Online and offline channels are merging. Here are some real-world examples of brands driving in-store traffic by sending geo-fencing promotions to app users, requiring almost no investment

What Is Geo-fencing?

In short, geo-fencing identifies the location of your app users, typically through the mobile phone GPS. Most readers will be familiar with Google Maps, which shows the location of the user and let’s them navigate to their desired location. Geo-fencing, takes this one step further: defining a geo-fence of e.g. 500m around a store, it allows brands to send app users a push notification about a gift or in-store activity upon entering the 500m store radius.

The advantage of using geo-fencing to trigger app notifications is that this is highly relevant to consumers, as the notification can be dependent on the time of day and location, such as an inner-city shopping mile. This increased relevance significantly drives conversion rates. It is therefore no surprise that marketing spend including geo-fencing triggers is expected to grow 30% annually for the coming years.

How Do Leading Brands Utilise Geo-fencing to improve Omnichannel Promotions?

Sephora sends a push notification to users coming close to a store and connects this to a gift. This is important as it creates excitement and gives customers an immediate purpose for visiting the store. With 30% of customers using the app, the reach is significant.

(Source: Maximilian Gellert)

One of the most famous examples of using geo-fencing promotion is when Burger King offerd all customers who came within 600ft of any McDonald’s restaurant a Burger King Whopper for only 1$c. After ordering the Whopper through the Burger King app, customers were directed to the nearest Burger King branch for pick-up. The aggressive character of this promotion would undoubtedly not be preferred by many fashion brands. It is nevertheless a great example of driving app downloads, as well as completing a full purchasing process. After all, customers had already provided credit card details to buy the 1 cent deal, leading to higher engagement and conversion in the future.

One of the main challenges is to convince customers to let brands track their location whilst using their phones, as this is required to know when a potential customer enters the geofence. With customers becoming more and more data conscious, one of the best methods is to convince them of the value of sharing this data. I have found Nike to be on of the most transparent apps in showing which data is shared, whilst also being clear on the value provided (i.e. notification about nearby events).

(Source: Maximilian Gellert)

It is important to point out that geofences can be placed anywhere in the world and do not have to be around a store. This provides endless opportunities for marketing: imagine targeting app users who have recently visited a bridal fair with wedding dresses or offering free same-day delivery for rain-boots to customers who are currently on rainy festival grounds.
Utilising so-called geospatial information allows for even more relevant promotional messages when connecting this to existing loyalty program data, such as age, gender and previous purchases.

How Can I Start with Geo-Fencing Promotions?

Running geo-fenced promotions will be new to most brands. Before beginning, it helps to clearly define what the goals of the promotion are, for example in-store traffic, sales, app downloads, loyalty program sign-ups or other forms of engagement. It is then important to put the right team together, usually marketing combined with analytics, finance, retail and digital operations. It also helps to have an omnichannel budget in place, as most of the workload will be incurred in digital, while sales will be realised in store.

To fully understand the value geo-fencing activities, however it is necessary to further track customer behavior and lifetime value change after having participated in these promotions – across all channels.

(Source: Sephora on Twitter)

How to Best Prepare for Future Geo-fencing Marketing?

As one of the main drivers for scaling geo-fencing promotion is scale, even those who are not planning to run any geo-fencing promotions in the near future need to take action: providing incentives to app users to provide location-based data helps to grow the target group for future omnichannel promotions already today.

About the Author:

Maximilian Gellert has been responsible for setting up both retail and online financial and operational KPI budgets for >4000 FTE in very high growth environments. Combining consulting experience with industry functions in premium apparel and online grocery, he supports retailers and etailers in their digital challenges and last mile innovation. Read more of his work here or connect with him on LinkedIn.