What Is Geofencing? How Does It Work?

What Is Geofencing? How Does It Work?
May 29, 2019 Digital Marketing

When done correctly, geofencing develops a significant interaction between the customer and the brand. For this marketing strategy to work well, it requires much more than just technology such as precise customer targeting as well as a personalized message. We will break down geofencing, what it is, how it works, some practical applications of the location-based technology, and some tips on how it can best be used to your advantage. 

What Is Geofencing? How Does It Work?

A form of location-based marketing, geofencing utilizes GPS or RFID in order to define a specific geographic boundary, and once this virtual barrier is determined, you can establish triggers that will send an e-mail alert, text message, or app notification once a cell phone enters or exits the designated area.

Geofencing gives local businesses a chance to interact with potential customers who are ready to purchase and nearby via their mobile devices before they ever step foot into their stores. The thing with geofencing is that it only targets customers that would be interested in purchasing from your store. The technology targets individuals in the designated area who have entered in relevant search terms or with a business-related app and then sends them ads, messages, or notifications for special offers for in-store purchases.

Applications of Geofencing

The basis of the geofencing technology is to engage customers based off of hyper-local location, which can aid in immediate sales.

For instance, a boutique could setup a very simple geofence that surrounds its physical location. Once individuals pass through that virtual barrier, they will receive a location-triggered alert or a special deal that increases the chances of them stopping by the boutique and shopping.

Another example is an auto dealer that sets up a geofence targeting individuals who are leaving a competing auto dealership. Sending them an offer for zero percent vehicle financing on a similar vehicle model at that exact moment in time is likely to cause them to come to your dealership and comparison shop—or at the very least, cause them to consider another option.

In the event that a geofenced notification or offer fails to provoke an immediate visit to your store or a sale, it allows for you (the business) to know the exact location that a consumed passed through and where the message was received. This type of data can be beneficial in refining future targeting efforts based on which marketing communications were successful and which ones were not.

Tips for Using Geofencing to Your Advantage

When it comes to using geofencing, it is important to understand that geofencing is not necessarily a one-size-fits-all type of marketing technology. To help use this marketing strategy to your advantage, here are a few tips.

  • Virtual Barrier Size – As you determine the size of your geofenced area, consider your location. If your store is based on the city, you have a couple of options. You may want to set up your virtual barrier for consumers who are within walking distance of your store, or you may want to set it up for consumers who are within a one-mile radius. It all depends on the type of business and industry or personal preference. It may take some trial-and-error to determine what works best for you. Now, if you are in a rural area, your geofenced area will likely be a significantly wider area. In any instance, this marketing strategy allows you to offer hyper-local deals to potential customers.
  • Personalized Offers – In order for geofencing to be successful for your business, it is imperative that you create personalized offers that will engage consumers. Advertisements that are too generic or sales-y can turn the consumer off, which means that they won’t be clicking on your ad to learn more. In some cases, they may even uninstall your app! Your advertisement needs to do three things: introduce your offer, connect with the customer’s immediate need, and insist on prompt action. Personalized content that does this will not only add value, but it will also build the relationship between the customer and the brand. As for the offer, it needs to reward the consumer for taking action to make a visit to the store.
  • Add Analytics – Analytics can help you understand the offers that consumers are responding to with in-store visits. You will be able to dig deeper in order to understand certain metrics such as the frequency of consumers visiting the store, how consumers responded (call, stop in, etc.), and how long the consumers shopped at the store. Ultimately, the more data that you have your hands on, the more data you have the ability to test. This is true for both digital and in-store advertisements and displays.

Geofencing is a mobile marketing strategy that has a lot of potential for local businesses. If you would like to learn more about this particular type of marketing strategy, don’t hesitate to reach out to us at WebDetail. We can answer any questions that you may have and even get you started with a geofencing marketing campaign. Give us a call today!