In the past when clients have asked my advice on their wiz bang new Location Based Services business I have often replied the reason most of these LBS start-ups fail is simply because they make the big mistake of confusing the presentation layer for a business model.
Let’s face it in the LBS game harvesting customer data and then mashing it up with other data and presenting it on a map is the easy it bit. The hard part is harvesting engagement… and by that I mean engaging with the audience as they travel through the location.
If you are there at the planning stage you are in the business of seeding ideas. If you are on location you are in the business of influencing “just in time” actions. Where would you rather be in the scheme of things? An idea or an action?
This is what I mean about harvesting patterns vs harvesting actions.
There are of course a number of stand out models based around harvesting customer data for trip planning and then prompting them with suggestions during the planning process. The problem of course is most of these models (e.g. Hotel and Car Hire Bookings) providing the location map is not a competitive edge. It is simply just another cost of doing business. If you don’t have the maps you are not in the game. The competitive edge is the pricing & availability data.
The same applies to enterprise level solutions like Fleet Maintenance and Insurance. Again mapping isn’t the competitive edge . It’s the presentation layer. The competitive edge is the pricing or costing data.
The other side of the LBS Business is of course the on-demand-on-location model. Here the business models become more interesting and the decision point then become a question of push or pull marketing.
Are you in the business of making the architectural space the customer inhabits more interactive and engaging? or, are you merely in the business of tracking, mapping, aggregating and handing out Mobile Coupons?
Here we encounter deeper questions like what has more appeal to the customer? Providing an in-store display that says touch me with your phone to receive something special, a redeemable discount embedded on a QR code on a billboard strategically positioned next to your competitors or sending your customer a message on their phone telling them you know they are walking past the store?
The interesting thing in all this of course being although there is a lot of customer engagement there isn’t a map in sight.
Which in the end is the simple message at the heart of my suggestion to anybody thinking about getting into location-based services… If you can’t make money out of this idea without showing me a map then you’ll never make money out of this… unless of course you are in the business of selling mapping data and map images to people who think they can make money out of Location Based Services.
Postscript:
While we are on the subject of location-based services I just thought I’d mention that I was always a bit surprised that none of the camera manufacturers made the connection between Mobile Apps (Location and otherwise) and Digital Cameras. After all until the arrival of the high-resolution mobile smart phone the most ubiquitous items carried by tourists the world over was a camera to record the moment, a street map and a translation book. Surely somebody should have made the connection in the world of cameras that the best place to create an amalgam of all these must haves was more logically the camera than the mobile phone?
Further Reading:
- Point, click and discover the future of advertising?
- Browsing with you but buying from them
- The future of retail signage?
Posted on June 28, 2011
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