Geofencing

Written by Lauren Gherardi

Have you ever received a text or email the moment you pulled in the parking lot of a business, alerting you to current coupons and deals available at said business? Or even the business within walking distance from where you parked? This is known as geofencing. Geofencing is a location-based digital marketing tool that lets marketers send messages to smartphone users in a defined geographic area. Geofencing basically creates a virtual fence around a business and once consumers reach their destination within the geofence they can be targeted for ads of any business within the area. Ads can be received in numerous ways, consumers can get SMS or MMS texts to their phones and ads can pop up on websites or apps they are using.

Pros

Using geofencing can steer your consumers away from the competition.

Let’s say you own a women’s clothing store and you’re located in a mall next to a large well-known department store. As soon as the consumer pulls into the parking lot of department store, she receives an SMS text to her phone about the sale going on in your store today. She will likely go to your store to check out the deal, thus driving more business to you from the department store clients.

This isn’t only beneficial to small business, but large companies can benefit from geofencing as well. It can even drive consumers to stop in even if they weren’t looking for the products you offer. Geofencing helps with top-of-mind awareness. Businesses can also use geofencing to offer complementing products. If someone is in a jewelry store a flower shop can send them a coupon for 20% off a bouquet. Even if the flower shop isn’t in the direct vicinity

Another benefit of geofencing is that it can aid in analytics. It can track things such how often a consumer visits a location, how long they are at the location. This can come in handy when it comes to consumer conversion rates at a location. Your company will be able to decipher if their employees were able to spend time with the consumer and convert them into a loyal client.

Cons

The number 1 con to this is an invasion of privacy.

Do you really want to constantly share your location every second of the day and receive a sales pitch in the form of a text message? Although this can be useful when you’re out shopping, if you are out at dinner somewhere that happens to be in a large shopping center, I don’t think you want your phone blowing up with product info and sales.

If a popular chain of businesses decided to use geofencing, think about how annoying it would be to get a notification every time you pass said business location. Especially in larger, more densely populated cities. If consumers get bombarded with these notifications they will probably turn them off, which will ruin your ROI. Consumers will also have to deal with data charges and battery drain if they are in a densely populated area.

Which brings me to my next point, geofencing is very expensive and if consumers are opting out of these notifications then there is virtually no point in spending the money. Geofencing requires a lot of upkeep. Depending what business is running the geofence you would have to have someone responsible for changing the message every day so consumers aren’t being spammed with the same offer and if you work for a particularly large chain of businesses you’ll have to keep adding more geofencing as the company continues to grow and add new locations.

We can’t say whether we love or hate geofencing. There are some definite benefits to using it, but, “do the pros outweigh the cons for you and your business?” That should be the real question you should be asking.