What Is Geofencing and How to Use it with Your Marketing Strategy?

March 09, 2021

Have you ever wondered why is it that every time you pass by a pizza place you get a notification on your phone to buy a pizza? Or, how did you just get a Starbucks notification to buy your favorite latte? (I’m on a diet, you guys!)

Are we being followed? Well, sort of. 

Welcome to the world of geofencing marketing.

What is Geofencing?

Geofencing is essentially creating virtual boundaries around a certain geographical area by using GPS technology. So, whoever has a phone in their hands they’ll probably get an alert or notification once they set foot in that area. Easy peasy.

Now, this might come as a shock, but geofencing has been around longer than you might think. In the past, it was mostly used by the rich companies that could afford it. But all that has changed with the advances in technology that allows us to have an internet connection, Bluetooth, and GPS. Today, it’s quite an affordable marketing tool.

How does Geofencing Marketing Work?

As I mentioned earlier, geofencing is available for any type of business. The idea is to send notifications to your customers once they are in the specific area so that they know about the latest offers. You want to allure them to your store by sending notifications for discounts, promotions, or invitations. 

Let’s say you have a restaurant with several competitors around your block. With geofencing marketing, once someone who has a smartphone enters your perimeter, they’ll become eligible to receive your promotions. So, if your geofence is set up at your competitor’s location, you could send invitations to people to come and check out your venue. 

You can also change the geofence. You can map the entire world if you want, or you can cover a mere 50 meters from your store. In addition, you can choose when the notifications appear. For example, if you think that the traffic is higher in the morning, you can set the notifications to appear in that time frame. 

Another thing I have to mention is the app. For you to use geofencing marketing, you need to have an app. The app will complement the geofencing and help you engage with the customers and naturally boost conversation to increase sales. 

The Benefits

Now that we have some basic understanding of what geofencing is, let’s look at some of the benefits.

  1. Reach your customers - once they enter your area they can send your promotions or ads. People spend about 5 hours a day on their mobiles, so why not take advantage of it? 
  2. Increase engagement - when people start getting notifications for your promotions, there is a big chance they’ll try and find out more about your business and what you have to offer. This is why they'll start engaging with your brand. With this, you also build brand awareness. 
  3. Get personal - folks get attached to things that are closer to their interests. I’m sure they are bombarded by offers they don’t really care about, so try to make it personal. When you use geofencing, it helps you get data about your audience, hence you can create better offers that produce more engagement and interest. Once you understand your target audience, you’ll be able to create offers that get people to your door. 
  4. Beat your competitors - you can cover your competitors’ area with geofencing. When someone enters that area, you can send them an offer or an ad and allure them. Dunkin Donuts did this back in 2016 when it created geofences around other coffee shops and sent targeted ads to those prospects. About 36% clicked the coupon and 3.6% return to redeem it. 
  5. Get data - when you start using geofencing, you’ll get a lot of data that you can later use for insights on which locations are suitable for expanding your business or which stores perform better. In addition, you’ll improve the user experience and understand user behavior. 

How Marketers Use It?

Here are some of the most common uses of geofencing by marketers:

  1. Brand apps and third-party apps - as I mentioned earlier, you’ll need an app. Many businesses develop their own apps that customers want to download, but even if you don’t have that, you can always use another one to send your ads and notifications. 
  2. Social media and web ads - you can use some of the big shots such as Google, Facebook, Instagram, or Twitter, to define your radius and send ads to customers when they enter the geofenced area.
  3. Text engagement - when someone agrees to receive messages from a brand, the engagement automatically rises. They receive messages once they enter the geofenced area.

The Statistics

Obviously, geofencing can generate some great results for businesses. However, don’t just take my word for it. Have a look at the facts: 

Business Giants that Use Geofencing

Sometimes there's just no need to start from scratch and waste your time finding out what works. 

Sometimes, we can just learn from the best. And boy, do they have a story to tell! 

I’m going to show you the businesses that found the best way to turn a hefty profit by using geofencing.

Let’s get cracking!

The first one on my list is Uber

As a matter of fact, Uber wouldn’t have existed without its GPS tracking system. So, if you are a user looking for a ride, what they do is use geofencing to see how many cars are available and how long you’ll have to wait for the driver to pick you up. Additionally, Uber will still know where you are if you agree to have your location services turned on when you are not using the app. So, once you enter their geofence area, they send you a notification to drive more sales. This is especially common at hotels or airports, where people usually need a ride, which is kinda genius. Yes, most people would use Uber, but others would also try and find a cab or call a friend. So Uber is just here, reminding us that we don’t need to do that at all. This was all made possible thanks to geofencing. 



