June 27 2016

What is Geofencing and How it Works

Geofences are the counterparts to beacons. While beacons are used for more specific proximity, such as letting you know when someone is close to a specific object, a geofence provides more general information such as when a person has walked by a storefront or visits a general area. 

How it Works

Geofencing works in conjunction with Google Maps and other mapping programs, allowing you  to create shapes (such as circles) to paint general areas or to tag specific buildings or other locations. Once you’ve tagged the desired locations, you can monitor your geofences via your smartphone. This can be useful for security and monitoring (giving you information as soon as someone enters the area and recording how long they were there) or as part of your mobile marketing (allowing you to trigger specific messages when a customer is in the optimal time and place).  

When to Use Geofencing

Geofencing for marketing purposes is best when combined with your existing customer relationship management software. So instead of emailing all of your customers the exact same messages and hoping to get a positive response from some of them, you can use geofencing to target existing customers that are nearby your store but that have not shopped for a long time. This is the perfect time to send them messages expressing how much you miss them and to use the opportunity to lure them in with discounts, “freebies,” or to simply tell them about your newest products that are similar to what they have purchased before. And as long as you mention it in your privacy policy, you can also put a geofence around a competitor’s location. This allows you to see who among your customer base is visiting the competition, and how frequently. This can help you adjust future interactions with that specific customer and to better evaluate what the competition is offering if they lure away several of your customers.  

How Does Geofencing Work?

While geofencing has historically relied on cellular data, modern geofencing combines has moved to using GPS and Wi-fi data more. This allows users to opt-in for things like location services and can receive push notifications to keep them updated. You can use “active” or “passive” geofencing, though passive is superior for many reasons.

For instance, while active geofencing can let you track individual customers by latitude and longitude through GPS by contacting a satellite, it consumes so much power that it devastates the user’s battery. This kind of GPS-based geofencing also only works while the app is open, which isn’t really compatible with busy customers bustling by your store.

By contrast, passive geofencing works in the background and consumers very little power, but it gives you less data about the customer and gives you fewer opportunities to reach out to customers, gather data, and transmit the kinds of messages mentioned in the previous section.

Ultimately, it is up to you and your company to calculate the risk versus reward of active versus passive geofencing. In addition to draining more of the user’s battery, active geofencing does risk the customer asking themselves if your app is worth what it delivers when factored against the drain on their battery life.

However, passive geofencing means that you are unable to do what geofencing is arguably designed for: to reach out and engage with customers by offering them relevant information and rewards that make them value your company over the competition.


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