Geofencing Marketing: The New Way to Market Your Business

What if you could market to your target audience while they’re shopping with your competitor? How about while they’re browsing your offline or online store? Or, even as they’re preparing to use your service?

While that seemed impossible decades ago, it’s now a reality for business owners.

With geofencing marketing, which is compatible with 92 percent of U.S. smartphones, you can reach your audience in new ways, boosting your profits to record levels. At WebFX, we specialize in geofencing marketing, and it shows — we’ve generated more than $1 billion in revenue for our clients.

Keep reading our handy mini-guide to get the scoop on this powerful marketing tool, which includes tons of examples to inspire you.

What is geofencing marketing?

Geofencing marketing is a type of location-based marketing that lets you connect with smartphone users in a designated geographic area, such as a store, through mobile apps or SMS text messages. As a location-based technology, geofencing relies on several technologies, including Wi-Fi, GPS, radio-frequency identification (RFID), and Bluetooth.

How does geofencing marketing work?

While geofencing marketing may seem complicated on the surface, it’s rather straightforward — especially when you have an experienced geofencing marketing company with decades of experience on your organization’s side.

To explain how it works, let’s look at an example.

Say you’re a fine-dining restaurant that also serves as a venue for events, such as company parties, weddings, and family reunions. You have some competitors within a few blocks of you, however, and want to get ahead.

With geofencing marketing, you can create a virtual fence around any geographic area you want. If anyone with a smartphone steps inside of your fence’s perimeter — or enters and leaves your perimeter — they’ll receive a notification on their phone.

The different ways you can use geofencing advertising

Keep in mind that you can place your fence almost anywhere. You can create one around your business, as well as around your competitor’s location. You could even place a geofence at the location of companies that often refer clients to you, such as a wedding gown boutique or consulting firm.

Your notification may contain a promotion, such as a discount on your booking rates, or an invitation to your location. If you set up a geofence at your competitor’s location, for instance, you could have a notification that invites couples to your venue for a free food sampling — after they exit your geofence.

If your company features a mobile app, you can also send notifications that way.

You can incorporate your email marketing subscriber list into your geofencing marketing efforts too — for reference, email marketing offers a $44 return on investment (ROI) for every $1 you invest. When users enter or exit your geofence, they’ll receive an email from your company.

The best part about geofencing marketing is that you can designate when you send alerts to consumers. If you tend to see more foot traffic during the afternoon on weekends, for example, you can set your notifications to appear in that time frame.

Who uses geofencing marketing?

Companies of all sizes and specialties use geofencing marketing. While it’s an excellent tool for businesses with brick-and-mortar locations, it’s also great for organizations that operate online. As a quick example, Taco Bell and the History Channel both used geofencing marketing with success.

We’ll do a deep-dive into both later, plus highlight a few other geofencing advertising examples!

Benefits of geofencing

Now that we understand what geofencing is and how it works, let’s look at five benefits of geofencing:

1.       MAXIMIZE CUSTOMER HAPPINESS

A statistic on user preferences for location-based alerts

A surprise for many business owners, as well as marketers, is that consumers want notifications from businesses. In fact, 80 percent of shoppers want to receive location-based alerts from companies, which is an excellent reason to use geofencing marketing.

Many consumers also use their phone while they’re on the go. Around 40 percent of shoppers use their mobile devices to find information, while another 60 percent search for information in their area — such as venues for company parties.

2.       BOOST LOCAL AND ONLINE SALES

Why do people want location-based alerts? Because a lot of businesses use them to offer the following:

  • Purchase incentives
  • Shopper rewards
  • Promotional notifications

In most instances of geofencing, consumers are only four to five minutes away from your location. It’s convenient for them to stop at your restaurant for a quick dessert or your shop for a quote on new flooring. Plus, you’re offering a temporary discount that can help them save on their purchase.

That’s why more than 50 percent of shoppers visit businesses after receiving a location-based alert.

3.       INCREASE SHOPPER LOYALTY

The cost of earning a new customer and retaining one

It costs ten times more to earn a new customer than to retain an existing customer. That’s why building shopper loyalty is so critical in today’s market. Geofencing marketing can help your company do that — and without offering promotions or discounts every time.

