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What Is Geofencing & How Does It Work for Your Business?

We know that the targeting capabilities for certain marketing tactics have evolved at an almost alarming rate. About 10 years ago, smartphones were just bursting onto the market. Now, we’re constantly on our phones, using them for everything from a GPS, entertainment hub, and social connector. So, wouldn’t it make sense to target users directly through their phones? And to take it a step further, why not target them through their phones when they’re in a specific area?

what is geofencing

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With geofencing, you can do just that. Geofencing is a powerful location-based marketing strategy that can dramatically increase the number of mobile users who see your marketing messages and advertisements.

Most importantly, they’ll see those messages while they’re near your location or a specific location you target, which increases the chances of them stopping by!

In this post, we’ll cover everything you need to know about geofencing for your business, including:

  • What geofencing is.
  • How geofencing works
  • The benefits of geofencing.
  • Tips for successful geofencing.

 

What Is Geofencing?

Geofencing is a local marketing strategy that allows you to target people with ads directly through their smartphones based on their location.

With geofencing, you establish an imaginary perimeter around a certain area – this could be your business, a complementary business, or even a competitor. Using GPS on consumers’ mobile phones, the system detects when someone enters the “fence” and then greets them with an in-app alert on their phone. This alert can be an offer for a deal at your business or an invitation to set up an appointment.

what is geofencing - example

 

How Does Geofencing Work?

Setting up the geofence parameters is surprisingly easy, in its most basic form, and as you learn more about what works best for your business, you can use more sophisticated geofencing techniques, like dynamic geofencing which automatically adjusts the size and behavior of the geofencing around your location.

Using dynamic geofencing allows you to expand your geofence area during slower times to reach more people and narrow it when you’re busy and people have to wait.

An effective geofence can also help you learn about the habits of prospective customers by tracking and reporting things like what times of day they enter and leave your area and how long they spend at locations within the geofence. Geofencing marketing uses this type of data to send ads while users are using specific apps to deliver invitations to visit your location while in the area or to send reminders for people leaving the area without visiting your business.

Geofencing might sound intimidating to someone unfamiliar with the technology. But in reality, it’s very easy to use and can get great results for any local business.

 

4 Benefits of Geofencing for Your Business

You may be wondering whether or not geofencing is right for you. Here are four major benefits of geofencing to consider.

1. Geofencing attracts people nearby.

When a geofence is set up around your business, you can target people with in-app phone alerts when they come within a certain distance of your business. This is great for businesses that don’t have the name recognition that a bigger brand has.

what is geofencing - geofencing attracts customers nearby

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Let’s say you own a coffee shop. Someone might be driving through your town in need of an afternoon pick-me-up, but they don’t know your business. They see a big national chain on Google Maps and are resigned to going there, but just as they come within a two-mile radius of your shop, they get an alert on their phone: “Stop in for a large coffee and get a free cookie with your purchase!”

They didn’t even know to look for you minutes before, but now they’re turning down your street.

Plus, consumers are receptive to this type of advertising. In fact, over 50% of people visited a retailer after receiving a location-specific message.

2. Geofencing is personalized.

Over 70% of people prefer advertising that is personalized in some way.  With geofencing, you’re able to personalize your marketing to someone based on their location, which increases their chances of engaging with your marketing message. In fact, 3 out of 4 consumers took an action after receiving a message when approaching a specific location.

3. Geofencing can steal customers from the competition.

Geofencing around your business is the most obvious application of the technology, but you’re not limited in where you can establish your fence. You can also set one up around your competitor’s business.

Maybe you own a children’s clothing store. You can put up a geofence around the big box store down the street, letting people know that you sell clothes and baby supplies that are ethically made and reasonably priced.

what is geofencing - benefits of geofencing - beat the competition

That’s going to catch the eye of some of those consumers who will gladly shop with a local business and can help you compete with the big brands.

4. Geofencing generates valuable data.

Beyond the short-term benefits of geofencing like bringing new people to your business, the technology also allows you to collect data on consumers. Over time, you can begin to see patterns in which geofenced areas are most popular, when people enter those areas, and how long they stay.

This data empowers you to create even more effective marketing strategies over time, so you can get specific about how, where, and when you reach out to potential customers.

 

Tips for Successful Geofencing

Now that you understand what geofencing is and the benefits of geofencing for your business, you might be wondering what goes into a successful location-based marketing strategy like geofencing.

Here are six tips for geofencing success.

1. Define (and refine) the right geofence.

The first step in a successful geofencing marketing campaign is defining your geofence.

