How Geofencing Can Help Expand Your Purchase Order Base

by Emily Retherford

2 min read

Geofencing is a new marketing strategy that has emerged in the mobile-based world. Learn what this term means and how a small business can take advantage of this concept to better market to prospective customers and clients and increase sales.

What is Geofencing?

Geofencing is a location-based mobile service that enables businesses to send a variety of messages and notifications to smartphone users within a specific geographical region. For example, perhaps a business in Toronto has a store in East York and Midtown neighborhoods. If a smartphone user is physically within the boundaries of these neighborhoods, the business can automatically send a message to their smartphone. However, if outside the boundaries of these specific neighborhood, no message would be sent to the prospect. Basically, businesses set up boundaries around their premises so that when customers are near the business they get messages that would not make sense elsewhere.

Geofencing Brings In Customers

Geofencing sends ads, promotional material, or other messages to users close by. According to some data, geofencing increases app usage by over 200%, improves customer engagement, and increases the probability of sales. As well, geofencing click-through data is staggering — it’s 15x higher than normal push notifications. All of this data shows that geofencing is an important tool for small businesses to use.

Geofencing Increases Conversion Rates and Allows Fast Experimentation

Because of the technology involved, small business can quickly experiment and iterate their content, which in turn, can increase conversion rates. Businesses can engage in-store customers better, localize deals more efficiently, have real-time updates, better understand customer preferences, easily use different languages, match currencies, and test visual elements of the message faster than ever before. It has been found that about 65% of consumers who receive push notifications open them and actually read them. Geofencing is a great opportunity to capture customers who are already physically close to your business.

Implementing Geofencing for Your Business

Geofencing relies on GPS data, cellular data, WiFi, and bluetooth to know when a customer is within a designated area. Once inside, your business’s app can trigger any one of the following — in-app popups, push notifications, loyalty programs, coupon incentives, or other dedicated content. Creating an appropriate-sized geofence is an important decision. For example, in urban areas, it wouldn’t make much sense to geofence the entire city boundary, as it’s too big. Conversely, it’s too narrow of a geofence to place the boundaries just a few meters from your business’s door. Often in cities, a geofenced-in area of 100 to 500 meters around a business is common. Much larger than this may not make sense, as the customer is too far away.

Another common best practice is to ensure that if your business has multiple locations the geofences do not overlap. If they do, this can easily cause the user to be confused regarding which location to visit.

Some popular companies that offer differing and unique geofencing services include ReachLocal, Simpli.fi, Phunware, and DealerStrong.

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