What is Geofencing? Your Guide to Location-Based Marketing

What is Geofencing

Marketing is an ever-evolving field driven by strategy and technology. With millions and millions of users connected via the world wide web, the sky’s the limit for businesses – both established and new. 

While e-commerce businesses with an all-digital presence can leverage powerful tools, agile operational models, and digital marketing campaigns to grow, those with physical or ‘phygital’ presence have to innovate. 

By physical businesses, we mean brick-and-mortar stores, and a ‘phygital’ enterprise implies brick-mortar-store plus digital presence. 

For retailers operating physical storefronts, the footfall and number of customers walking into their store are crucial KPIs for growth. In the olden days, they had to rely on local advertising, hoarding banners, and even word-of-mouth to drive-in interested customers.

Such is not the case today. Brick-and-mortar retailers too can leverage powerful marketing technologies to drive more customers into their stores and boost sales. 

Many strategic marketing approach options for a branded retail storefront, from Phygital QR codes that capture and onboard anonymous customers to location-enabled contextual marketing. 

Geofencing is one such technology, and this blog will help you discover its value for your retail business. 

Let’s get going!

What is Geofencing?

It is an amazingly tactical strategy to drive in more store-visitors. Simply put, geofencing involves creating virtual perimeters in real-world locations to create an enclosed area. Whenever a customer interacts with this boundary (entry, exit, or stay), custom SMS/Emails can be triggered to engage them.

what-is-geofencing

Let us say you run a branded sports shoe store in the city. You’ve had hundreds of customers walk-in every day during the sales season, and now you have the database of all of them. 

These are the customers you would want to retain, and they will bring in most of the recurring revenue if you succeed. You set up a geofencing service (something similar to what is shown in the above schematic). 

You set the boundary radius of 5-miles, setup SMS templates that include an offer/incentive to visit your store, and wait…

Whenever your users enter or exit the boundary set around your store, they’ll receive the text message including the offer/incentive – and probably visit your store to buy another pair of awesome sports shoes. 

“However, it depends upon the active or passive alerts whether a customer opts-in to your geofencing service or not.” 

What are Active and Passive Geofencing Alerts?

Active alerts require users to opt-in to location-based services. Once they opt for location/geofencing services, users will receive a business message when they enter or exit the set virtual boundary.

Active alerts use either the Global Positioning System (GPS) or RFID technology to build virtual fences and trigger alerts. This is the reason why your audience must have their location services enabled to reach them via the active alerts.

On the other hand, Passive alerts are always on! These alerts rely on the users’ WiFi connection or cellular data network to send alerts when interacting with Geofence. If your smartphone location is turned on, passive alerts will continually work in the background.

Once you know the type of alert that would work best for your business case, you can decide on the campaign, the size of the fence, and the suitable triggers for your business.

Leveraging Geofencing for Marketing Applications

Geofencing gives retailers the freedom to use different alert types that can be triggered when interacting with the fence. 

For instance, retail store-fronts can trigger;

  • In-App Notifications
  • Text Messages
  • Social Media Ads

Most retailers prefer to trigger In-app notifications and Social Media ads because of the user’s familiarity with the brand, making them more likely to visit the store and shop.

Benefits of Location-Based Marketing

Of course, location-based marketing comes with benefits and values, unlike other modes of marketing. For retail businesses, specifically, Geofencing promotions yield the following benefits;

#1. Personalized Audience Engagement

Personalization is not just using ‘names’ and ‘fancy copies’ to persuade your audience. It is also about ‘Context.’ Location-based marketing scores higher on the user context than other approaches and yields better ROI for the businesses. Your users will see it as a ‘contextual engagement’ opportunity of value – and you’ll score the sale. 

#2. Boost Local Sales

Why woo the customers from long distances when you have a loving neighborhood? Geofencing is an excellent way to drive more sales from customers residing in your local area. Just engage them with a great offer when they are near your store, and build a loyal customer base.

#3. Supercharge Your Brand Awareness

Being known where your customers are is every brand’s goal. When you take advantage of geofencing marketing, you help build brand awareness for your company. You put your brand in front of your audience and get them to think about your business.

It’s a great way to remind your audience to choose your business over the competition.

Here is an overview of how real-world retail brands leverage Geofencing and reap the above-listed benefits.

Snapchat’s Location-Based Engagement

snapchat-geofencing-example

Ever sent a Snapchat with your location on? You might have seen the filters for a business, stickers, and more. Snapchat uses Geofencing technology to provide a location-based experience to its users and promote brands via their platform. 

Starbucks Location-Based Promo

starbucks-geofencing-example

Here is an example from Starbucks that uses geofencing to drive-in more customers into different stores. Customers receive discount notifications along with their favorite drink name – ah! The touch of personalization. 

Geofencing can be incredibly powerful for brands of all sizes that aim to drive-in more and more customers while retaining them for a longer CLTV. 

Your turn to drive-in locally targeted leads.

If you haven’t tried location-based marketing for your business, this is the right time to ride the wave. Choose from active or passive alerts, draft a suitable campaign and start delighting your customers whenever they come around your store.

Zaujan Baig

Zaujan Baig

Experienced digital marketer, currently working as an SEO specialist at Wigzo Technologies. In his free time, you can find him drawing cartoons.

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