Updated: Jul 28, 2022
The world of Marketing is swiftly changing. While flyers still fill our mailboxes and commercials rule the airwaves, companies have found new and innovative ways to sell their products that move beyond the traditional. One thing that has not changed is a single truth, the importance of location. In fact, By the end of 2022, marketing spending on mobile location-based marketing is estimated to top $38 billion.
One way marketers are using location to their advantage is through geofencing. Geofencing is the use of GPS or RFID technology to establish a virtual geographic border, allowing software to respond when a mobile device enters or exits a certain region. Depending on how a geofence is set up, it can trigger mobile push notifications, SMS messages or alerts, send targeted social media advertising, track vehicle fleets, deactivate particular technologies, or offer location-based marketing data.
For instance, if a customer is near a coffee shop using geofencing, a notification may appear on their phone saying buy one latte and get another 50% off. Another real-world example occurred in December of 2018. Burger King placed geofences around their competitor, McDonald's. When customers came within 600 feet of any McDonald’s they would receive a notification from the Burger King Mobile app. The app offered a whopper for $0.01 and gave directions to the nearest Burger King location. Within a few days of its inception, the "Whopper Detour" campaign had more than 1 million app downloads, and it eventually had 1.5 million downloads. The promotion sent Burger King's app to the top of Apple's App Store for several days in a row.
Geofences can also be flexible and dynamic, thus they can vary, decrease, or increase activity based on the user-defined criteria. For example, if you are utilizing geofencing to draw people to your restaurant, you may target individuals who are close to the location during peak hours. Then, during downtimes, you can extend the range of your geofence.
How Geofences are Made
Geofencing is all about the two Gs, geography and geometry. Geofences may be created in three ways using these two sciences.
The first method uses a radius centered on an object's centroid. This entails determining the center point of a structure or property and then computing a distance away from that point (i.e., a radius) in each direction. This generates a generic proximity zone that will transmit advertisements anytime someone with a mobile device comes within a certain distance of an area of interest. An example of this would be the “Whopper Detour” campaign discussed earlier.
The second way is to employ an isochrone, which is a walk or driving time. This comprises calculating the time necessary to go to a certain point from another location using available transportation. A company may then send out adverts just to those who can visit their business location during a specific time window. It is determined by the ease of transit rather than the actual distance. If you’ve ever used Google Maps, then you know that you can calculate estimated travel times at any given time of day. So, for example, a geofencing marketing campaign would send an ad to anyone with the restaurant app who could arrive within 10 min to eat lunch on a Saturday rather than anyone within 10 miles of the restaurant.
The final example involves building footprints. This approach uses measured polygons to depict the precise physical boundaries of a location of interest, which may be a complete building, a park, or a retail unit in a mall. Then a company may send alerts only to those who have physically entered the facility or property. For example, if you just entered the mall, you may receive a coupon for a pretzel. You would not however receive that coupon if you were in the parking lot or across the street.
Benefits of Using Geofencing
Build Brand Loyalty
A business's chances of selling to an existing customer range from sixty to seventy percent. This means that creating a sense of brand loyalty is not only profitable but essential to a business's success. It has also been shown that reducing your customer attrition rate by just five percent can boost profits by twenty-five to ninety-five percent.
In addition to redirecting foot traffic to your business, geofencing can also allow you to track how often someone comes into your business using their mobile device. If you observe a consumer returning to your shop frequently, you may thank them with unique coupons or discounts. This can create recurring client loyalty by demonstrating your gratitude for their business and giving a level of personalization that your rivals may not. Conversely, if you have customers who have not visited your establishment in some time, you can send coupons to entice them to stop by.
Increase Brand Awareness
No matter if you are new to the industry or just new to the area, it is important to get your brand name out there. The brand customers don’t know is the brand they don’t use. The same is true for stores. If it's not a store someone frequents or a store they are looking for, people usually pass that store by. Geofencing can change that by delivering SMS messages from the store when they are nearby. These messages will then generate curiosity which in turn will generate foot traffic.
Gather Data in Real-Time
Data drives the machine that is the world of modern business. The faster and more accurate data comes in, the quicker savvy companies can act as needed. Traditional paper coupons and media advertisements are great but gathering data about their effectiveness in bringing in and maintaining customers have always been difficult. Not so with geofencing!
When using location data to target, the same technology may be used to determine if devices visit a retail store after receiving any type of advertising. This means that you can extrapolate the data of shoppers who came in after just passing by from those who came in after seeing a geofenced-based advertisement. Thus, you can immediately see the effectiveness of your campaign.