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Location technologies for Retail: Geofencing for Customer Engagement

Geofencing is very effective in location-based marketing on its own, or used with beacons and WiFi. It works for airports, malls, retail stores and sports and other events.

In an earlier article, we briefly covered the communication types and devices used for location-based marketing. While beacons are the most frequently used device, geofencing is a close second. There are several ways to use geofencing to increase traffic, and it can be very suitable for short-term campaigns, like sports events, concerts and store opening specials. Geofencing is based on GPS positioning – a "virtual fence" is erected around the desired location, such as an airport and its parking area, a concert hall or sports stadium, or a mall or shop. When your customer enters the fence perimeter, an alert activates the sending of a useful message, such as a discount or promotion, directions to seating or a store running a sale, or even info and content about their favorite player or the star of the concert.

The tagline for location-based marketing is "delivering the right message to the right person at the right time". Geolocation is obviously a powerful tool in this respect, and its popularity is growing. Unacast, which measures location-based marketing and its suppliers, show a growth of 6% in geofencing between Q3 and Q4 in 2016.


Chart extracted from the 2016 Q4 Proximity Report "Proximity Technology in Smart Cities", The Proximity Directory Report: State of the Proximity Industry (Slide 31), produced by Unacast on a quarterly basis.

When Geofencing is most Effective

Short-term initiatives - Geofencing is very suitable for short-term promotions and events. This can range from a deep discount on an item for a few hours to a week-long conference. This does not preclude using it on a permanent basis, for instance around an expo centre and stands within it, or an airport or similar key point, where it can play a dual role as a marketing and security aid. It is quick and easy to implement with the help of an experienced e-commerce development partner.

Tightly-focused Locations

Smaller is better, especially for short-term promotions. This makes geofencing a good tool for SMEs. It could be an area limited to the entrance of a store, or a particular aisle, although you could also use beacons in this case. This does not mean you cannot embrace really big spaces – we cite a case below – however, if you are starting out on erecting your own geofence, start small to best understand the benefits. It’s worth mentioning that your geofence does not have to be in your store's proximity, a high-traffic zone that is used by your customers can be just as good, for instance a parking garage. Generally though, the site should be close to your location.

Be Observant of Timing

There is little point in promoting an in-store special to someone walking past the store if the store is closed. This is noise and will definitely not encourage sales. However, this does not mean that you should not promote specials when a store is closed, you can encourage the customer to buy from your on-line store, or a nearby store with longer opening hours. A special offer can be a very short-term event, limited to an hour, and available only to those in the store or walking by.

Boost Effectiveness by Using Several Mechanisms

None of the services shown in the chart above are mutually exclusive. Geofencing can be used on its own, or it can be augmented by the strategic use of beacons, for instance. The campaign plan will indicated what needs to be done and the best tools to accomplish it. Beacons and geofencing work wonderfully together, which was shown at the Giro d'Italia.

Huge Geofence - the Giro d'Italia

After emphasizing that small, fenced areas are good, the example of this legendary cycling event illustrates that this is a rule meant to be broken. The total geofenced area was about 200,000 square metres and the campaign was limited to the final 2 days of the Tour in 2015. During a cycle tour, fans line the roads waiting in anticipation for the leaders and pelotons about to zip past. To keep the spectators both informed and engaged, Italian Media group RCS streamed digital content from strategically placed beacons along the way to tablets and phones. The audience was limited to Apple users, as iBeacons were used, but the introduction of competing products for Android will no doubt lead to even larger audiences at future Giros. Some of the statistics for this free service were:

  • 30,000 individuals used the service and browsed the articles available
  • over 45,000 pages were browsed during the event.

RCS Media Group were very happy with the event and see opportunities to integrate with other sporting events. While this was not a revenue-earning exercise, it either introduced new readers to their products or boosted the use of online articles among existing customers, thus raising the brand image.

Guerrilla Geofencing

There are several inventive ways to use geofencing, one of which is guerrilla marketing. We are used to seeing competitor's billboards strategically placed near a retail store. Whether this is effective or not, it is unlikely to attract much interest unless the billboard is smart. One of the earliest examples of geofencing guerrilla marketing was by Meat Pack. They geofenced their competitors' stores. As the customer entered the fenced area, a promotional ad was sent to them, offering a 99% discount. The discount was gamified, and dropped by 1% every second, so the shopper had to dash to the nearest Meat Pack store to get the best discount. What's more, it takes far less time to set up a geofence campaign (and dismantle it) than a billboard but this does not mean that billboard advertising is a thing of the past.

Geofencing for Good

A very creative campaign was run by Women's Aid, a British NGO, in London. An interactive advert displayed a woman bruised by domestic abuse. Facial recognition cameras were used to pick up pedestrians' response to the advert. The bruises gradually disappeared as the number of viewers increased and reacted. The campaign, “Don’t turn a blind eye to domestic violence", created a powerful impact on all who viewed it.

Be Creative, the Technology is Here

As seen from the Women's Aid campaign, there are many possibilities to engage passers-by once they have entered the fenced area, by incorporating cameras, video and sound, you do not have to be limited to mobile apps or text messages promoting in-store discounts but these are probably your best options if you are starting out. Geofencing is a great way to engage the customer, especially if you use a quirky or creative approach that piques the viewer's curiosity, or offer a useful service, like navigating through an airport to the correct boarding gate.

Geofencing also offers great opportunities to gather data about your customer's shopping habits, such as when they are in proximity to your store, and whether they always come in or pass by. If they do come in, do they make a purchase or do they just browse? Gradually a profile can be built up for each individual of their shopping behavior, which can be used to tailor promotions that engage the customer on a personal level. Segmentation has been replaced by personalization, and there is no turning back.

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