Geofencing is quickly becoming one of the most adopted forms of targeted advertising in the world with its market value set to reach $1.7 billion in six years.

This is due to its ability to reach customers at the perfect moments to drive sales and encourage interactions with your brands.

With geofencing technology producing more sophisticated apps and uses, now is the perfect time to start adopting it for your business.

Read on to learn everything you need to know and how to set up geofencing effectively.

What is Geofencing?

Geofencing is a developing technology that allows organizations (such as the government) and businesses to communicate or advertise through location-based services.

There a number of ways this is being utilized. For example, the government can disable drones which fly within a certain area of the White House and other government property. Another use could be a bar alerting customers who are nearby of their happy hour special.

The uses are infinite, so understanding how the technology works is essential to know how to use it effectively.

How Does Geofencing Work?

Unless it has been disabled, all our devices transmit our location to help our applications work accurately. For example, the only reason Google Maps can alert you to traffic is because it tracks other people’s journeys. It can see they are all slowing down below the average speed in a specific area and can conclude that traffic is happening.

Geofencing capitalizes on this information by isolating specific areas inside a set virtual fence. That way when a user (who has opted into the service) enters or exits this area, the system is alerted and is programmed to produce a response.

To make the most of this for your business, we’ll cover the options and strategies you can use below.

How to Set up Geofencing

There are many companies who can offer geofencing services that suit your needs. The costs can range anywhere from $1000 to over $50,000 depending on your budget and goals.

Knowing what it is you want ahead of time can help ensure you find the best provider.

By having an idea in mind, you will discover more opportunities available to your business to implement a successful campaign.

1. Develop an App or Join Another

Creating your own custom app can be expensive with a minimum cost still being around $30,000, but it does carry a number of advantages.

You can interact with your customers on a more personal level and it means you don’t need to compete for their attention with other brands. You can also use it to gather data specific to your business to help you improve your products and services.

Of course, if you’re just starting out this option can be too expensive. In this case, you can join a coupon or discount app that messages customers about your latest offers and deals.

You can then combine this with geofencing to ensure that customers are only alerted when they are most likely to make a purchase decision.

2. Choose Your Locations Wisely

With geofencing, the choice of your location is extremely important to guarantee success.

For example, Gatorade could set up geofences around gyms and parks to target anyone out exercising with an offer. A dry cleaner could set up geofences around nearby offices and restaurants to catch anyone who accidentally spills their morning coffee or breakfast.

You can even place geofences on a competitors store.

Let’s say you own a bakery and have decided to start selling coffee. You could set up a geofence around a nearby Starbucks so that any customer who walks in receives a message. An example could be: “Grab a morning cup of coffee with us and receive a free donut!”

If someone was going to buy a coffee anyway they’re more likely to go to your store instead.

3. Consider Your Customers

One of the best ways to think of ideas to reach your customers effectively is to forget your business and try being them.

What this means is it’s common for business owners to stop seeing customers as people with worries and things to do. Imagining what potential situations your customers could be in will help you think of ways to reach them.

Let’s say you run a clothing store that specializes in high-end dresses and gowns. People will likely only buy your clothing if they have a high-profile event or party they are going to and are worried that what they already have isn’t good enough.

So rather than geofencing a shopping mall where you will be competing with every other business, you could place the geofences around high-end bars, restaurants, and venues. To save money, you could even limit the geofencing to those areas in the build-up to events you know are happening.

By understanding the mindset of your customers and their reasons for going to your store, you can tailor your messages far more effectively.

4. Make Use of Offers

This is where using offers is a great option to entice customers to your store.

As mentioned in the examples above, there are many ways you can do this. What’s important is that the offer is directly tied to something actionable and relevant to your customers.

It’s also recommended you go beyond the typical ‘buy-one-get-x-free’ and engage with your customers in a new way.

If we use the dress store as another example, rather than just offering a deal, you could ask customers to bring their favorite accessories with them to find a dress that matches.

For the bakery, the store owner could give discounts to any customer that’s able to guess which roast of coffee is which based on taste. This is not only a fun for the customers but it also lets them try all of the products too. It’s a fun experience that will elevate the store compared to all the others in the area.

5. Get Creative

Of course, you are not restricted to just offers. You can combine the information from your customers’ social media profiles to wish them a happy birthday and an offer when they’re nearby.

If you are a music band you can leave fun messages when your fans are near a venue you will perform at.

There’s no limit to the possibilities so just think of ways you can surprise and delight your customers.

Enjoy a Better ROI

With geofencing, you are able to contact your customers in a specific location. How you talk to them and what you say is entirely up to you.

By thinking about their journey and their mindset, you’ll find fun and creative ways to draw them to your store and encourage purchases.

Check out our other articles on how to help your store stand out and bring in more revenue.