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Geofencing Demystified: How To Target Customers On The Go

February 22, 2018 at 11:05 AM

With a 61.5% increase in paid social media spend, consumers are being bombarded with promotional messages from every nook and corner. This has resulted in a click-through rate (CTR) of just 0.5% across all ad formats and placements. That’s where geofencing steps in. It is the concept of establishing a virtual fence around a pre-defined geographical area to promote your business.

It has become increasingly important for businesses to find new ways to capture their attention and keep them engaged. Geofencing enables businesses to deliver different content to a device user based on his or her geographical location. This device could be anything - a desktop computer, a mobile phone or even a smartwatch.

According to a MarketsandMarkets research, the geofencing industry is expected to grow by 27% by 2022. In fact, the usage of this technology across numerous industry verticals has grown manifold. Today, you will find geofencing being used in social media, human resources, telematics, cybersecurity and marketing.

Benefits of Geofencing infographic

Source: Salesforce


Depending upon the configuration with the device, the new technology can prompt mobile push notifications, send targeted ads on social media, initiate text messages and deliver location-based marketing data.

How does geofencing work for marketing?

Marvelously!

Ever noticed the push notification you receive from Sephora on your mobile phone as soon as you enter their store? That’s geofencing. Or the food recommendations you get when you are in a certain neighborhood?

How about brands messaging you when you drive by a concert venue they are playing in? That’s the magic of geofencing. But with 92% US smartphones being compatible with geofencing technology, this is hardly surprising.

However, it is important to note that with the use of geofencing, there is always a risk of irritating the customer with unwanted updates. If your businesses crosses the line, they might unfollow you on social, block your social advertisements, disable notifications from your business and even uninstall your app if you have one. In worst case scenarios, they might do all, leaving your business with limited channels to communicate with them.

Digital geofences provide better CTRs for advertisers

Source: Search Engine Land

Businesses are still juvenile when it comes to harnessing the power of geofencing. Apart from sending special offers when a potential customer walks or drives by the business’ location, the common use cases for geofencing haven’t progressed much. Most of these marketers are either not aware of the types of geofencing or how to create a more sophisticated geofence.

Since there’s no limit on location, the businesses can do much more such as improve customer experiences and provide them benefits, with a dash of creativity. This is where geofencing marketing enters the picture.


Benefits of geofenced marketing

60% of consumers look for local information on their mobile devices. 40% of them look for info while on the go. Amazingly enough, 70% of consumers are willing to share their location with businesses for something in return.

If businesses want to successfully target their customers on a hyper-localized level, they should pace up with smart marketing tactics. Here are top three reasons why:

1. Escalated local sales

53% of shoppers visited a specific retailer after receiving a location-based alert. About 50% of customers who stopped by a store, said it was unplanned and because of a display ad they saw on that particular day. Since the geography is limited, any promotion or gimmick will result in faster conversions as the customer can just hop off to the store.

That’s why if your business is looking into boosting its local performance, geofencing is the way to be. Run frequent time-bound sales and send push notifications to encourage more people to visit your store and buy from you.

2. Higher personalized engagement

Of course! Every customer wants a special treatment from the businesses they buy from and will buy from. Geofencing allows you to collect data so that you can tweak the offers accordingly. From demographics to general interests, you will find ample information to make suggestions to the customers.

With the right data and technology. you can even skim through the purchase history of a specific customer to see what his or her buying pattern is like. Once you have an idea, alter the promotions accordingly and engage with them. Easy!

3. Increased sales metrics

Usually, it is difficult to survey every customer that visits the store. However, if a person has shown interest from a message you sent from geofencing, then there may be a number of deeper metrics that you can measure, depending on your analytics tracking. These include a customer's purchases, the amount of time they spent in your store, and visit frequency.

 

Ways to use geofencing

1. To provide proactive customer services

You know what Uber does? It notifies the users arriving at the LA international airport about the number of cabs available in the area. They are able to cash in on the basis of the immediate requirement of the consumer.

Even if you are not in the travel industry, you should find ways to let the consumers know you have what they need and they can trust you for the same. Uber is just proactive in its services. You can be proactive too - thanks to geofencing.

