Learn how to target the right audience, boost sales, and improve the overall ROI of your eCommerce store in this blog post.
Last Updated:  September 16, 2021
In today’s highly competitive environment, you need advanced tools to target the right customers and propose solutions that can accurately meet their needs. Smart retailers are now getting creative and revolutionizing the shopping experience by leveraging technology and proving customized experiences to their customers.
Geofencing is one of the best tools to achieve this goal. This marketing strategy enables eCommerce retailers to send marketing messages based on customer location. Businesses without a physical location can target their competitor’s brick and mortar store or place geofences in high traffic areas to drive users to their online store.
Indeed, this technique can improve your eCommerce store’s click-through rate by up to 0.82%, which is more than double the industry benchmark of 0.40%. Statistics on consumer behavior also show that up to 70% of online shoppers are willing to share their location details with you to exchange benefits like offers or discounts.
To better understand this topic’s applicability, this article will dive into this technology’s definition, how to use it in marketing, and how to boost your eCommerce sales with geofencing.
What is Geofencing?
Geofencing technology uses the global positioning system (GPS) and radio-frequency identification (RFID) capabilities to create a virtual fence or perimeter around a specific, predefined physical area, such as a brick-and-mortar store.
Whenever your customers enter this space, the geofencing tool can track them, provided they have enabled the GPS and location services on their smartphones.
You can use geofencing to design and send marketing messages relating to customers’ needs within a given geofence. The tool requires the phone user’s consent, after which they can receive push notifications whenever they enter the defined area.
Looking to use geofencing in your marketing strategy?
Your referral sources (companies that often refer customers to you)
Households in need of targeted and personalized services
To create a geofence, you should start by creating a virtual perimeter in a designated area of your choice. You can use the above locations to determine the most suitable target location for your geofence. You should also create an ad campaign for your geofence.
Once users come within your virtual perimeter, they are added to your marketing campaign audience or target group.
You should then deliver ads to these users through alerts, display ads, or in-app ads. The ads can be in the form of text, email, or push notifications. Text and email ads work best if the recipients are customers or lead already in your database. You can also place the adverts on social media platforms or Google Ads.
You can also set the time frame to send ads, such as during peak hours and over the weekends or holidays, increasing your eCommerce store’s visibility.
The data you collect will inform you of your customer’s buying behavior and patterns. For instance, you will learn which outlets they shop from, what time, period, the season they visit, and their general tastes and preferences.
In addition to the basics of setting up and implementing a geofence, you will still need to learn how to use the technology to boost your eCommerce sales.
How to Boost your eCommerce Sales with Geofencing
eCommerce stores can benefit from geofencing marketing in the same way as brick-and-mortar outlets. Tracking shoppers within a specific radius will inform you of customers visiting your target locations or stores and create and deliver ads focusing on their needs.
To gain the most from geofencing solutions, you need to keep in mind the following strategies:
1. Create a Fitting Geofence
For eCommerce brands that have an online-only presence, targeting their competitors have a physical store or high wait areas is ideal. For instance, if you’re a store that sells groceries online, target local stores and offer a better discount to drive users online or target apartments and residential buildings where users spend more time and are more likely to order online for the convenience.
If you have both an online and physical store, like sellers of clothes, beauty products, electronics, and automotive, you need to understand how to create the right size to make the most out of your geofence.
Avoid large virtual spaces by limiting the distance between the geofence perimeter and your store to four-to-five minutes away for on-foot and drive-through shoppers. If the distance is 15 or 30 minutes, customers will likely choose to buy from stores nearest to them.
Create a small, compact perimeter for your target area, making it easier for you to monitor visitors’ numbers. Purchasing behaviors and needs. This strategy will also make it convenient for customers to visit your store.
The closer the shoppers are to your store, the more relevant your geofencing marketing campaign.
2. Target the Right Audience
To improve your eCommerce sales with geofencing, you need to understand who your target audience is, their needs, and how you can fulfill them.
You can start by analyzing the data you already have or by using your social media platforms to interact with your customers and know about their tastes and preferences by posting engaging content like explainer videos, infographics, etc about your product/services.
Using this information and feedback, you can develop ads to engage shoppers within your geofence and encourage them to buy.
American Eagle gained increased in-store sales by creating a geofence targeting mall locations with American Eagle stores. This approach enabled the retailer to convince customers to buy from its stores. Customers who had previously downloaded the American Eagle app would be automatically enrolled for targeted campaigns whenever they entered a mall parking lot within the retailer’s vicinity.
Customers would receive specialized ads with offers and incentives for trying on clothes, increasing the brand’s in-store sales threefold.
This strategy works well when you understand your marketing campaigns’ target audience, whether operating a physical or online store.
3. Use Actionable Ads
Ensure to use ads, which are specific, enabling your prospective customers to understand which product or service you are selling, the details of the discount or offer attached, and the expiry date for the promotion.
For instance, a call-to-action (CTA) saying, “Buy 2 tickets to get one free entry, today only!” will appeal better to your users than a general ad.
Simultaneously, you can boost your eCommerce sales if you engage your target customers first before selling to them. You can guide users through the sales funnel by, for instance, offering free trials instead of telling them to buy right away.
According to Forbes, 62% of millennial customers are more likely to become loyal customers if a brand engages with them on social media platforms.
Walgreens uses actionable ads to drive engagement and brand loyalty. They do so by creating a geofence, where customers receive a notification to open the outlet’s app after entering the virtual perimeter. Customers can access the app by clicking on the notification, enabling them to view their account details or promotional materials with ease.
Similarly, you can boost your eCommerce sales with geofencing technology by leveraging targeted in-app ads or personalized social media content with a brief CTA and relevant information for your target audience.
