How to Create an Effective Geofencing Marketing Strategy for Local Businesses

Local businesses everywhere face constant challenges in attracting foot traffic and driving sales. While traditional marketing strategies such as print advertising, billboards, and radio ads have their place, advancements in digital technology have unlocked more targeted and cost-effective solutions.

One such method is geofencing marketing, a powerful tool that allows businesses to reach customers based on their geographic location, delivering personalized, real-time advertisements straight to their mobile devices. This not only boosts local foot traffic but also helps businesses build stronger connections with their nearby customers.

In this comprehensive guide, we’ll explore what geofencing is, how it works, and, most importantly, how local businesses can harness its power to create an effective geofencing marketing campaign. By the end, you’ll have a solid understanding of how to use this digital marketing tool to drive more customers to your door.

What is Geofencing Marketing? (With Examples)

Geofencing is a location-based marketing strategy that utilizes GPS, RFID (Radio Frequency Identification), Wi-Fi, or cellular data to set up virtual boundaries, or geofences, around specific geographic areas. When a consumer enters these predefined areas, they are automatically sent advertisements, promotions, or push notifications via their mobile devices. The key to geofencing is its precision—it enables businesses to target customers based on their exact physical location.

For example, imagine you run a small coffee shop. You could set up a geofence around your shop and send a promotional offer, such as “20% off your next latte,” to potential customers who pass by or enter the vicinity. Similarly, you could use geofencing to target people visiting a nearby competitor, offering them a discount to entice them to try your business instead.

Geofencing is particularly useful for small businesses looking to boost foot traffic from local customers. It allows businesses to deliver timely and personalized messages that are relevant to where a consumer is at that moment, increasing the likelihood of conversion. 

How Does Geofencing Work?

Geofencing involves setting up a virtual perimeter around a designated location using digital tools. When customers enter, exit, or dwell within this geofence, the marketing system can trigger an action—usually sending an ad or notification.

The technical process of geofencing involves several key steps:

1. Defining the Location: The first step is choosing the physical area where you want to set up your geofence. This could be a few blocks surrounding your business, a competitor’s location, a shopping mall, or even a neighborhood where your target customers live.
2. Setting the Perimeter: Once you have identified the geographic location, you can use geofencing software to draw a virtual boundary around that area. This geofence is typically set in terms of a radius (e.g., 1 mile, 5 miles) or a more precise area such as a street or block.
3. Triggering the Action: When a mobile user crosses into or out of the geofenced area, the system will trigger an action. This could be a push notification sent via a mobile app, an SMS text message, or a display ad appearing in their social media feed.
4. Engaging the Consumer: The final step is delivering a personalized, actionable message that encourages the consumer to visit your business. This could be a discount, a reminder of a sale, or an invitation to check out a new product.

With geofencing, the possibilities are nearly endless, allowing businesses to get creative in how they engage with nearby customers. For instance, retail stores can send special offers to shoppers, auto dealers can promote test drives, and law firms can offer consultations when potential clients are nearby. These geofencing examples illustrate how businesses can leverage location-based marketing strategies to attract and engage customers effectively.

Benefits of Geofencing Marketing for Local Businesses

Geofencing marketing offers a host of benefits, especially for small, local businesses trying to reach a specific, nearby audience. Here are some of the top reasons why geofencing is a valuable addition to your marketing toolkit:

1. Target Customers Where They Are: With geofencing, you can target customers who are already in or near your physical location. This means your ads are being delivered to people who are most likely to visit your business, which can lead to higher conversion rates compared to traditional mass marketing methods.
2. Deliver Timely, Relevant Offers: Since geofencing allows you to engage with customers in real-time, you can send highly relevant offers and promotions that match their current location. For example, you could send a lunch discount during midday hours when customers are more likely to be thinking about where to eat.
3. Increase Brand Awareness and Foot Traffic: By delivering ads or promotions to consumers when they are physically near your business, you increase the likelihood that they’ll stop by. Geofencing allows you to be top-of-mind at the most critical moment—when they are nearby and ready to make a purchase decision.
4. Cost-Effective Advertising: Geofencing allows you to target a specific audience within a defined location, which can make it more cost-effective than broader advertising campaigns. You can control your ad spend by focusing only on people who are likely to visit your store, ensuring you get the best return on investment (ROI).
5. Gather Valuable Consumer Data: Geofencing not only drives immediate foot traffic but also provides valuable insights into consumer behavior. Businesses can track data such as how many customers enter the geofence, how long they stay, how often they visit, and how frequently they respond to offers. This data can be used to refine future marketing campaigns and improve targeting.