2. To strengthen the business cause

According to an Alloy Media study, 95% of respondents said they are less likely to ignore ads or promotional messages from those brands that are not associated with a good cause. There’s nothing better than using geofencing to support your cause - whatever that might be.

Honeywell’s Lyrics is a smart thermostat and it uses geofencing to calculate the number of people in the room. It then turns the heat on and off depending upon the presence of people. This way it saves electricity. Smart, isn’t it?

3. To understand the target audience better

Live Nation, a concert and events producer, has geo-fenced amphitheatres for events with a product called ShowBook. The technology enables the product to collect all the fan social media content generating in the Live Nation locations.

This enables the events producer to understand what the people enjoy and are most likely to share at the events. It helps Live Nation plan its marketing activities around that chatter.

4. To send reminders to make a purchase

Taco Bell is not only a smart brand but also very innovative. It’s geofenced mobile app has a feature that allows consumers to order from their phone and simple go pick up the delivery - without standing in long queues.

Once the consumer orders from the app, Taco Bell then stores that data to send frequent reminders whenever he or she around a Taco Bell store. Sephora, H&M and PVR are other brands that appeal the “want it now” generation through this technology.

 

Geofencing a map

Are there any non-traditional uses for geofencing?

Absolutely! Let’s have a look:

 

1. Geo-conquesting

This is the concept of drawing a geofence around a competitor’s location in the hopes of stealing their competitors. Just because you are going hyper-local, doesn’t mean you won’t have any competitors to fight.

Geo-conquesting is typically most effective in environments where the market is relatively saturated and dominated by a handful of known competitors. Dunkin’ Donuts has done this to steal customers from Starbucks.

The coffee giant combines geo-conquesting with behavioral data to target Starbucks customers and to convert them with a mobile coupon campaign, which recorded an impressive redemption rate of 3.6%.


2. Targeting complementary businesses or points of location

A complementary business offers products or services that relate to your business and appeal to your customers but doesn’t take your place. For instance, a gym and athletic apparel store are complementary businesses.

  • A local tour guide company can geofence landmarks on the tourist path to get in front of a probable audience.
  • A nightclub or other business catering to a younger demographic can geofence local universities to target students.
  • A food delivery business can geofence neighborhoods characterized by a lack of car ownership to get in front of those who need the service the most.

3. Geo-targeted recruiting

Since potential job candidates don’t really spend as much time on job boards, recruiters have found a new way to attract and engage them: through geofencing. They now geofence campuses of large corporations to poach top talent.

With the use of GPS and radio frequency identification, the recruitment agencies are able to set up a virtual, wireless geographical perimeter so that mobile users in respective areas receive job ads right on their devices.


Rules of geofencing marketing - how to do it right

There are five rules that every business should keep in mind when it comes to marketing with geofencing.

  1. Don’t restrict your marketing strategies to just mobile phones. Geofencing can be done effectively on tablets and desktops as well.
  2. To enable geofencing on mobile, it is important for the consumer to have the app running in the background or be within a web browsing session.
  3. The chances of a geofenced message to succeed increase when the consumer checks the mobile phone at the right time, such as when they're passing by a store or when you know it's on their daily commute.
  4. Always put the consumer first. Think about the action you are asking him or her to do.
  5. Be very specific about the location you are planning to target.

Wrapping up

Geofencing is a local business's biggest weapon. It allows any business to carve a name for themselves in their local area and target the right people at the right time. Done right, it dramatically cuts the cost of local advertising and brings in better quality leads: those who pass by on a daily basis and may likely become repeat customers.

At Spatially, we've recognized the importance of geofencing to local advertising, and we've made it easier than ever to launch and manage a geofenced campaign. Give it a try with Spatially Ads and get your next campaign up and running in mere minutes..

Vanhishikha Bhargava

Written by Vanhishikha Bhargava

Spatially's content marketer, Vanhishikha writes and tweets on all things local advertising. With a background in content marketing for startups, she enjoys researching strategies and tools designed to drive conversion. Always up for a brainstorming session on marketing and travel, you can find her on Twitter at @VanhishikhaB.

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