Benefits of Geo-Fencing

10 min read

Couple Shopping and Looking at Smartphone

Poet Robert Frost once said, "Good fences make good neighbors." If you hear the word fence, do you picture barbed wire stretching across the prairie on weather-worn wood posts or the chain-link type surrounding buildings? How about a virtual border that helps retailers sell more?

It's called a geo-fence, and it also creates a perimeter around a specific area. It combines GPS (Global Positioning System) with RFID (Radio Frequency Identification) technologies.

This post will help you understand what geofencing is and how it can help you improve your marketing campaigns. Taking liberty with Mr. Frost's quote, we can say, "good geo-fences make more sales."


What is Geo-Fencing

Instead of barbed wire, geo-fencing or geo-targeting uses radio waves to establish a perimeter. The waves trigger someone's mobile device or an RFID tag as it crosses the virtual boundary. Marketers adapted the technology to deliver hyper-targeted messages to people's mobile devices.

For example, when a shopper enters a store or walks through a nearby geo-fence, it can send mobile in-app notifications, text messages, or targeted advertisements on social media directly to that person's device. It does require that the shopper's phone has GPS and location services enabled and that they consent to push notifications.

Other non-marketing uses for geo-fencing include tracking vehicle fleets, employees in the field, automating timecards, monitoring company property, and controlling autonomous vehicles.

For marketers, geo-targeting is essential for delivering and receiving location-based marketing data.


Geo-Fencing Marketing

Geo-targeting is an excellent method for marketing an eCommerce business. Nearby stores that offer coupons attract more shoppers.

Advertisers can connect with shoppers via their smartphones in areas as precise as 1,000 square feet, the size of a small brick and mortar shop. The technology is available to more than 92% of U.S. smartphones.

Marketers can set up a fence anywhere, including:

  1. A store location or entrance

  2. Streets surrounding an area or store

  3. A competitor's business

  4. Live trade shows, events, and conventions

  5. Colleges and universities

  6. Referral sources such as stores or companies that often refer customers to you

  7. Individual households needing personalized services

Geo-fences can be highly targeted and can produce an ROI of 400% or more depending on the product or service.


Creating a Geo-Fence

Image of a City with GPS Markers

Setting up a marketing geo-fence takes development skills, the right software, and experience. However, a simplified version of the process goes like this:

  • Step 1 – Define the Geo-fence Perimeter

    A geo-fence is a simple polygon defining an area, perimeter, or entry/exit point. Using certain tools, a web developer will draw the borders at a specific location on a map. Map providers that support geo-fencing include ESRI Maps, HERE Maps, OpenStreetMap, and Google Maps.

  • Step 2 – Configure the Trigger

    A trigger or event is when a person or a vehicle passes a specific location in the geo-fence. When someone passes the region or point, it triggers an automatic push notice. Marketers can specify when the message gets sent upon entry, exit, or both.

  • Step 3 – Define the Actions for Events

    Setting up a marketing geo-fence can get quite technical. There are many options and parameters to consider. For example, you must assign a thing to happen for a specific event within a particular geofence. Otherwise, the shopper won't be notified or may receive irrelevant messages.

    Did someone walk into the store? Create a trigger to send a notification of a sale or coupon. Are they leaving? Send a limited-time offer by SMS or email. There is a broad range of events and marketing options.



How Does It Operate?

Once an experienced geofencing advertising agency sets up the nuts and bolts of the system, building campaigns is relatively straightforward.

Let's say that an upscale restaurant also offers event space for corporate gatherings or weddings, and they have multiple competitors or related businesses within blocks of their location.

It's possible to create geofences surrounding the entire area or around individual businesses. If someone walks into a competitor's restaurant or a bridal boutique nearby, they will receive a notification on their phone telling them of a great deal they can get by visiting the restaurant.

In a nutshell:

  1. The company creates a geo-fence and specific ad campaign for it.

  2. As prospects enter the geofence zone, they get added to the list.

  3. They are eligible to receive targeted, highly relevant ads and notifications.

Prospects are more likely to remember your company because they are in the process of looking for the same product or service that you offer. Marketers can set specific time frames to trigger ads, like during peak hours, weekends, or holidays.

Let's look at a few tactics retailers can use to leverage this marketing method.


Ways To Attract Sales Through Geo-Fencing

Woman Shopping In A Mall

Here are some areas that have proven to work to increase leads and sales:

  • Your current business location or locations

  • All of your competitor's locations

  • Live events, trade shows, and surrounding businesses

  • Individual households via hyper-targeted, address-based campaigns

  • Universities, colleges, hospitals, or other facilities with high population density

  • Nearby stores and surrounding streets

  • Neighborhoods, towns, cities, or states

Marketers can set up geofencing for any purpose, from eCommerce to political advertising. They can dive deep and focus on specific addresses or the entire state.


