What is geofencing?
- Active alert – For this kind of alert to work, a customer must choose to opt-in to your location. Once they opt-in they will receive a message from you, if their mobile applications are on and they pass the perimeter. This kind of alert utilizes Global Positioning System (GPS) or radio frequency identification (RFID) to set up the alerts. However, one of the reasons Active alert tends to be less effective or accurate is because it can only function if the customer has turned on their location service.
- Passive alert – Unlike active alert, passive alert does not depend on the customer’s will to opt-in. Instead they are always on as they rely on the customer using any network such as WiFi or Mobile Data to send them alerts the moment they enter the perimeter. They do not use GPS positioning and are primarily designed to be uninterrupted. Passive alerts can function in the background even when only the Mobile Data is on and the customer isn’t interacting with their device.
What are the marketing applications of geofencing?
There are several applications for geofencing but to utilize them in their maximum capacity, you might have to limit your boundary. Geofencing works best when you are targeting within a narrower boundary as that helps create a well-defined, tightly knit customer base. Once you are able to narrow your perimeter, here are some ways you can benefit from geofencing:
- Target the right kind of customer
It is true that it is better to retain your customers than to try and obtain new ones. Geofencing helps you do that without the hassle of pushing a promotion or an advertisement each time. Instead it targets customers within a limited boundary and this way you can share relevant messaging at the right time followed by better service for your customers. Since geofencing functions as a virtual barrier, you can reach your customers right on their mobile devices. As people are spending more time on their mobile devices, it gives you the opportunity to put your products directly into the hands of your customers.
- Build local marketing campaigns
Since you are trying to retain your customers and build a loyal customer base, geofencing provides you with the perfect solution to build a stronger local marketing campaign. When you target the local market, you can increase your conversion rate. According to a survey done by Reveal Mobile, audiences targeted through geofencing take action on ads at an average of 7.53% as compared to ads pushed on social media which is at 0.90%.
As you are keeping your boundary limited you can also engage better with your customer to understand what actually works locally. Maybe that will help you make more personalized messages or push a product line that is more suitable for that local market.
Get a Competitive advantage
One of the primary advantages of geofencing is that it not only creates a virtual fence around the location of interest but also points out where your potential customers might be. Geofencing can be used to pull in customers away from competitors by creating a boundary around other shops and attracting customers through targeted ads.
- For example, Starbucks uses geofencing to attract customers within the area. Even if the customer is at a competitive store, such as Dunkin Donuts or Lavazza, which are located close within the geofenced area, they will receive a notification. It can be about an offer or a specific personalized message about a promotion on the customer’s usual drink. Sometimes, depending on the time of the day, Starbucks will also push happy hours which means customers will flock to their store rather than going to Dunkin Donuts or Lavazza.
- Collect Data insights Geofencing provides a gamut of information that can be helpful when you are trying to understand your customers’ experience. It gives you access to valuable insights such as traffic patterns, stay durations, and messaging effectiveness. You can collect this information, along with other online activities such as web browsing behaviors, to improve your user experience and increase engagement.
- Personalize your customers’ ad experience When it comes to marketing, one size fits all often does not work. Consumers are more interested to see advertisements that are relevant to their needs, for example if a consumer frequently visits a pet store it could mean that he/she has a pet and might be interested in pet-related products. Geofencing marketing strategy helps you not only to target customers according to your desired demography but also reach out to customers who are within your area of interest.