Instead, users talk about what your company did better than your competitor. Why?

You shared a relevant, non-spammy promotion. Then, you followed it up with an amazing customer experience and product. So, why wouldn’t they shop with you again or share your name with family and friends?

4.       OPTIMIZE DATA AND ANALYTICS

A core part of geofencing marketing is analytics. It runs on data, which gives your marketing team or marketing provider actionable information for your next campaign. Geofencing also provides your team that data in real-time.

Some factors you can measure include:

  • How long a shopper stayed
  • How much a shopper spent
  • How often a shopper visited

Another benefit of geofencing marketing is that you can modify your campaigns on the go. If you notice users aren’t responding to your promotions, for instance, you can investigate what’s not working in your campaign. Maybe you’re targeting the wrong area or timeframe, for example.

5.       IMPROVE USER ENGAGEMENT

Based on your gathered data, you can improve your campaigns and boost your user engagement rates. In short, you’re refining your audience to drive better results. To do that, you may invest in A/B testing, which sees you deliver two notifications, but with minor differences.

Instead of advertising a free food sample for people that request a quote for a group booking, for example, you may offer a $50 meal voucher. Then, you’ll analyze the response rate, as well as the leads generated, of the two geofencing ads.

With your new data, you can refine your ads even more to boost your target audience’s engagement.

Strategies for geofencing marketing

How can you bring the benefits of geofencing marketing to your business?

By keeping these seven strategies for geofencing marketing in mind:

1.       MAKE YOUR GEOFENCE SMALL

The ideal distance for a geofence from your location

Companies get excited about geofencing — and, in some cases, too excited. That can lead to oversized geofences, which won’t drive results. If you have a competitor that’s a 30-minute drive from your store, for example, it’s unlikely that consumers will make a trip to your store that same day.

That’s why you want to create small, compact perimeters. The general rule of geofencing advertising is that your targeted area, or fenced-in area, is only a four-to-five minute walking distance from your store. In some cases, you may increase that to a four- or five-minute drive.

Remember, you want to make it convenient for users to visit you.

2.       RESEARCH YOUR TARGET AUDIENCE

Your target audience is essential to geofencing marketing. If you understand who your audience is, as well as what they want, you can create a target area that’ll drive results. Plus, you can develop notifications that will engage shoppers and encourage them to purchase.

If you’re unsure of who makes up your target audience — or are revamping your target audience — look at the data you already have available. If you’re active on social media, for example, interact with your customers and see what they’re saying about your business, services, or products.

3.       MAKE YOUR NOTIFICATION ACTIONABLE

The best practices for creating geofencing notifications

Which is more actionable — “Buy an entrée and get one free, today only!” or “Come in for our dinner special!” Sure, you’re inviting users with each, but you’re much more specific and to-the-point in the first call-to-action (CTA).

It’s also worth noting that you should develop notifications that aren’t spammy or self-serving. If you’re promoting a new product, for example, invite users to try it versus telling them to buy it. With this approach, you’re guiding them through the buying funnel in a natural way.

4.       REVIEW YOUR DATA ON A ROUTINE BASIS

Optimize the success of your geofencing marketing campaign, as well as your other digital marketing efforts, by reviewing your data on a routine basis. Otherwise, you won’t know how your campaign’s faring.

If analytics is uncharted territory for you, you can always partner with a geofencing marketing company.

With technology like MarketingCloudFX, you can also review your ROI from geofencing. If a user visits your website after receiving a notification but calls later to place their order, for example, you can see it in MarketingCloudFX.

5.       KEEP YOUR MESSAGES BRIEF

While shoppers are active on their smartphones, they may not pay attention to your notifications. Users tend to skim materials too, so you want to optimize the time that you have their attention. That’s why you want to keep your notification or message brief.

If users only pull out their phone to check their notifications, versus unlocking their phone to see your full message, they may miss out on what you’re offering. With the earlier example, shoppers know you’re offering a two-for-one entrée special that day — they don’t even have to unlock their phones.

That’s why you want to create notifications that are brief, actionable, and worth your audience’s time.

Encourage users to open their phones while visiting your store too. For your restaurant, for example, you could ask users to share a picture of their meal with a designated hashtag for the chance to win a free dinner.