Examples of geofencing include how companies like Uber and Dunkin’ utilize this strategy to enhance customer engagement through targeted notifications and exclusive promotions, showcasing the effectiveness of geofencing in driving foot traffic and increasing sales.

Understanding Your Audience

Understanding your audience is crucial for a successful geofencing marketing campaign. To effectively target your audience, you need to identify your target market, understand mobile user behavior, and create buyer personas.

Identifying Your Target Market

Identifying your target market involves understanding the demographics, interests, and behaviors of your potential customers. This information can be gathered through market research, customer surveys, and social media analytics. By understanding your target market, you can create geofencing campaigns that are tailored to their needs and interests.

For instance, if you run a retail store, you might find that your target market consists of young professionals who live within a 5-mile radius. By setting up a geofence around local office buildings and offering lunchtime discounts, you can attract these potential customers when they are most likely to be nearby and looking for a place to eat. 

Understanding Mobile User Behavior

Mobile user behavior is critical to understanding how to effectively target your audience with geofencing marketing. Mobile users are constantly on the move, and their behavior is influenced by their location, time of day, and device usage. By understanding mobile user behavior, you can create geofencing campaigns that are timely, relevant, and engaging.

For example, if you notice that a significant portion of your target audience uses their mobile devices to search for dining options around noon, you can set up a geofence to send push notifications with lunch specials during that time. This ensures that your message reaches them when they are most likely to be making a decision about where to eat.

Creating Buyer Personas

Creating buyer personas involves developing detailed profiles of your ideal customers. This includes understanding their demographics, interests, behaviors, and pain points. By creating buyer personas, you can create geofencing campaigns that are tailored to their needs and interests, increasing the likelihood of conversion.

So, if one of your buyer personas is a busy parent who values convenience and quick service, you might set up a geofence around local schools and send push notifications about your family-friendly menu and quick service options. This personalized approach makes your message more relevant and appealing to that specific segment of your audience.

Steps to Creating an Effective Geofencing Marketing Strategy

Creating an effective geofencing marketing strategy involves more than just setting up a virtual boundary. It requires thoughtful planning, creative ad development, and ongoing optimization. Below are the steps you should take to develop a winning geofencing strategy for your local business.

For instance, companies like Starbucks and Dunkin’ have successfully utilized geospatial data to enhance their marketing campaigns, providing excellent geofencing advertising examples. 

1. Define Your Business Goals

Before you set up your geofencing campaign, it’s essential to define what you want to achieve. Are you trying to drive more foot traffic to your store? Are you hoping to increase sales of a specific product? Do you want to promote a limited-time offer or event?

Your business goals will determine how you structure your geofencing campaign. For instance, if your goal is to increase sales during a specific time of day (such as breakfast), you might set up time-based geofences that trigger offers only during that window.

2. Choose the Right Locations

Geofencing allows for hyper-local targeting, but the success of your campaign hinges on choosing the right geographic areas to create an effective geofencing marketing campaign. Consider the following locations for your geofences:

• Around Your Business: This is the most obvious choice. Set up a geofence around your store to capture nearby foot traffic and encourage passersby to visit.
• Competitor Locations: By setting up a geofence around your competitors’ businesses, you can capture potential customers who are already considering making a purchase. This is known as competitive conquesting and can be highly effective for small businesses trying to win over local market share.
• Community Events: Local events such as festivals, fairs, or farmers’ markets tend to draw large crowds. Setting up a geofence around these events allows you to target attendees with offers or reminders to visit your store.
• Nearby Attractions: If your business is located near popular tourist attractions, shopping centers, or other high-traffic areas, consider setting up geofences around those spots to attract tourists or local visitors.

3. Create Effective, Personalized Ads with Push Notifications

The success of your geofencing campaign depends largely on the quality of your ads. It’s not enough to just send out a generic message—your ads need to be tailored to your target audience, location, and offer. Here are some tips for creating effective geofencing ads:

• Use Compelling Offers: Provide customers with a reason to visit your business. This could be a discount, a free item with purchase, or a special deal available only to those who receive the geofencing ad.
• Keep It Short and Sweet: Since most people will be seeing your ad on a mobile device, make sure the message is short and to the point. Include a clear call-to-action (CTA) that encourages immediate action, such as “Visit us now for 20% off!”
• Personalize the Message: Whenever possible, personalize your ads to make them feel more relevant. Mention the neighborhood or area where the customer is located, or refer to the specific event they are attending.
• Incorporate Time-Sensitive Language: Urgency is a powerful motivator. Use phrases like “Today Only,” “Limited Time Offer,” or “While Supplies Last” to encourage customers to take action immediately.

