Geofencing appears to be making a comeback in a big way, according to a new study by Salesforce. The technology, which allows marketers to send messages to smartphone users when they enter a defined geographical area, was first trialled several years ago. It wasn’t as widely adopted as first hoped, but improvements to the service have drastically increased the number of retailers and shopping centers signing up.
Using the technology, sellers can choose to send potential customers a message when they enter their store, shopping centre or neighbourhood. The technology only requires GPS and an app to work, and can easily be integrated into most CRM systems. On a very basic level, this can be used to alert potential customers who may not have visited otherwise. Retailers can also choose to send information, such as directions to the stall, or run hyper-local promotions. 1-800-Flowers deployed this tactic successfully back in February, when they offered a 20% discount on roses to customers who entered their town. It lead to a 300% increase in sales.
Geofencing can also report back on customer behaviour. Some apps will record which shops a customer ended, and almost all will show success metrics. This data can then be used to see which offers and locations actually attract more customers, and whether that translates into more sales. Other possible metrics include the effectiveness of window displays, how often a customer visits the store, and how long they shop for.
Finally, Geofencing can lead to better rewards systems. Once you know where your customers are and how they behave, you can encourage and reward them effortlessly. Neiman Marcus stores even use Geofencing to detect when VIP customers are in store, and look at what they typically buy. This gives the customer a much more personalised service.
While the privacy concerns that blighted the first Geofencing offering still exist, the Salesforce survey indicates that customers are happy to trade their personal information in favour of a better service – but it needs to be additive, not intrusive. Done right, geofencing could revolutionise location-based sales.
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