Last Updated on October 13, 2018
Chances are you’ve at least heard the term “geofencing” regarding marketing your business. But do you know what it is, and how it can actually help you attract more customers, increase engagement, and most importantly, drive more sales?
At the risk of oversimplifying, geofencing is placing a virtual fence around a defined geographic area. There are several different applications for geofencing. For instance, some organizations use it to create more secure networks within their buildings; the geofence prevents visitors from accessing the company network or specific applications without authorization. Geofencing is also growing in popularity in smart home design. Using the technology, a homeowner can program the garage door to automatically open when a beacon detects his or her vehicle reaches a certain point on the street.
By far the most common application for geofencing is marketing, though.
How Geofencing Works
Imagine that you’re out on the town, and want to grab a bit to eat. You head toward your favorite burger joint, but as you are walking down the street, you suddenly receive an alert on your phone from your favorite dining app: For the next two hours, entrees are buy one, get one free at the Italian restaurant on the corner. You decide you’re in the mood for pasta, and enjoy a fabulous meal that you otherwise wouldn’t have considered.
In this case, the Italian restaurant used geofencing to attract customers in the area. There are several different ways you can put the technology to work. You can geofence your specific business, sending messages to existing customers about specials or other news. You can set the perimeter wider – or even around a competitor’s location – to drive business to your location. You can also set the geofence for related businesses; for instance, if you own a party store, you could geofence nearby popular event locations to let people who are planning parties about your specials on decorations.
The catch, of course, is that to receive your messages, individuals must opt in by downloading your app and agreeing to push notifications. And because many users disable location services on their devices for privacy reasons – or will delete an app if it uses too much battery, a common problem with GPS – you need to have a plan for how you will reach as many people as possible with your geofencing efforts.
The Benefits of Geofencing
If you can overcome those challenges, geofencing is a proven method of growing your business. Consider these facts:
- Geofencing has been shown to increase app usage by 200 percent
- 70 percent of consumers think that geofencing is valuable
- 53 percent of consumers are likely to engage with an app due to a geofenced message
- Geofencing allows businesses to create their own marketing channels, saving money while still reaching their target audience
Best of all, geofencing is relatively simple to do. In fact, the technology is already built into iOS and Android platforms, and your app developers can implement easy-to-use tools so you can set up multiple fences for maximum benefits.
The Difference Between Geofencing and Beacons
While geofencing shares some similarities with beacons, they are actually quite different.
Geofencing relies on GPS and RFID to send messages to individuals in a specific geographic area. This is what allows your coffee shop, for example, to send a message to people who are within a few blocks of the local Starbucks offering a discount on their morning brew.
Beacons, on the other hand, are even more focused. They are small Bluetooth-enabled devices that can be placed at various locations around your business, and use sensors to detect the presence of an app-enabled smartphone nearby. When the beacon senses the app, it will send a push message to the user; for instance, a beacon by the door might send a greeting when the customer enters the store, while another beacon near the register will offer a discount code.
It’s relatively simple to set up a beacon-based marketing campaign. Beacon units, which are essentially sensors equipped with microprocessors and memory to process and distribute the messages, generally cost less than $20. You do need to invest in software to distribute the messages, but the overall ROI on beacon market tends to be high.
The average consumer receives anywhere from 3,000 to 5,000 advertising messages every day. Geofencing ensures that your messages aren’t lost in the shuffle and reach consumers when they are most likely to be ready to act. So, whether you want to drive traffic to your shop, build sales, or just let people know you are there when they need you, geofencing is a viable option.