4. Set Up Multiple Geofences for Broader Reach

While it might be tempting to set up just one geofence around your business, creating multiple geofences can expand your reach and give you more opportunities to engage with potential customers. Here are some strategies to consider:

• Layered Geofencing: Create multiple layers of geofences at different distances from your business. For example, you could set up a geofence at 1 mile, 5 miles, and 10 miles. Each geofence could deliver a different type of message depending on the customer’s proximity. For instance, someone within 1 mile might receive an immediate discount, while someone further away might get a message inviting them to visit when they’re in the area.
• Target Different Audience Segments: Use geofencing to reach different types of customers. For instance, you could set up geofences around high schools or universities to target students with specific offers, or around office buildings to attract professionals during lunchtime.

Geofencing examples include retail stores offering in-store promotions, auto dealers sending service reminders, and law firms providing consultation offers to nearby residents.

5. Optimize for Mobile Devices

Since geofencing relies on mobile engagement, it’s essential to ensure that all aspects of your campaign are mobile-optimized. This includes not just your ads, but also any landing pages or websites that consumers are directed to.

• Mobile-Friendly Design: Ensure that your website is mobile-responsive, meaning it adjusts to different screen sizes and provides a seamless browsing experience. A poor mobile experience can result in lost sales and missed opportunities.
• Fast Load Times: Mobile users expect quick load times. Make sure that any landing pages linked to your geofencing ads load quickly to prevent drop-offs.
• Clear, Simple CTAs: Mobile users tend to prefer simplicity. Make sure your calls to action are easy to find and act on. Use large, clickable buttons for actions like “Shop Now,” “Claim Your Offer,” or “Find Us Here.”

6. Monitor Performance and Optimize 

Once your geofencing campaign is live, it’s important to monitor its performance and make adjustments as needed. Look at metrics such as:

• Click-Through Rate (CTR): This measures how many people clicked on your ad after receiving it. A higher CTR indicates that your ad is resonating with your target audience.
• Foot Traffic: If you have the capability to track in-store visits, compare your foot traffic before and after the campaign to see if it has increased.
• Redemption Rate: If you offered a discount or promotion, track how many people redeemed the offer. This will give you a sense of how effective the ad was at driving sales.
• Customer Feedback: Ask your customers how they heard about your business. This can give you additional insight into whether your geofencing campaign is working.

Choosing a Geofencing Method

Choosing a geofencing method involves selecting the most effective way to target your audience. There are several geofencing methods to choose from, including location-based offers, push notifications, and geofencing ads.

Location-Based Offers

Location-based offers involve sending targeted offers to customers based on their geographic location. This can be done through mobile apps, social media ads, or email marketing. By sending location-based offers, you can increase the likelihood of conversion and drive sales.

Location-based offers can be used in a variety of ways, including:

• Sending exclusive deals to customers near a retail store
• Offering discounts to customers who visit a competitor’s location
• Providing personalized offers to customers based on their location and interests

For example, if you own a retail store, you could set up a geofence around your location and send a push notification offering a 10% discount to anyone who enters the geofenced area. Alternatively, you could set up a geofence around a competitor’s store and offer a special deal to entice their customers to visit your store instead.

By using location-based offers, you can create effective geofencing campaigns that drive sales and increase customer engagement.

Geofencing marketing is a powerful tool for businesses looking to target local customers and drive sales. By understanding your audience, choosing a geofencing method, and creating effective geofencing campaigns, you can increase the likelihood of conversion and drive revenue.

Legal Considerations for Geofencing

As with any location-based marketing strategy, there are privacy concerns associated with geofencing. It’s important to ensure that your business complies with data protection regulations such as the California Consumer Privacy Act (CCPA) and General Data Protection Regulation (GDPR). Make sure that customers have given explicit consent to receive location-based notifications and that they have the option to opt-out.

Unlocking Local Business Growth with Geofencing

Geofencing is a game-changing digital marketing tool that allows local businesses to engage with nearby customers in real-time. By delivering personalized, location-based messages, businesses can drive foot traffic, increase sales, and build stronger relationships with their community.

To create an effective geofencing strategy, local businesses need to define their goals, choose the right locations, create compelling ads, and optimize for mobile. By following these steps and continuously monitoring and optimizing your campaign, you can harness the power of geofencing to grow your business and attract more local customers.

Now is the time to get started with geofencing and take your local marketing to the next level. Whether you’re a small coffee shop, a retail store, or a local gym, geofencing can help you reach the right customers at the right time, right where they are. 

Contact Markitors today to discuss your local strategy options!