Next is Burger King. This was one of the best and cleverest ways of using geofencing. What Burger King did was cover the areas of their competitor - McDonald’s. And not just that, but they started encouraging people to go and eat at McDonald’s. Weird, right? However, there was a twist. You see, once a customer with the Burger King app entered one of the geofences around McDonald’s, Burger King started sending offers from the closest Burger King about their offer called “Whopper Detour”. The whole thing worked like a charm! The Burger King app had over 1,000,000 downloads and became number 1 in the Apple App Store’s food and drink category.

Another great example is Sephora. Sephora took geofencing to another level. It didn’t just target potential customers that entered their geofenced areas, but their Sephora app launches every time someone enters their store. The app has all the history on the buyer - what they’ve previously bought, their wish-list, etc. The idea is to encourage them to spend more and to have a look at their latest offers. Well, they at least got me!

And what about Coca-Cola? Coca-Cola decided to use geofencing to make customers use their vending machines. How? Today’s vending machines are connected to the internet, so they implemented facial recognition and payment tracking tools into their machines. This allowed them to see which drinks sold best and where. Additionally, Coca-Cola announced that they are planning to enable their vending machines with free Wi-Fi, making them Wi-Fi hotspots.

Starbucks also uses geofencing to send personalized notifications. If let’s say, your personal favorite drink at Starbucks was a vanilla latte, they’d send you a notification inviting you to grab one. At a certain point, they were also having happy hour Thursday and offered BOGO free on any large drink. So, if you were in their area on Thursday during their happy hour, you would know about that deal.


Geofencing Companies

When you are considering buying geofencing software, you should consider the companies. We did some research for you, so relax and read away. 

Let me start with one of the founders. Simpli.Fi. Being one of the best, they are quite expensive. You’ll be spending a minimum of  $10,000 – $20,000/month in media to work with them. However, there are no better specialists than the team working at Simpli.Fi. However, if this is too much, try Propellant Media which uses the Simpli.Fi solution but at a lower cost. They help small-size businesses allowing companies to spend $1,000/month in media when working with them.

Let’s continue with ThinkNear. They are location-based advertisers that offer their services to companies such as Disney, Coca-Cola, Whole Foods, and many more. Their targeting focuses on finding mobile users near events, businesses, and the locations operated by their competitors.

Salesforce offers the standard geofencing solutions to capture users in specific locations and send them messages. If you already use Salesforce, you can unlock their geofencing capabilities to target your customers. Their geofencing capabilities are a bit different than the standard use of targeting people visiting specific sites. 

And what about Kick Adz Media? Cool name right? It offers social media ads and YouTube ads, as well as search engine ads. They offer the standard procedure - services to businesses that want to target people that enter their competitor’s location and to retarget the ones who have already been to their own location. 

Another one is Enradius. Enradius is interesting because it allows you to target customers based on DMAs or zip codes. Their team promises to work closely with you to make the best out of it. They help boost brand awareness and increase the conversion of the businesses.

The Total Economic Impact study by Forrester Consulting recently did research and found out that Factual customers generate 202% ROI on their targeting investment and a 47% lower cost-per-action (CPA) on average. They offer you to reach customers based on their real-time locations, high-quality location data, and they help you with planning, targeting, and recommendations. 

Is Geofencing the Next Big Thing?

One word - Yes!

It is a powerful and affordable tool that offers a range of possibilities for both, customers and marketers. For customers, it is a reminder and a notification tool for the hottest offers out there. For marketers, it is a tool to boost brand awareness. 

Any affordable option is worth trying to build your business, especially if you are trying to stay competitive. 

Now that you’ve read the article, you should have some understanding of how it goes and how you can make the best of it. So try it out. Maybe you already have some creative solutions and ideas you want to implement. I’m eager to know how it works out and if you have any questions feel free to reach out. 


Let’s work together!

Author: Jasmina Stankovska

Jasmina Stankovska

Jasmina is a technical author and content writer. She enjoys movies and music, and when she is trying to give her eyes a break, you’ll find her up on a mountain, exploring nature.