That gets them to open their phone and see your entire geofencing message.

6.       OPTIMIZE YOUR USER DATA

The different options for creating a target audience for geofencing

Depending on the size and age of your business, you probably have an archive of user data. Whether that’s through your email subscriber list, loyalty reward member list, or client testimonials. Use that data to your advantage in refining your target audience for geofencing marketing.

Make sure, however, that you’re transparent in any data you gather. For companies with mobile apps, for example, it’s critical to include a Terms of Use that states you may access their data to improve service.

App developers should also incorporate a pop-up request that asks for permission to access a user’s location.

7.       USE ALL YOUR TARGETING TECHNIQUES

In geofencing marketing, you can use several outside marketing techniques, including:

  • Context targeting: A targeting option that shows an ad that’s relevant to the content on the page, such as an ad beside a news article about local restaurants.
  • Content targeting: A targeting tool that targets keywords used in searches, as well as the intention of those keywords. If you have content for the keyword, “restaurants with private dining areas,” you’d ensure the content discusses your private dining area and options.
  • Retargeting: A targeting strategy for marketing that shows an ad to users that have viewed a product on your website, such as after visiting your storefront.
  • Dayparting: A targeting technique that targets users at certain times of day, better known as ad scheduling. If you have a target audience that’s active on the weekdays, for instance, you may only run your promotions Monday through Friday.

Like many digital marketing tools, geofencing marketing will support and complement your digital marketing strategy. It’ll inform your team, for example, about when your target audience is active, as well as how to market to them after a store visit.

Geofencing marketing examples

Ready for a few geofencing marketing examples to inspire your campaign? Here are five to start:

1.       HOW NORTH FACE BOOSTED SALES

An outdoor apparel company, North Face discovered that weather-related alerts via geofencing could push their company’s sales forward. In fact, in-store sales increased by almost 80 percent from shoppers that received its notifications.

Even better, 65 percent of those customers bought a product.

2.       HOW BMW MADE GEOFENCING A SERVICE

Many companies focus on geofencing as a marketing tool — and BMW did too — but as a unique selling point. How? With their BMW Trackstar and BMW Trackstar Advance services, which track the position of your vehicle to ensure its security.

If your vehicle moves without your car keys, BMW notifies you.

For BMW, the decision to bring geofencing into its marketing and business plan worked. The service not only offers an advantage to consumers but also offers a continued source of revenue for the company. BMW Trackstar and BMW Trackstar Advance have an annual subscription fee.

3.       HOW TACO BELL AMPLIFIED ANNUAL SALES

Taco Bell, a fast-food giant for Mexican dishes, leveraged its mobile app for geofencing advertising. The marketing team at Taco Bell wanted to target users under the age of 30 that had enabled push notifications for the Taco Bell app.

The goal? For users to say, “Yo quiero Taco Bell.”

By creating well-defined geofences in areas near Taco Bell locations, the team improved the company’s annual profits by six percent. For reference, the company recently posted $10 billion in annual sales — that means the campaign generated close to $600 million in additional profits.

4.       HOW THE HISTORY CHANNEL RAISED BRAND AWARENESS

The History Channel, a television network for all-things history, improved awareness for its brand by partnering with Foursquare, a mobile app for finding local restaurants, entertainment, museums, and more.

If users opted to check-in to a historical location, such as the White House, they’d see additional information on the location. For the White House, for example, they may see an overview of its construction dates, as well as notable historical events.

While the companies didn’t release numbers on the campaign, industry insiders view it as a success.

5.       HOW AMERICAN EAGLE INCREASED IN-STORE PURCHASES

American Eagle, an apparel company, also found success with geofencing marketing. It focused on targeting mall locations, which often house American Eagle stores. The company also wanted to persuade its competitors’ customers to choose American Eagle.

By sending notifications with special offers, as well as incentives for trying on clothes, the company accomplished its goals. In fact, its in-store sales increased three times over, generating new revenue for the business.

Want to learn how to start a geofencing marketing strategy?

Join our newsletter at the top and we’ll deliver tips and tricks for creating a geofencing marketing strategy that delivers real results!