What is Geofencing Marketing?

Posted on Nov 25, 2020
What is Geofencing Marketing?

Introduction

In the early days of computers, no one thought of advertisements. Every inventor just wanted the machine to work. And even when we had the internet it still wasn’t a big deal, we still didn’t get all that thought going.

But in recent years when we found out “oh!” we could advertise to people on mobile phones too. We don’t need to wait till they watch TV or work on the internet.

And that was a chapter of finding better ways to advertise to people on mobile phones too.

What if I told you that you could market to potential customers when they’re in a competitor’s store or even just around the corner?

Geofencing marketing is a lot more than just putting advertisements in front of any and everyone, geofencing seeks to advertise to potential customers that are within a certain geographic environment.

Let’s Split the Words

geofencing

Geofencing: The dictionary defines Geofencing “as the use of GPS or RFID technology to create a virtual geographic boundary, enabling software to trigger a response when a mobile device enters or leaves a particular area”.

This is basically a method that is used to advertise a product or a business to a mobile user when they step into a location marked by a virtual boundary.

For example, a business owner that sells coffee at the airport may decide to set up a geofence to show adverts of their store to people immediately when they step into the airport.

We will discuss more on this in the coming parts of this article, just keep reading!

Marketing: According to the oxford dictionary, marketing means the action or business of promoting and selling products or services, including market research and advertising.

While Investopedia defines it as activities a company undertakes to promote the buying or selling of a product or service.

The above definitions are fancy ways of saying marketing involves a process of researching and drafting methods to sell a product or a service to potential a customer or customers.

ALSO READ: Top 8 Social Media Strategies That Every E-commerce Store Needs To Implement

What is Geofencing Marketing

what-is-geofencing-marketing

Geofencing marketing is one of the numerous marketing strategies that allow businesses to advertise their products or services to potential customers using location-based advertisements.

The goal of this marketing is not just to advertise to anyone, but to advertise to persons within a marked region.

In our previous example, we talked about a coffee shop owner, let’s call it ‘sun-bucks’, kind of an opposite of ‘star-bucks’. The owner runs a coffee shop at one of the airport’s outlets.

He knows very well that just putting up an ad on google ads wasn’t enough because people saw the ad when they search for coffee shops from their homes, work, or a park.

To narrow down to her potential customers, he gets introduced to geofencing marketing when he was surfing the internet on how to grow his customer base.

He uses geofencing to create a virtual/imaginary border around the airports. So in this case, when someone visits the airport, they get an ad showing sun-bucks coffee shop on their mobile phone.

This makes it easier to reach his potential customers and also gives the customer an easier way to find a store within the airport premises, rather than showing a coffee shop outside the premises to a customer.

I really do hope that this example helped you grasp the concept of geofencing marketing.

Now that we understand what geofencing marketing is and a simple example of how it works, let us discuss some benefits, disadvantages, strategies, the why, who and when to use geofencing marketing.

You definitely want to keep reading.

Benefits of Geomarketing

Mobiles are the new makeup. It’s rare to walk up to someone and they won’t have their phones. We now hold our phones and spend more time on it than we do with real humans.

And what better way to sell things to people if not via the exact place they spend lots of time. People are either on social media or an E-book app or a medical care app or just surfing through the internet.

Randomly and systematically positioning your products and services to people via mobile is the way to go. Statista shows that there are over 3 billion mobile phones as of 2020.

And the average person spends about 5.7 hours on their phones. Aside from these facts, there are good reasons to consider geofencing marketing. These include but are not restricted to:

Enhancing Market Sales: A business owner that is able to understand their market and build a geofence could increase sales and grow their customer base.

Making use of this technology exposes one to rank high in local searches and what better way to sell to people in a specific location if not by location-based search.

Using geofencing marketing creates a provider-customer relationship, for example, our coffee-shop owner can tailor his ad to suit both the location and the occasion.

This way, the potential customers are fed with what they need to see and when they need to see it.

Improved personalization and engagement: A situation where a customer is presented with a 10% discount for their coffee the minute they are within the airport premises, increases online and offline interactions.

Geofencing provides quality demographic data. This data in turn can be collected by the provider to understand what kind of people are in the location, ages, and what kind of promotions/offers would interest them.

Another advantage of this data is it helps you to narrow down to what products/ services were most appealing to your customers. This in turn gives you an idea of how best to tailor your business and improve your promotions and sales.

Easy and More Accurate Search Results: A little more than often, when customers search for places or things. The search engine just does its thing by bringing up as much data, but more often the search results are a little bit off the radar.

Setting up geofences allows an easy way for your customers to find you. For example, we have a first-timer at the airport and he needs a cup of coffee, he goes online and searches, viola!

There’s a lot on the list, he sees the first and tries to follow the map, only to go round the airport and outside the airport to find the store.

Now imagine if we had set up fences, he would find our sun-bucks coffee shop first.

Geofencing marketing not only helps the businesses but also the customers by narrowing down their search.

