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Geofencing as a Marketing Tactic

June 21, 2016 No Comments

Featured article by Nate Vickery, Independent Technology Author

geofencing

Geofencing drastically changed marketing of location-based businesses. This concept uses Global Positioning System (GPS) and Radio Frequency Identification (RFID) to mark geographical boundaries and target consumers within them.

In recent years almost all advertising is done online. Digital marketing practices drastically improved promotion techniques, but location-based targeting is still not precise enough to target consumers, who are in close proximity of a certain venue. Before geofencing marketers and entrepreneurs used banners, signs and leaflets for this purpose, but now they can finally move to more subtle and efficient ways of promotion. In this article we are going to demystify geofencing and explain its benefits and disadvantages.

How geofencing works?

Business enterprises that want to add geofencing to their marketing strategy need to develop an app that will establish a virtual fence around predefined geographical area. In most cases it is the area around their venue. The moment an app user enters this area he/she receives push-notification that contains an appealing offer.

Benefits and disadvantages of geofencing

Geofencing can bring many different benefits to small business marketing models. It enables businesses to serve great offers, at the best possible time, which is exactly when potential customer is passing next to the store. Geofencing campaigns also provide plenty of data, for marketers to play with. Major benefits that this concept brings, include:

– Improved user experience– because consumers will be served with best offers and deals at a given moment;

– Building strong relationships with individuals– geofencing opens new communication channels between companies and consumers;

– Gaining location-based customer data– geofencing marketing campaigns generate tones of useful consumer data.

Same as other marketing concepts, geofencing comes with a few disadvantages. Many of these disadvantages are driven from the lack of independence of geofencing marketing models. It requires companies to develop apps, and promote them to customers, before they even start their geofencing marketing campaign. Major disadvantages of this marketing concept include:

– Customer approval requirement– consumers need to download the app to see promotional messages;

– Strict geographic limitations– it can only target consumers in areas around business venues;

– Dependence on consumers’ smart phones– geofencing can overload phone’s OS and battery. .

Geofencing and BI synergy

Many businesses use this technology to gather large amounts of customer data. They combine geofencing technology with some advanced business intelligence software and structure and analyze consumers’ movements. This type of data is very useful for location-based businesses. Insights we can draw from geofencing marketing campaigns enable us to better understand consumers’ buying capacity, motivation and habits.

Common mistakes

Many entrepreneurs tend to overuse this marketing concept in order to engage more customers. Use of geo-fencing in marketing needs to be strictly contextual. Sending frequent notifications, without valuable offers can drive away your customers and make them to turn off or uninstall the app.

Companies also need to be very specific when they promote geofencing apps. They should clearly state the fact that it is enabling them to view consumer’s location. They should also have strict privacy policy and use consumers’ location data only for analytic purposes.

Prominent examples

There are many great examples how small businesses can use geo-fencing to increase their sales. Bars and restaurants can notify passers that their happy hour is on, and real estate agencies can send notifications about open houses in a certain area. This technology is already put in use by some of the biggest corporate enterprises, and wider acceptance of geofencing among small business entrepreneurs is yet to come. Some real-life examples of geofencing used from corporate world, include:

– Vouchercloud– UK program that serves free vouchers to consumers who are located 200 meters from a participating store.

– Walmart App– delivers coupons and e-receipts and notifies customers about major discounts.

– Starbucks– this app is not available yet, but Starbucks currently plans to introduce order ahead service that will be based on geofencing technology.

Geofencing technology is also used in many other niches. Many businesses that run fleet vehicles use it for communication and coordination. This type of technology is also very valuable for alerting passers about potential danger that is waiting ahead and it waits to be discovered by government institutions. With all this in mind we can conclude that location based marketing is currently surviving its Renaissance, and it is all thanks to this advanced technology concept.

 

 

 

 

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