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?
But in a non-threatening and appreciated way!
With geofencing marketing, 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. Geofencing technology provides an excellent method for businesses to connect with their customers and reach them where they are…literally. By targeting your audience based on location and proximity, you’ll catch them when and where they’re more likely to engage and buy.
In this post, we’ll cover everything you need to know about geofencing marketing for your business, like:
- What is geofencing marketing
- How does geofencing work (with examples)
- Benefits of geofencing marketing
- Tips for successful geofencing
Let’s get started!
What is geofencing marketing?
Geofencing is a type of location-based marketing that uses GPS or radio frequency identification (RFID) to deliver messages and advertisements to smartphone users who enter or exit a geographic area.
These mobile messages are commonly sent using SMS, allowing businesses to deliver promotions and other relevant information to customers as they move through their daily routines. Recently, geofence technology has expanded to include push notifications from downloaded applications, too.
A form of mobile marketing, the most common use case for geofencing is to deliver location-relevant ads. Let’s say you have a coffee shop and want to advertise a special offer via your business’s mobile app. To target customers who are walking or driving by your shop, you’d create a geofence around your business that triggers a push notification to former customers.
Not only does this strategy catch customers when it’s easy for them to visit and purchase from you, but it also provides a subtle nudge to keep your brand top-of-mind.
How does geofencing marketing work? (+5 real-life examples)
While customers see a simple text message or app notification, a lot is happening behind the scenes of geofencing.
Geofencing marketing allows businesses to establish a virtual geographic boundary around a set of GPS coordinates. This is also known as a “geofence” and is typically drawn around a business storefront or special event.
When a device enters or exits this boundary, geofencing leverages real-time location information to trigger a digital event, such as an SMS message or push notification from a business’s mobile app.
You can leverage these notifications to share:
- Coupons or discounts when customers are near the business
- Reminders to check into the business’s social media page
- Messages to encourage customers to sign up for a rewards program or newsletter
- Notifications about event details and times
- Ads about sales at nearby stores
Geofencing also offers unique opportunities for employees and managers. Take Quickbooks’ geofencing services, for example. The brand recently offered geofencing tech in its software, allowing companies to set boundaries around work areas to preserve the integrity of time tracking.
Let’s look at geofencing marketing in action. Volvo attracted 500 new prospects to its site and 132 clients to its showroom in 30 days using a location-based marketing strategy.
They created geofences around areas bursting with car shoppers based on local competitor locations. They then used banner ads to target potential customers with information about their cars.
Volvo also created a conversion zone around their dealership to learn who visited their showroom in person. With geofencing marketing, the company was able to build brand awareness and reach potential customers who were looking to purchase a luxury vehicle.
Here are a few other examples of how you can use geofencing marketing.
Market to audience demographics and behaviors
Since geofences are virtual boundaries around a geographic location—a store, a city block, or even a mobile device—marketers can leverage them to create content based on target audience demographics and behaviors.
For example, let’s say you own a chain of stores with locations across Chicago. You’re using a geofence around each location to grab the attention of nearby shoppers, but your clientele varies greatly based on their neighborhood.
For each store location, you could craft unique messages that resonate with each neighborhood and draw in local customers to shop. This can help you reach new audiences and increase engagement with existing customers by providing relevant information at the right time and place.
HotelTonight provides its app users with information about the best open accommodations. It uses cellular GPS data to provide accurate location-based content. After A/B testing geofencing and seeing good results, they incorporated it into their app.
HotelTonight’s Rate Drop feature captures users likely to be looking for lodging. When a customer is nearby a participating hotel after 3 p.m. (later in the afternoon when they may need a place to crash that night), the Rate Drop tool offers heavily discounted lodging if you book through HotelTonight.
Reach your customers at the moment they’re looking at your product or service
Geofencing entails using GPS technology to trigger a digital interaction when someone enters or leaves a specific geographic area.
For example, if a customer enters a store, they can receive an offer on their phone about 20 minutes later. The same scenario applies to restaurants: A customer may receive an offer for discounted appetizers if they sit down at the bar or table within 15 minutes of arrival.
Look at Sephora’s mini-makeover push, for instance.
Sephora customers receive a push notification when they’re nearby a store location. The push offers them complimentary services, which entice them to enter the store and make a purchase.
With geofence technology, businesses can provide customers with location-targeted messages. Businesses can pinpoint precisely where their customers are and engage with them at the right time and location, which increases customer satisfaction and loyalty.
This is especially effective for retailers who want to reach customers at key moments—when they walk into a store or drive past it.
Understand your business’s busy and slow times
When someone crosses into the geofenced area, it lets you know where they are and when they’re there—data that’s unavailable with other marketing methods. Moreover, you see when they exit, which can help you understand shopping and brand engagement time.
Here’s an example: Let’s say you own a restaurant and want to know you’re busiest dining times so you can hire plenty of staff during those hours. You can create a geofence around your business so whenever someone enters or exits the geofenced area, you will receive push notifications and be able to track peak hours.
Uber is a great real-life example of using geofencing to measure activity and surface your products or services when appropriate.
Let’s look at how Uber engages with travelers at airports.
Above is an airport in Colorado. When travelers dismount from a plane, Uber sends them a push notification letting them know that Uber services are accessible nearby. Uber also uses this to implement dynamic pricing in neighborhoods with a surge in demand for cabs.
Businesses can also arrange multiple geofences for different activities or locations within your business.
For example, one geofence could be for when an employee arrives at work, another for when they leave at the end of their shift, and another for when they go on break. This helps monitor your field sales team and better understand where their services are needed most.
Benefits of geofencing marketing for your business
Now that you thoroughly understand how geofencing marketing works (along with some examples!), you may be wondering whether or not it’s right for you. Here are four major benefits of geofencing for small businesses 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 or SMS pushes 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.
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.
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
So, 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 are a lot of people to target.
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
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 ad or message
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 user 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.
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 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 + click-through rate
Just like other forms of digital marketing, you’re able to track how often a person clicked your ad as well as the click-through 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.
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.
If your geofencing marketing campaign includes click-to-call, you can track the number of calls that came from your ad.
One of the great things about geofencing for your small business 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.
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.
Some other marketing 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 small business
As you can see, geofencing and geofencing marketing can be used in countless ways to help grow your business and get more customers.
Geofencing allows you to engage customers with unique offers and reminders. It can improve foot traffic and optimize your in-store customer experience to drive customer delight and loyalty.
As a location-based marketing strategy, geofencing enables businesses to reach their customers when they are most likely to visit and shop—as one of the most effective and underrated ways to “meet customers where they are.”