How Geofencing Works for Brick-and-Mortar Businesses

How Geofencing Works for Brick-and-Mortar Businesses

E-commerce options heavily drive the spending patterns of modern consumers. Instead of getting into their cars and driving to local stores, people can log onto websites and purchase what they need in a few clicks. Stores like Amazon also offer same-day deliveries, meaning buying things online doesn’t necessarily involve a long wait.

But despite the conveniences it offers, online shopping does have shortcomings. For example, people can’t smell a bottle of lotion and dab some on the top of their hand to see how well it absorbs into the skin. They also can’t touch the fabric of clothing or a sheet set to determine how durable it feels.

The face-to-face interactions between shoppers and shop employees are usually gone with online transactions too. Although some websites have live chat features, people can’t readily get the advice of a salesperson by asking them if they’ve personally used a piece of merchandise. They can’t find out if there’s more of a sold-out item in the back that hasn’t been put onto shelves yet.

One way brick-and-mortar businesses are competing against online shops is through a technique widely used in apps and on websites: geofencing.

What Is Geofencing, and How Does It Work?

Geofencing is the practice of using GPS or RFID technologies to define a virtual boundary around a business. Then, when people in an area move into that defined zone, they receive targeted marketing that encourages them to come into the establishment immediately. A store might use geofencing to target people currently within 25 miles of a given business and send text messages to those individuals so that they might come later.

Here are some ways brick-and-mortar businesses can benefit from geofencing.

1. Geofencing for Brick-and-Mortar Businesses Can Come After Online Efforts

Sometimes, brands with both brick-and-mortar stores and online presences launch geofencing campaigns for their physical locations after online-based attempts have favorable outcomes. In one example, Norton, the brand known for security-based computer software, partnered with RetailMeNot, the app and website that helps people find deals.

The two brands collectively took on a brick-and-mortar project after teaming up for years to boost Norton’s online sales through the RetailMeNot app. The goal was to promote a Norton product by sending RetailMeNot users a substantial discount available to redeem at a physical office supply chain. In the end, over 10,000 people engaged with the offer.

2. It Brings Online Shoppers Into Physical Stores

Retailers with both physical and online locations also work hard to urge online shoppers to come into physical stores. Sometimes that happens with a hybrid option commonly known as click and collect. People pick out their items online, then go into the store and pick them up.

With geofencing, people might see messages while shopping online that inform them that the items they want to buy are not in stock online but are available in a nearby store. If those individuals are registered users on the site, their addresses are likely on file, and that data indicates a person’s location.

Alternatively, most smartphones have location-based services that allow brands to determine where shoppers are while they’re browsing online. People who buy things through the internet generally appreciate efficiency, so instead of potentially going to another online store and waiting for that merchant to send their items, they could go to the original retailer’s brick-and-mortar store.

Home Depot has an app that senses when people walk into one of its physical stores, then gives them extra content to simplify the shopping experience. For example, they can rely on their phones to scan barcodes on merchandise or use the Product Locator, which has a mapping function to help people know exactly where to go in a specific store to find the stuff they need.

About 45 percent of Home Depot purchases people make online get picked up in local stores. The content that arrives through the app once individuals get within the required distance from the store could spur them to do more inside than merely go to retrieve the items they bought.

3. Geofencing Could Increase Customer Loyalty

Most people can relate to feeling pangs of hunger and knowing it’s time to eat but having trouble deciding precisely where to go. Elephant Bar — a restaurant chain serving American and international fare — successfully enticed members of its loyalty program by sending them text messages as they neared the food establishment’s locations.

The messages were also personalized based on the number of loyalty points a person accumulated. The campaign’s results showed that 30 percent of people who received those correspondences from the chain came into a restaurant on the same day. Such a program gives people opportunities to use their loyalty points or earn more, thereby reminding them of how much their membership pays off.

4. It Gives Opportunities for Data Collection

Habits are part of our lives, and people often don’t even realize when they engage in them. For example, a person might get a cup of coffee at a local cafe and hardly think about participating in that action unless they don’t do it one day and feel the effects of reduced caffeine consumption. If the retailer hones in on that person through geofencing, it’s possible for the retailer to predict habits and influence actions.

What if that consumer got text messages when passing the coffee shop both before and after work but only acted on those text messages after work 10 percent of the time? Then, the content could become increasingly personalized and say things like “Start your morning off with a smile, and get a free pastry with your coffee today.”

Data collection happens in ways other than geofencing too, but the immediacy geofencing offers means brick-and-mortar stores can capitalize on a person’s proximity and potentially gather details at the same time. A geofencing text could tempt a person with a discount in exchange for filling out a survey about overall satisfaction with a brand, perhaps. Then, companies can gain insights, and participants can save money.

What’s Trending?

Like most other marketing methods with staying power, geofencing has substantially evolved over the past few years and is used in increasingly creative ways. One app called TempWorks Buzz lets temporary workers punch in and out of job sites through the app, which features geofencing and facial recognition components.

It’s not hard to imagine a future where that technology gets applied to brick-and-mortar retailers and shows how many people with kids, for instance, enter stores between certain hours, allowing retailers to distribute tailored promotions to shoppers.

Also, a company called Simpli.fi offers what it calls “addressable geofencing.” Its technology allows creating an individual geofence around every property in a neighborhood, then laying the foundation for marketing content that’s extremely personalized based on factors such as past purchases or census data, including the amount a household earns annually.

Simpli.fi asserts that its technology could potentially make all targeted marketing efforts more effective, including direct mail outreach. Potential use cases offered by the company include a car dealership targeting households with cars due for lease renewals and a local dentist office focusing on current patients to let them know about a teeth-whitening promotion.

Geofencing Helps Brick-and-Mortar Businesses Cater to Needs

Regardless of a physical company’s type or size, it’s essential for establishments to understand what customers need and position themselves as able to help. Geofencing, therefore, is crucial for addressing customers at times when they’re closest to locations and compelling them to stop in to make purchases.

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