ALSO READ: 7 Facebook Remarketing Strategies that Actually Work

Improved Analytics and ROI: Tracking when customers visit your store, how long they spend, and what they did could be some extra and daunting tasks but using the data provided, these can be tracked.

And understanding the events that led to the visit of customers and what they requested when they visited goes a long way in improving quality and quality improves sales and exposes the brand.

The benefits of geofencing is a lot more than meets the eye, and till you give it a shot, it may still look undoable to you.

Challenges With Geofencing

In our current world, every beautiful solution tends to come with some sort of disadvantage. In the case of geofencing marketing, our biggest disadvantage is with the users.

Although, the service uses the GPS, when users decide to turn it off then there will be no customers to advertise to.

And a major reason for users turning off their phones are, users, complain a lot about how much it drains phones’ battery. And yes, that thing with privacy.

How to Set up Geofencing Marketing

how-to-set-up-geofencing- marketing

Setting up a Geofencing marketing strategy is a bit less complicated than usual. There are a couple of things to keep in check in order to successfully launch a marketing strategy like this.

  • Know your audience.
  • Ensure that your business can be found easily.
  • Ensure that you have the right message to be passed to customers.
  • It’s important that your geofence is within a walking distance because if the geofence is far, it’s unlikely for customers to visit the same day.

When we have this setup, the marketing consultant or company could help with developing content that can go on to the screen. This content needs to be specifically tailored to suit customers within a geofence.

For example, to feed the interests of customers within the airport, we may want to target young and vibrant customers. The most beautiful part about this is geofencing marketing allows you to set what time the ads pop up.

So, we can show ads when we are sure customers are around for a flight or when the coffee is done brewing.

To set up a geofencing marketing strategy, it is important to know if you can do it yourself or contact a company. In most cases, it is important to ask for professional help.

You could find it by just googling it out or consulting a marketing firm for more info. A marketing firm could give you a run-down cost of how much it would cost to run such ads and how it works.

Companies Using Geofencing Marketing

Over the years and most recently, we’ve had some companies implement the use of geofencing marketing to either engage customers, boost sales, or make searching easier for users.

We have a list of interesting cases:

Taxi-hailing Apps

Bolt Formerly known as Taxify is a taxi-hailing app. We wouldn’t successfully talk about companies using geofencing marketing without starting off with our popular Bolt.

bolt-geofencing

It is no news that modern hailing apps use GPS tracking and location services. I mean we can even say this is one example that answers some questions about geofencing marketing being for brick-and-mortar businesses.

When a user opens the bolt-app and makes a request for a ride, the app using geofencing searches for rides around a marked location-geofence and displays the wait time.

Using GPS to be able to help movement and finding nearby available rides is a huge step. And it not only helps the business but also helps the users.

Another hailing app that uses geolocation marketing is uber. Uber uses the same model and adds an extra feature.

uber-geofencing-airport-notification
Image source: medium.com

When a user arrives at an airport, they receive a notification with a message asking if they will need a ride as there are nearby rides in the airport.

Sephora -the companion

Sephora is a multinational retail store(or Empire as the owners like to refer to it) that sells beauty products.

sephora-geofencing
Image source: acquisio.com

The empire introduced a new feature that uses geofencing. Firstly, the companion shows up to notify a user to visit a nearby store either for a first visit or to announce the arrival of a product in the user’s wishlist.

Secondly, when a user steps into the store, an online companion is automatically launched. This companion feeds the user with information like previous purchases, new offers, product recommendations and reviews, a wishlist, and more.

Honeywell Home

This is a company that offers smart home luxury. They offer safe, energy-efficient solutions and comfort to homes. It requires setting up a home automation dashboard.

honeywell-home

This dashboard allows users to control appliances and gadgets from anywhere.

Honeywell Homes has a good range of thermostats, ranging from a smart WiFi thermostat with room sensors and humidification control to a couple of programmable and non-programmable thermostats.

A thermostat uses geolocation to monitor specific marked points, check if a person is in the room or not. And with this information, it checks to see the temperature of the room and based on its program adjusts to the desired temperature.

This technology not only helps the users but also feeds Honeywell-home with enough data to better provide their customers with better solutions.

In Conclusion

Geofencing marketing is meant for the business owner that needs to drive sales, monitor customers’ reactions, and advertise to potential customers within a certain geographical zone.

It sure has some challenges, but a good tip is ‘understanding your environment and your business plays a huge role in selling to your customers’.

Finally, the earlier this approach is adopted and applied to your business, the earlier you get to enjoy all the opportunities that come with growing a business.

Thanks for reading!

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WRITTEN BY
Rithesh Raghavan

Rithesh Raghavan, is a seasoned Digital Marketer with more than 17+ years in Digital Marketing & IT Sales. He loves to write up his thoughts on the latest trends and developments in the digital world, especially related to WordPress, Woocommerce and Digital Marketing.

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