It’s an adage as old as time: in business, location is everything. That holds especially true today, but perhaps even more important than your own location is the location of your customers. Knowing when potential customers are nearby, and reaching out to them with time-sensitive special offers, is a growing trend in local marketing known as geo-fencing.

Simply put, geo-fencing is technology that detects when a participating user enters a specific zone – such as a mall or shopping center – and targets those users with relevant offers. For example, a boutique shoe store may send shoppers a brief text message offering a 10% coupon for shoppers that buy a pair of shoes within the next hour. Because the shoppers are nearby, and presumably in a shopping frame of mind, it can be a highly effective way to increase sales with relatively little effort.

How effective? According to a pilot study released by Placecast, a provider of location-based marketing solutions, 79% of participants said that the alerts increased the likelihood that they would visit the retailer, with many (nearly 60%) opening messages as soon as they received them, while others waited a day or two before viewing them. Reaction from shoppers was favorable, with most shoppers reporting that they had found the program to be relevant and useful, and that they would likely use the service in the future.

A common concern about geo-fencing is that consumers will find the service intrusive or that it would raise privacy concerns. Street Fight released polling data that gives revealing insight into the mindset of shoppers. When asked whether they’d be willing to allow a smartphone app to track their activities at all times if it meant a 50% off purchases at every store they visited, 50.7% of respondents answered “yes”. While the example in the question may be an extreme one, it certainly indicates that privacy sensitivities are fluid, and can be influenced by the promise of real rewards.

While the most obvious application may be in retail settings, there are marketing opportunities for a wide variety of local businesses, including service businesses. A heating and air conditioning company might target potential customers in their immediate neighborhoods with timely reminders to perform seasonal maintenance, for instance.

More and more retailers of every size are rolling out location-based marketing efforts, and geo-fencing is likely to increase in popularity over the next few years. For local businesses, the relatively low cost and ease of implementation, and the tangible impact it can have on sales makes this marketing solution a strategy worth considering.

 

Duprey, Patrick. Poll: 50.7% of Consumers Would Trade Location Privacy for Discounts. Street Fight Mag, 30 July 2012. http://streetfightmag.com/2012/07/30/50-7-of-consumers-would-trade-location-privacy-for-discounts/  accessed 10/21/2013.

Kogel, Kathryn. Consumer Insights on Location-Based Mobile Marketing. Placecast ShopAlerts Pilot Studies Executive Summary. http://placecast.net/research/Placecast-ShopAlerts-Pilot-Studies.pdf accessed 10/21/2013.