Location-Based Systems in Customer Relationship Management

The Golden State Warriors (www.nba.com/warriors) won the NBA championship in June 2015. Significantly, technology increased the enjoyment of fans who were on hand to enjoy the victory at Oracle Arena, the team's current home court in Oakland, California.

The arena sends personalized messages to fans' smartphones about merchandise deals at the team store. They can also receive notifications that they can upgrade their seats while at the arena for a game. Warriors fanscalled members of Dub Nationcan sign up for an app that detects their location in the arena and alerts them to which entrances are less busy. The technology uses a beacon, a wireless hardware device that pinpoints the app users through the geolocation-based technology.

The idea behind the Warriors' apps is that location is an im portant way to add value for customers who are essentially a cap tive audience. Specifically, location-based services (LBS) enable the Warriors to provide better service and to deepen customer loy alty. LBS can target customers where they are in real time, giving them offers they can take advantage of right away.

The Warriors have experienced mixed results from their loca tion-based services. On the positive side, LBS notifications were credited with making it easier for fans to upgrade seats, generating approximately 15 percent of arena seat upgrades. In contrast, fans largely ignored the LBS notifications about free popcorn with the purchase of a pizza slice.

Even if technology can do something, it doesn't always make practical sense. For example, the Warrior app has the ability to de liver instant replays to fans in the arena. But the organization nixed that idea, figuring the game already moved too fast for replays to be of value. However, the team was considering making instant re plays available to fans not attending the game.

The LBS data on its own won't give the Warriors the complete picture of their fans and enable them to provide experiences in context. The team must integrate that data with information from CRM, inventory management, and workforce management appli cations. Fan behavior also varies whether they are in the arena, on the phone, or online.

There are other interesting examples of location-based ser vices employed in customer relationship management. In Brazil, Nivea, the maker of skin care products, embeds a beacon in maga zine ads that parents can tear out and make into a wristband for their children. A smartphone app can track how far the children are from their parents in public places. The app alerts parents when the child strays beyond a certain range. As a result of this CRM tool, Brazilians now perceive Nivea as a brand that cares about its cus tomers' children.

As another example, 313 Somerset, a mall in Singapore, has deployed a beacon-based mobile advertising service. The app detects when users who opted in to the service are within a predefined distance from the mall. That triggers the sending of cou- pons and other offers to their smartphones. Retailers have enjoyed a 46 percent sales conversion rate thanks to the app. (The sales conversion rate is the percentage of prospective customers who actually make a purchase.)

LBS does have downsides. Critics feel that some companies use the brute-force approach, sending so many messages that con- sumers either ignore them or turn off their phones. Even worse, customers may be so irritated and feel the messages are so irrel- evant that they delete the app entirely. For LBS to succeed with empowered customers, companies must offer true value to their customers at the right moment.

Questions

1. Describe the advantages of location-based services for cus tomers and for businesses.
2. Describe the disadvantages of location-based services for customers and for businesses.
3. What are other location-based services that the Golden State Warriors could provide for their fans?