Retail 101: What Stores Need To Know About Geofencing

If you’re new to mobile retailing and wondering how exactly stores are connecting to consumers through their phones, you’ll want to pay attention to geofencing.

Just hearing the name alone, you may be picturing some kind of boundary––which is exactly what it is. But instead of a physical “fence” you can see, these areas are only visible to your mobile device, which let you know when you’ve entered a geofenced area via push notification, text message, or email.

While there are any number of applications for a geofence, it presents a big opportunity for retailers looking to drive traffic to brick-and-mortar stores in high traffic areas.

In short, when someone enters a geofenced region––usually near a store––the mobile user is given a notification from the retailer most often in the form of an offer. The biggest advantage to the customer is convenience. If you’re already nearby a certain store, you can quickly run in and take advantage of the promotion even if you didn’t intend on shopping that day.

Compared to the average store visitor just browsing around, geofenced customers arrive with the intent to purchase.

The Advantages And Disadvantages Of Local Retail Marketing

Smart targeting with technology like geofencing is an up-and-coming form of local marketing. Most closely related to the direct marketing strategies of the past, many consumers seem be on board with a mobile nudge when they otherwise might have passed right by a store on the street.

According to a 2013 customer experience study by comScore, 47% of shoppers surveyed said they’d be more likely to shop with a retailer if they offered promotions to their smartphones when they’re nearby.

On top of this, the conversion rates for these qualified customers are much higher than what’s typically achieved with direct marketing.

Victor Wong of PaperG, a leading cross-platform advertiser, has reported that local advertisers saw a 70% boost in click through rates for mobile promotions that are smartly localized and optimized to the customer, rather than generically.

While these numbers are attracting the attention of marketers, retailers should be careful not to take these promotions too far by ignoring the benefits of outstanding in-store service.

Irrelevant and incessant ads can often have the opposite effect you’re looking for by annoying the customer with information they’re not interested in over and over again.

How Retailers Can Leverage The Power Of Local Marketing

For marketers using geofencing promotions, the first step is to get inside the customer’s head and craft offers with real value. If customers are willing to give up their privacy in return for a more convenient way to shop, make sure you’re providing that value in full.

Even more importantly, remember that location alone doesn’t define a customer. Geo-fencing and mobile retail in general are not a cure-all––they’re pieces of a much larger strategy that centers on your store.

A targeted promotion can help get someone into your store with intent to buy. To truly take advantage of these leads, you need to have expert staff ready to help the customer discover other products or services that relate to the offer that brought them inside. Whether it’s a well-executed suggestive selling strategy or highly-personalized in-store service, be sure you’re providing a full array of outstanding experiences.

Before putting your own mobile strategy in place, it’s essential to get a read on your customers to discover whether or not local marketing tools like geofencing will truly provide more value to their in-store shopping experience. Shopper evaluations like customer intercepts give you the opportunity to create a customized survey geared to get at this question specifically.

In addition, customer journey maps can zoom out and give you a complete picture of where you customers are engaging with your brand and how to strengthen those paths to purchase both online and on the ground.