Best Practices Before Setting Up a Campaign

eCommerce stores can benefit from geofencing solutions if they follow these proven strategies:


    • Aim for Your Competitors

      If you only sell online, you can set up a perimeter around your competitor's physical location. Send discount or coupon notifications if shoppers visit your competitor's store.

      Adjust the perimeter to outline the immediate area of the building, typically a three or four-minute walk or drive. A tighter border will provide more accurate customer behavioral data and more efficient marketing.


    • Target the Right Audience

      Before starting a geo-fence program, make sure you know your audience well. Analyze existing customer data from previous purchases, CRM tools, and social media. You'll have better success by sending offers they want.


    • Use Actionable Ads to Build Customer Engagement

      Geo-fencing promotions are no place for fluffy, ambiguous text. Be direct and transparent. Tell them the offer, why they need to buy now, and what they need to do to lock it in.

      Additionally, actionable ads help ease customers into your store by offering free trials, app downloads, or other low resistance offers. Engaging customers this way builds loyalty and boosts eCommerce sales.


    • Optimize Customer Data

      Marketers can collect real-time data to determine consumer behavior and ad performance with a high degree of accuracy. Data analytics tools can reveal if customers respond to ads and their exact location. Analyzing the data provides actionable information about a campaign's effectiveness and ROI.


      • Make Ads Time-sensitive, Relevant, and Transparent

        Location-based marketing campaigns allow eCommerce marketers to send relevant offers in real-time. Analytics can determine specific customer movements and behavior within the geo-fences.

        However, bombarding prospects with irrelevant or too many ads can drive customers away. Messages should be explicit by letting customers know what to do and what to expect if they take the offer.


When promoting both an online and physical store or there are multiple offers, provide information about the alternatives to help them make better-informed decisions. Doing so improves conversion rates.




Main Benefits of Geofencing

Combine the tactics and tips above to create a successful location-based ad campaign. Here are a few advantages for both eCommerce and physical store retailers.

    • Reach Shoppers at the Right Place and Perfect Moment

      Once marketers set up the geo-fence within their business location or around their competitors' area, they can offer relevant product promos, sales, or pricing when potential customers are within this vicinity. They receive a marketing message at the precise moment they are thinking about buying a product.

      It's a proven method to grab people's attention while shopping.


    • Increase Local Sales and Followers

      National brands with local retail outlets benefit from building local followers. One example is Dunkin' Donuts. In a recent promotion on National Donut Day, they engaged users who visited their stores by offering a free Snapchat lens filter that made people look like they were a donut with sprinkles. Along with the humorous app, people also got great discounts and exclusive deals that drove extra traffic to local stores.

      Advertising using geo-fencing gives a brand a larger share of that local market by driving local traffic. They reached their desired audience more effectively than if they advertised on a much larger and general scale.


    • Optimize Customer Data and Analytics

      One significant advantage of geofencing ad campaigns is collecting and analyzing shopper data in real-time. The marketing team can measure metrics like ad impressions or views and the number of visits to the conversion zone.

      Marketers can modify campaigns on the fly, changing content, offers, time frames, and the fence's configuration. They receive live information enabling them to optimize promos immediately.


    • Personalizing A Customer's Experience

      Successful personalization is an extension of gathering customer data and detailed customer insights. It makes it simpler for marketers to create personalized offers that speak to individual shoppers based on their actions.

      Retailers can quickly test offers to see which ones produce better engagement and sales in their location.


    • Build Brand Awareness

      When someone receives a notification from your store, it's an effective way to build brand awareness. The perimeter can extend a few blocks away from the store's physical location, generating interest and traffic from people who may have been unaware of that store's location.


  • Get Ahead of Your Competition

    Setting up a fence around a competitor is a timely way to introduce or reinforce the brand. If you are McDonald's, what better timing than to set up a geo-fence just before the nearest Wendy's? You can attract customers away from your competition with the right offer and timing.

    A study by Access revealed that 93.2% of all consumers travel 20 minutes or less to make everyday purchases. On a more granular level, surveyed shoppers said the maximum they are willing to drive is:

    • 6 minutes for gas
    • 8 minutes for groceries
    • 19 minutes for clothing
    • 17 for movies

Customers are willing to travel farther if you can offer a better deal.


Using Geo-Location to Reach Your Customers

Geo-fencing establishes a virtual perimeter around any predefined physical area. It's a highly targeted and effective marketing technique that enables marketers to send personalized messages at an appropriate place and time. With 80% of shoppers using their phones in-store to search and compare, it's an excellent opportunity to grab their attention. Did you know that 51% of customers discovered new companies or products directly from geofencing marketing?

It's highly successful, yet only about 22% of businesses utilize hyperlocal marketing. It's a great way to beat the competition in your local market.

Would you like to discover how location-based marketing plans can boost your sales and brand awareness? Leave a message here. Although implementing a location-based advertising campaign can be complex, it's well worth the investment.

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