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How to Improve Sales Promotions with Geofencing?

Kate Banasik
Kate Banasik
September 29, 2021
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How to Improve Sales Promotions with Geofencing?

Here is a list of topics that I will cover in this post:

  • What is geofencing and how does it differ from geotargeting?
  • How to incorporate geofencing into your marketing strategies?
  • Not-so-obvious benefits of geofencing.
  • Best practices of geofencing and where to place them?
  • Ideas for location-based sales promotions.
  • Real-life examples of geolocation campaigns.
  • How to use geofencing in Voucherify?


I can't wait to discuss these topics with you, so let's jump right in.

What is geofencing?

Geofencing is using radio frequency identification (RFID) or GPS technology to create a geographic fence or perimeter to target your audience. It has been used as part of marketing strategy in the past couple of years. By using location-based technology, businesses can connect with customers as they enter or leave a designated geographic area. The location is currently mostly tracked on smartphone devices and the users need to have the store’s or a partner app installed with tracking allowed. Location-based communications are usually done via smartphone devices as well.  

Geofencing verus geotargeting

Geotargeting is very similar to geofencing. Geotargeting targets users or devices based on their desktop location, while geofencing targets users or devices (usually smartphones) based on a given virtual perimeter.

How does geofencing work in marketing campaigns?

As I said, geofencing is used commonly for targeting marketing efforts. A virtual geofence is created around a specific location which the business wants to target. This can be anything, from the business’ own store, competitor’s store, to a high-traffic area or event location. When people enter the geo-fenced location during a specific timeframe, they will become a part of the targeted audience. The business then can send them messages, reminders, relevant information, or promotional incentives via any channel (usually mobile devices).

Why should you use geofencing in your marketing strategy? 

Better targeting

Geofencing lets you target a specific audience at specific times, which allows you to market to potential customers and not waste ad spend on general audiences, which is a smarter way to use ad spend and deliver advertising.

Personalized customer experience

Thanks to targeting very narrow customer segments, you can customize your messaging based on the demographics and geographical area you are targeting.

More efficient marketing campaigns

Thanks to better targeting, you get higher conversion rates, save the marketing budget as you do not target the wrong customers and, in turn, have a higher ROI from your campaigns. 

Bringing in new customers 

Geofencing can help you reach new audiences, many you could have not thought about because they are in locations near your store but maybe they are not your main target audience. 

Competitive advantage

You can put your geofence around your competitors’ locations and lure their customers away. This approach is called geo-conquesting. It increases brand awareness, when customers are about to buy from your competitor.

Increased customers loyalty

You can build customer loyalty thanks to highly personalized, targeted communications, if you are not too spammy. 

Geofencing allows for tracking the shoppers’ past behavior and equipped with that data, marketers can send appropriate notifications to the user in the form of a discount, loyalty program, exclusive member-only sales, and games to bring repeat purchases. 

Getting more customer feedback and referrals

Thanks to geofencing, you can reach out to your customers who have left the geofenced location asking them to fill a feedback form and get more insights about their experience or asking them for a review of your business. As you can reach out to your customers with a personalized thank you note once they leave the geofence around your store, you can also send them an incentive to refer your business. As the memory is fresh in their minds (and hopefully positive) it is easier to ask them right on the spot than later on. 

Geofencing marketing statistics 

The following are some of the most interesting statistics about geofencing marketing for 2021:

  • Location-based mobile advertising is predicted to increase to $38.7 billion by 2022.
  • Mobile ads with geofencing have double the click-through rate versus standard mobile ads.
  • Geofencing is compatible with 92% of smartphones.
  • 53% of shoppers visited a retailer after receiving a location-based message.

Best practices of geofencing marketing

There are a couple of things to watch out for when planning your geofencing campaign.

Do not spam your customers 

You should not send too many messages to your customers or flood them with irrelevant information. Choose whom and when you want to send messages to and plan for them to be rather sporadic than regular. If not customers may mute your app notifications or turn their location sharing off if you spam them. 

Ensure you have all necessary permissions to track users’ location 

Make sure you got the users’ permission to track their location and that the way you use geolocation is legal in your country/state of operation. Before using geofencing, it is best to inform app users about tapping into their geographical data and making use of it for sending out deals and promotions. The intent and purpose of the usage of this data should also be explicitly stated, in case there are grievances regarding data usage by third-party apps. 

GPS accuracy

The location is the crux of any geofencing marketing campaign. For a successful geolocation campaign, you need to make sure the data you collect is accurate or that you have set up a larger geofence, keeping in mind the possible inaccuracies. 

Combine geofencing with other tactics 

Make sure you combine geofencing marketing with other marketing strategies for best results. For example, you could combine offer personalization, marketing psychology, real-time marketing and geofencing to deliver a highly personalized offer to your customers. For example, send a message on Valentine’s Day to all men who have bought flowers in your store with a $5 gift card (using Endowment Effect) on all flowers, available only today, targeting men in a 500m radius of your store. 

Keep your geofences small 

If you use geofencing in your marketing strategy, the general rule is to keep your geofencing to a four- or five-minute travel radius (walking or driving). Source: smartbugmedia.com Keeping your geofence small means more precisely targeted marketing. When you connect with a local audience on a personal level, you inherently boost your brand’s image with potential customers. When consumers know your brand is in touch with their local lifestyle, community, and topics relevant to the area, you create a stronger impression that increases the chances of that customer returning to do business with you in the future.

Where to set up geofences? 

Geofencing marketing strategy can be implemented in almost every place. There are a couple of location ideas you can keep in mind when planning your strategy: 

Places that are associated with the products or services you offer

Is there a place that potential customers are likely to visit for the same reason that they may need your product or service?

