What is geofencing – and should you use it for marketing?

Have you heard of geofencing? A new tech on the block when it comes to marketing, geofencing has already been implemented by some of Australia’s biggest and best-known brands. So what exactly is it?

Geofencing is a new way of performing location-based marketing. Using location technology already embedded in mobile smartphones like WiFi, Bluetooth, GPS, cellular data and radio frequency identification (RFID), geofencing allows marketers to target your exact location and present you with a hyper-specific marketing message. 

If that all sounds a bit sci-fi, it’s because it kind of is! But, when you put it in terms of a real-world example, it makes a bit more sense. You might have already experienced geofencing technology yourself if you’ve ever downloaded an app for a big-brand retailer or food outlet you often visit.

Say, for example, you’ve downloaded the KFC app. You’re strolling and scrolling along the street when you walk past a KFC and – bam! – a notification hits your phone with a 2-for-1 popcorn chicken deal at that store. How did they do it?

Well, geofencing allows users to erect a virtual perimeter (the ‘fence’ in question) around a certain location. When you’re inside the fence, it’s a trigger to send a marketing message to your mobile device if you’ve already opted in to it. This could be a text, an app notification, an email or even just an ad on your social media feed. It’s important to note that these messages will only be triggered if the user has already downloaded an app or opted in some other way, and has enabled location tracking, and notifications on their device. So there are a few hoops to jump through – geofencing isn’t a silver bullet solution. 

This kind of hyper-targeted advertising can be really powerful. There’s even been talk of geofencing so specific it can trigger based on where you’re standing within a store – for example, in the pasta sauce aisle. You might get a notification offering you 50% off Dolmio! 

The obvious benefit for consumers here is the ability to access specific and unique deals. The trade-off, as always, is their data. Access to that location data allows marketers to improve their data collection, for example by comparing which target audience segments are more likely to follow up on an offer after passing through the geofenced perimeter. They can build ever-more detailed understandings of what their customers are likely to do and when, and this is extremely powerful when it comes to marketing. Although this sounds a bit alarming, it’s worth remembering that anybody receiving marketing messages via geofencing would have opted in and still has the ability to opt-out. 

So, as a small or medium business owner, should you start using geofencing? 

Probably not – and as always in marketing, the reason why comes back to your customer journey. 

Impulse purchasing vs. planned purchasing

At Roobix, we use the Gartner Buy-Own-Advocate model to understand and plan out customer journeys. Laid out in a linear model, it goes something like this:

Gartner Buy-Own-Advocate model

Customer journeys usually look like this for planned purchases. There are plenty of steps in there to come to terms with their need for a product, discover the options and evaluate them before eventually making a selection and following through on a purchase. 

Impulse purchases, on the other hand, have a much shorter customer journey driven by emotion – from Aware to Evaluate to Purchase, and that could be just about it. The KFC example is perfect for demonstrating that shorter journey – you become aware of the deal via a notification on your phone, you evaluate whether you want it, then you purchase it. 

Determining whether your product or service would normally be obtained through a planned purchase or an impulse purchase can probably tell you whether geofencing is right for you or not. If you were walking past your favourite hardware store and got offered 30% off a lawnmower, you probably wouldn’t be ready to go in and purchase a lawnmower right then and there! In summary, impulse purchases are location-based, time-sensitive and driven by emotion. Planned purchases are the opposite. 

Plus, that example relies on you already having downloaded an app or opting into marketing communications from your favourite hardware store. As a small or medium business, it’s not likely your customers will have done that – and they may not even have heard of you yet! In this case, geofencing wouldn’t be a viable option to drive sales. That’s why geofencing is an engagement-building activity best suited to businesses with big existing databases but can’t put you in front of people that haven’t heard of or engaged with you before.

Instead, we recommend small and medium B2B businesses stick to the tried and true methods of digital and traditional marketing. By combining good branding, great messaging and excellent customer experiences, almost any business can improve – thus driving advocacy and increasing conversions later down the track. It’s a slower path, but a better one – just remember the story of the tortoise and the hare.

If you’re looking for assistance with your marketing, Roobix can help. Our celebrated Managed Marketing Service gives you access to a full team of strategists, designers, content writers, digital marketing technicians, events managers and automation specialists – all for less than the cost of one in-house resource!

Find out more about Roobix today!

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