You want to make sure you target an area:

  • With people who would be interested in your business.
  • Where people are close enough to travel to your business.
  • Where there’s a lot of people to target.

what is geofencing - geofencing marketing tips

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If your business is on a road where there’s not much foot or vehicle traffic, you might want to expand your geofence to a grocery store that’s near you – or this is where a complementary business would come into play.

For example, we worked with an apartment complex that was looking to sign more leases. They had a lot of current residents who worked at a nearby hospital, so the apartment complex targeted the physicians’ parking lot with a geofenced ad highlighting the short commute and included a discount for hospital employees. They were able to sign a number of new leases as a result with renters who may never have driven near their location on their commute home.

The area you geofence is the most important part of your geofencing strategy, and it may require some testing to identify the ideal location for your fence. Analyze the data to measure the effectiveness of your existing geofence, and don’t be afraid to A/B test locations to see which drives the best results.

2. Identify a compelling offer.

The best geofencing campaigns include some kind of incentive to entice your target audience to visit or try your business.

Here are some ideas for offers for your geofencing ad:

  • A 20% discount on a service or their purchase.
  • A buy-one-get-one-free offer.
  • A future-use coupon after their first purchase.
  • A piece of branded swag for your business.
  • A welcome gift for becoming a customer.

what is geofencing - geofencing ad offer

Whatever you decide, make sure your offer will be effective in bringing in new customers – you may even consider talking with your existing customers or employees to help you identify the right geofencing offer.

3. Craft an effective geofencing ad.

Your geofencing marketing campaign will show people an ad for your business that may include an image with copy or just copy – either way, you need to make sure your ad stands out, captures attention, and urges the consumer to take action and become your customer.

Your ad should include:

  • Your offer or selling point.
  • A brief description of your business or services.
  • A strong call to action.
  • A sense of urgency.

what is geofencing - example of geofenced ad

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By including the above elements in your geofencing ad, you can drive people to visit your business. Because geofencing works by targeting consumers nearby, a sense of urgency can be the extra component of your ad that drives them in – so try testing language like “limited-time offer” or “hurry in before this offer expires.”

4. Measure your geofencing results.

Just like any local marketing strategy, measuring the results of your geofencing campaign is extremely important. You want to ensure your ads are reaching people and driving them to take an action.

Here are some geofencing metrics to measure:

Impressions

Impressions are the number of times your ad is seen by a customer. You want to measure impressions to track whether or not your geofenced ad is getting seen. If you’re seeing low impressions, it could be a sign that you need to adjust your geofence.

Clicks + Clickthrough Rate

Just like other forms of digital marketing, you’re able to track how often a person clicked your ad as well as the clickthrough-rate (CTR) of your ad. The more clicks you have on your ad and the better CTR, the more likely it is that your ad creative and messaging is effective at driving someone to take the next step.

Website Visits

Depending on the goal of your geofencing ad, you may be driving people to your website and will want to measure the number of website visits you’re getting from your ads.

Calls

If your geofencing marketing campaign includes click-to-call, you can track the number of calls that came from your ad.

Walk-Ins

One of the great things about geofencing is that it’s one of the few marketing strategies that can easily track online-to-offline conversions through walk-ins. Because geofencing works by using the GPS on a customer’s smartphone, you’re able to track whether or not that person visited your business after seeing your geofencing ad by setting up conversion zones around your business.

what is geofencing - geofencing metrics - walk-ins

As part of measuring walk-ins, you can also measure the cost per walk-in (CPW) to see how much each walk-in is hitting against your budget.

Additional Metrics

Some other metrics you’ll want to measure include:

  • Cost Per Click (CPC)
  • Cost Per Call (CPC
  • Cost Per Thousand (CPM)

Measuring and analyzing these metrics will help you see the success of your geofencing marketing campaign and track your overall ROI.

5. Always be testing.

With geofencing, there are many opportunities to optimize your campaigns, A/B test different offers and creative, and geofence different areas to see what drives the best results for your business.

Don’t be afraid to try different variations to maximize your marketing budget and ensure you’re reaching the right audience in the right way with the right offer.

6. Run geofencing as part of your display advertising strategy.

Geofencing is a display advertising tactic and is most effective as part of your overall display advertising strategy. Geofencing targets customers on their mobile devices in apps, so in order to target them on both desktop and mobile browsers, you’ll want to run traditional display ads and/or retargeting.

This gives you the best chance of reaching the most consumers and converting them into customers.

 

Get Started with Geofencing for Your Business

Geofencing can work for your business to increase in-person visits, boost awareness, and generate leads. Using these simple tips and the right technology, you can leverage geofencing as part of your marketing plan to reach your unique business goals.

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