAmerica and another 100 markets in Asia, Europe,and South America. How big a phenomenon is it?Big enough to have rejected a reported $6billionbuyout offer from Google in late 2010.

Groupon isnt a GPS-driven location-based service,per se, but the implications for LBS are signi cant.Its users are value-minded and localized, with eachcommunity receiving local deal offers. Advertisersare happy with the service because it gives them

extremely well-targeted exposure to a localized,quali ed, tech-savvy demographic. Consumersare happy because they feel like theyre getting asigni cant value. Groupons happy, because it uses

this matchmaking ability to make incredible amountsof money. Win-win-win.

Tying it all together

Therefore, with a market in which users have the will to share valuable location and personal information, the technology exists to easily leverage thisinformation, and ample evidence exists for the bene tof providing targeted value to customers, a perfectsituation emerges for service providers and otherenterprise customers to leverage location as a tool for

customer retention and revenue growth.

If consumers are already primed to respond to dealslocalized to their city, how much more valuable would

they nd a service that, based on real-time locationand contextual information on their likes and dislikes,offered them deals on dining and entertainmenta block from the hotel where theyre staying forbusiness? Or that offered them premium tickets toan upcoming concert taking place in the city in which

they happen to be vacationing? Or enabled them tond fellow university alumni to watch the big gamewith in their city of residence?

And what would this increased level of customizationdo for the overall customer experience? How much

more deeply would the consumers value a serviceprovider if their interaction with that provider wasnot based on negative experiences, like billing errors or service interruption, but positive, proactiveexperiences that bring depth and value to the mobileexperience?

I know, you know, and software vendors like Progressknow that location is a big issue, and that all theanswers dont exist yet. There are, however, toolsout there to aid service providers and enterprisecustomers take full advantage of the promiseof location. The possibilities are endless, and,increasingly, the tools exist to help them come tofruition.

why location is the next big thing: location-based services for churn reduction and revenue growth

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