What Is Geofencing (and How Can It Benefit Your Business)?

To succeed in business, it’s important to stay abreast of the latest trends. Often that means adjusting your practices to keep up with the latest industry developments, so that you don’t fall behind your competitors.

One example is accepting mobile payments. Another is knowing how to use “geofencing” in your marketing efforts.

What Is Geofencing?

Geofencing is essentially the 21st-century answer to direct mail. However, instead of blanketing a given ZIP code with coupons, you target only shoppers who actually enter your target zone.

Geofencing establishes a virtual perimeter around a real-world site, such as delineating the square mile of residential neighborhoods surrounding a retail storefront. When someone carrying a smartphone or tablet enters the designated area, their enabled device sends out geolocation data that establishes their whereabouts.

The technology has many potential uses. From a marketing standpoint, geofencing lets you target customers within a specified area and thus maximize your return on investment. Because geolocation tracks people’s actual locations at any given moment, you have the ability to identify where your potential customers are in real time — and tailor your marketing messages accordingly.

How Does Modern Geofencing Work?

Customers must opt-in to geofencing. That is, they must actively consent to having their digital devices geolocated by your business. Early experimentation with this method of geofencing has shown positive results.

During the 2012 holiday season, shoppers were given a chance to opt-in to a promotion at an Ohio mall. Those who did received SMS text messages on their smartphones whenever they were physically nearby. Almost two out of every five participants reported that their shopping habits were influenced by this geofencing initiative.

How Do You Use Geofencing Effectively?

Geofencing is most effective when it is done a certain way. Practically speaking, it’s unwise to send a promotional text every time a digital device moves within an established geofence; this could potentially flood customers with marketing messages and become an annoyance rather than welcome advisory or offer.

Instead, use geofencing as one tactic in a well-planned marketing campaign. For instance, a cantina might issue a text every other Friday afternoon to customers within a geofence that invites them to “start the weekend right” with two-for-one margaritas.

If you generate enough interest and pick your spots wisely, you could assemble a geofencing promotion that increases repeat business, strengthens customer loyalty, and boosts your business’s bottom line.

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