One example can be competitor’s stores. Another can be some (non-competing) products or services that you know your customers use. For example, if you own a hairdresser salon, you could target customers who are going to a spa or a mani-pedi close by. 

Locations that your target audience may frequent

You do not need to focus necessarily on similar or competitive products or services. Think of where your target audience goes. For example, if you are targeting mums, you could set up geofences around playgrounds. 

Events that your target audience may attend

Events are a great way to capture a large audience in a short amount of time. By choosing events that are of particular interest to your target market, you increase your chances of seeing conversions.

For example, if you sell sports sneakers, you could target people who are participating in sports events (matches, tournaments, races, etc.). Both participants and viewers, basically anyone who happens to be in the area at the time of the event. 

Places where your products are sold

This one is an obvious choice. It can be your physical store, stores of your retailers or events where your products are sold. 

Which campaigns can you use geofencing in? 

You can use geofencing to improve your content personalization or customer experience. You can also use it as part of your product (for example, Honeywell air conditioning switches on once someone enters the geofence in the room). A great marketing tool is using sales promotions in geofence-targeted campaigns. 

Here are a couple of examples of geotargeted sales promotions by promotion type: 

  • Geotargeted auto-applied promotion – apply a 10% discount to all customers who are within your geofence, attending a football match. Valid for all your sports clothing and shoes collection, only on the day of the event, for purchases made online, in your official e-store. 
  • Geotargeted discount coupon campaign – send a discount coupon via SMS for -$10 to all customers within 100m from your store, only on Black Friday. Minimum purchase value $50. Limited to once per customer. 
  • Geotargeted referral campaign – send a thank-you email to all customers leaving your geofence that is set around your store. Include a call to action requesting a referral, mentioning each successful referral gets a $10 gift card. 
  • Geotargeted loyalty program campaign – send a push notification promoting your loyalty program to all customers entering your geofence (around your store). Make a special incentive – everyone who joins today gets +200 loyalty points. 

You can find more examples and inspirations in our Inspirations Library

Real-life geofencing campaigns inspirations 

Here are a couple of real-life examples of geofencing campaigns from the biggest market players: 

Whole Foods 

Whole Foods created geofences around every store location. When customers entered these geofences, they automatically received alerts and promotional offers to entice them to visit the nearest Whole Foods location. They have also created geofences around local competitors. . When potential customers visited those places, they received offers from Whole Foods designed to take them away from the competitors’ stores and to visit Whole Foods instead.

Results

Whole Foods’ geofencing and geo-conquest campaign allowed them to reach a nearly 4.7% post-click conversion rate (as compared to the national average of 1.4%). Source​​

Wholefoods geofencing campaign

Burger King 

Another example of a geo-conquesting strategy comes from Burger King. Burger King launched the Whopper Detour campaign, which started with erecting 600-foot geofences around McDonald’s locations. Burger King then encouraged their followers on social media channels to go to McDonald’s. As soon as a customer who had downloaded the Burger King app crossed into one of the geofences around a local McDonald’s, the app would send an offer for a one-cent Whopper from the closest Burger King. This prompted many customers to take “Whopper Detours” and abandon their plans to go to McDonald’s. Source

Results: 

More than 1.5 million downloads of the Burger King app, which moved it in the Apple App Store’s Food and Drink category from ninth place to first place. 

Whooper Detour campaigns from Burger King

John Hopkins 

Johns Hopkins All Children’s Hospital used geofencing marketing in a recruitment campaign. They have targeted people who lived or worked nearby, using geofences around their hospital. The hospital targeted social media ads that appeared in qualified users’ (by profession and geolocation) news feeds to advertise open job opportunities. It was a creative use of geofencing marketing and helped them reach valuable and qualified candidates.

HotelTonight 

HotelTonight is providing its app users with information about the best open accommodations using consumer’s cellular GPS data and delivers accurate, location-based content. They offer discounts based on geolocation. They switch on 10 to 40 percent discounts on accommodations after 3 pm, when the customer happens to be a few miles away from a participating hotel.

HotelTonigh push notification based on user location

Starbucks 

Starbucks uses geofencing to advertise drinks to interested customers. They commonly send push notifications when users walk by their business or are in a nearby area, offering special discounts. Starbucks sends personalized app notifications too. If a user typically orders a Vanilla Latte, Starbucks will send a geofenced notification enticing that user to grab Vanilla Latte. The customized information entices more users to visit Starbucks.

Source: Medium

Taco Bell 

Whenever a customer (who has a Taco Bell app installed) drives by a Taco Bell location, they’ll get a push notification. This notification reminds them that they can order food from their phone and pick it up.

Results: 

After launching this campaign, Taco Bell saw a 6% increase in sales. Furthermore, the average order amount from the mobile app was 20% higher than in-store orders.

Tacobell push notification

American Eagle 

An apparel store, American Eagle used geofencing to increase sales for their factory outlets.  Shoppers who had the American Eagle app received promotional ads as soon as they entered the outlet mall parking lot.

Results: 

Increased sales threefold.

How does geofencing work in Voucherify? 

Voucherify offers geofencing and geotargeting options for all your promotional campaigns. Simply select the geopoint or geofence you want to target and use it to segment your customers or to base your discount publication on the customer entering or exiting the geofence. You can use various geofences in one campaign, launching a campaign in various locations.

Summary 

Geofencing campaigns are helping you to narrowly target your customers and provide them with personalized content and discounts. It can prove more effective than more generic types of targeting. There are plenty of geolocation-based campaigns you can set up depending on your goals. To launch geolocation- or geofence-based campaigns you need powerful promotional software that can use such data to limit the campaign distribution or the campaign use to the specific area. Voucherify is an API-first Promotion Engine that offers geolocation and geofencing features built into your campaigns and campaigns distribution settings. It is easy to connect with your existing stack and front-end of choice. 

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