4. Optimize Data Analytics
Real-time data is a critical component of geofencing marketing, enabling marketers to gather, analyze, and determine consumer behavior with a high degree of accuracy.
As an eCommerce retailer, you can improve your sales with geofencing by using the collected data to measure and analyze your ad performance. This practice will inform your decision making reliably and effectively, leading to increased sales and revenues.
For instance, you can determine your ad views and impressions and the number of visits to a given conversion zone.
This information will enable you to modify your marketing campaigns to suit the needs of your target audience. Suppose customers are not responding to the existing ads. In that case, you can quickly test their reaction to other promotion materials, giving you a clearer idea of what works best for improved eCommerce sales.
You can also use some useful data analytics tools to assess the return on investment (ROI) from your geofencing efforts. This approach will tell you if you are making enough profit from your marketing campaigns to take more informed action towards increasing your revenues or lowering costs.
Uber uses geofencing to offer proactive information to its customers. The company uses geofences to continuously collect and analyze data and create promotions for customers in strategic places (virtual perimeters), such as the Los Angeles International airport and San Francisco airport. Upon arrival at the airport, users are automatically informed of the number of cars they can use, giving Uber a competitive edge.
This approach makes you get ahead of the competition, offering your customers a better, personalized experience, hence, increased sales.
5. Be Time-sensitive and Relevant
Your geofencing tactics will not work if they are not improving your customer experience proactively. If you are looking to boost your eCommerce sales with geofencing, you need to do more than just send promotional materials when customers come within your virtual fence.
You can do more by tracking events beforehand and informing customers of what to expect depending on user behavior.
For instance, Apple Maps tracks user location constantly and predicts where they are likely to visit. If you usually leave work at a specific time and go straight home, the app will record this habit.
It creates a geofence for the areas you spend the most time in, and if you are outside them, you will get a push alert informing you how long it will take to reach your destination. If you are driving, it will tell you how the traffic is and alert you of changes affecting traffic along your routes, such as an accident or road work. The app also allows you to change your departure time or select other suitable, suggested ways.
As an eCommerce owner, you should keep your geofencing marketing campaigns real-time and relevant to your customers. You can increase your sales by tracking their movements and behavior within your geofences. You should then send them alerts during your business hours and reasonable for them to make purchase decisions or use your services.
6. Be Transparent
If handled poorly, geofencing can be unpleasant and annoying to customers. However, if implemented well, they can improve your eCommerce sales.
What should you do to alleviate negative perceptions associated with mobile marketing through geofencing?
Ensure to inform your customers of what to expect upon downloading your app or opening your advert. In addition to using actionable ads, the content in your messages should not deceive customers by selling what you cannot deliver.
If you are running both an online and physical store or have multiple offers, be open about these options or alternatives to make it easier for customers to make better-informed decisions while improving your conversion rates.
For instance, Taco Bell’s mobile app comes with geofencing capabilities, which sends push notifications to customers whenever they drive by a Taco Bell outlet. The alert reminds users that they can order food online and pick it up instead of queuing at the brick-and-mortar store. Following its launch, this campaign enabled Taco Bell to increase its sales by 6%, while the number of orders made through the mobile app was 20% more than in-store orders.
You can create both actionable and transparent mobile marketing ads, enabling app users to make the right choices within your geofence. This practice will improve customers’ perception of your brand, leading to increased sales.
7. Use Content Targeting
You can use tools like Google Adsto create ads with the most relevant words to the content or items you are marketing through your geofencing marketing campaigns.
For instance, you can use words like “wedding dress,” “home alarms,” or “gym equipment.” When people search for terms covered in your virtual territory, they will see your ad.
However, this approach works best if you operate a large eCommerce store because many customers will have researched physical stores near them before coming online.
Even so, once you accompany your ads with low competition and high volume keywords, you can be sure to gain more visibility on search engines, boosting your eCommerce sales.
8. Retargeting and Day parting
Retargeting is a marketing strategy where users see ads after viewing a product or service on your website or visiting your physical store. If you use Google Ads, users will see ads for products similar to those they had viewed on your eCommerce store.
This tactic can help boost your eCommerce sales because it enables you to target the most qualified clients.
ShopBop retailers use this approach in their geofencing marketing campaigns, where they display items shoppers have been viewing. These are goods customers have already expressed interest in and, when accompanied by discounts and offers, like free shipping, will surely enhance your eCommerce sales.
On the other hand, dayparting is an ad scheduling approach, enabling you to target customers during specific times. For instance, if you have an audience attending an event over the weekend, you can create a geofencing marketing campaign for a particular day, targeting people who will be within the event’s vicinity. If you have another target group that is only active during weekdays, you can schedule your ads to run from Monday to Friday.
Dayparting enables you to make the most out of geofencing marketing campaigns by offering your products and services to the right audience at the right time. If you understand your target group’s needs well, you can easily make more sales from this strategy.
Geofencing is a technology that creates a virtual fence or perimeter around a specific, predefined physical area, enabling you to design and send marketing messages relating to customers’ needs within the space.
Some of the spaces to target geofencing include your store location, neighboring stores, events, institutions of learning, and competitors’ outlets. As an online retailer, you can boost your eCommerce sales with geofencing technology by determining the right size for your geofence, targeting the right audience, and using actionable, time-sensitive, relevant, and transparent ads.
You should also leverage your existing data to analyze your ad performance and create more customer-centric offers. Tools like Google Ads will enable you to implement content targeting, retargeting, dayparting with high precision, hence, increased sales.
Rithesh Raghavan is the Director at Acowebs, an online store for eCommerce plugins. Having accrued a rich experience of 15+ years in digital marketing, Rithesh loves to pen his thoughts on the latest trends and developments in the world of IT and software development.