Location Based Marketing with Geofencing

In a report by Markets and Markets, it is predicted that location-based services will boom to $39 billion by 2020. In a world where, about 30% of the population is using location based marketing and about 80% of the population within a network coverage, Geofencing is a targeted marketing technique that cannot be ignored for any scale of business.

Have you ever noticed, when you pass a particular store on the street and you happen to have its app installed on your smartphone, you get at least one push notification about discounts or offers? This type of targeted marketing happens because of Geofencing.

Walmart uses the technique of geofenced marketing extensively.

What is Geofencing?

Geofencing is a marketing technique that targets users based on specific geographic area. In simpler words, Geofencing is a technique where you select an area on the map, and when a user passes or enters that area, you can target them by giving push notifications to increase your business.

Geofencing depends on the use of technologies like RFID (Radio Frequency Identification) and GPS (Global Positioning System) to create a virtual area or a perimeter around an actual physical geographic area. With this type of targeted location based advertisement a business store can steer away the customer from competitors who are not using this technique, just by following the simple mantra of, ‘Right offer at the right time AND location’. Let me explain this to you by an example.

Suppose you are in a market where there are two eating joints, A and B. Eating Joint A has used geofencing to increase customer base and store B simply doesn’t use this technique. Now you pass by these joints, and happen to have the mobile app of both the joints, but you get 20% discount coupon message from Joint A. Where will you go? (Off course, your food preferences are a vital parameter here but let’s assume they offer the same food and taste.)

That’s how location based advertising and marketing works with the help of geofencing.

Not only this, notification sent can be customized according to the customer type also. This can vary by their purchase history, loyalty points, and frequency of visits. All this is done after analyzing the user records either by app data or personal customer database.

The depth and dynamics added to the analytics by geofencing is amazing. It help the companies to a great extent when they have the behavior model of customers ALONG with their location. They can see whether it is making a difference to the sales or not, their time spent in the store, purchase summary, did the new window mannequin work or not, etc. This data again is collected and proves another level to the analytics model of a company or a store, which leads to decisions that may boost the sales.

Like any technology has its pros and cons, Geofencing has its own. Like Geofencing is not much accurate and pin pointed as iBeacon (will talk about it in coming posts) which uses Bluetooth. So you can get only an idea that a target customer was here and a notification is sent, which again, may or may not be received by the customer when he was actually in that area.

Also, Geofencing will only work if the user provides the required permissions otherwise it will simply not work (remember those pesky app permissions that you always ignore.). Since location and permission for notifications is a must for this to work, no location access, no notification, no geofencing. Clear and cut.

Conclusion

I would say that, geofencing is a great technique to attract customers and increase you market base, it has a long way to go (in tech world we all know a long way is merely 2 years). Not to forget, in how various applications and aspects it can be used besides targeted advertising. That is a debatable topic which will surely be debated in the coming posts.

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