How Can Location-Based Marketing Build Your Business?

Effective marketing is about reaching the right customer at the right time. Leveraging the power of location-based marketing makes the most of technologies that target your ideal audience when they’re most likely to make a purchase. 

Businesses use location-based marketing (also known as geofencing or proximity marketing) to engage customers once they enter the business’s geofence – a predefined physical location. Companies can send relevant messages, alerts and advertisements on social media or push notifications directly to customers’ smartphones. 

Since 85% of Americans own a smartphone, mobile phones have transformed the traditional way businesses market their products and services. Location marketing attracts customers to your location by leveraging the power of mobile. A recent survey indicated that 53% of shoppers visited a specific retailer after receiving a location-based alert. Additionally, 50% of those shoppers indicated their visit was unplanned before the message!

Some businesses use location marketing technology to track and monitor activity when people enter (or leave) their geographic location, neighborhood, or store. Some companies even use geofencing to monitor their employees, keep track of store property, and automate time cards. 

Let’s learn more about implementing location-based marketing and why it might be the right choice for your business.

Table of Contents

• How does location marketing work?
• 4 ways location-based marketing builds your business
• Identifying your target market
• How to measure success
• What about privacy?
• Companies that use location-based marketing

How Does Location Marketing Work?

Getting customers to opt in to your SMS texts is the first step in any digital marketing campaign, followed by inviting them to enable location tracking. If you are running a geofencing marketing campaign, you have probably already established your business radius. 

Once subscribed customers enter your business radius, you can send pre-programmed texts straight to their phones. These messages could contain a special promotion, discount or any other deal which could motivate them to visit your store to purchase. If they take advantage of your offer, you can sweeten the deal by offering them a bigger discount the next time they visit your store.

Pro tip: An effective geofencing radius can be between 100 - 150 meters, depending on your business and its location.

4 Ways Location-Based Marketing Helps Build Your Business

So, how can location marketing campaigns help attract more customers and increase conversions? Here are four reasons you should consider including location-based marketing in your digital marketing strategy.

Reaches the Right Customers

The days of “spray and pray” are long gone. So why waste time and effort creating communications that don’t appeal to your target audience? Once you’ve identified your ideal customer base, creating specific, personalized messages draws customers toward your brand and offerings.

Builds Foot Traffic

Building foot traffic is essential if you have a brick-and-mortar store that relies on customers physically coming to your store to make purchases. Appealing to customers already in your geographic area increases the chances that they’ll visit you over patronizing a competitor.

Enables Hyperlocal Campaigns

Geofencing doesn’t work well on a broad scope; therefore, creating a precise, hyper-local geofence is the key to success. Again, an effective geofence can be as wide as 150 meters from your business. 

However, if marketing to customers inside your business, that range can be as small as five meters. Ideally, location-based marketing is best executed if customers can reach your store within a five-minute transit, whether driving or walking.

Improves User Experience 

Nobody likes messages that don’t speak to their interests. They waste time and can potentially turn customers off to your brand. However, sending messages that appeal to customer interest and anticipate their needs strengthens loyalty and heightens the customer experience.

Identifying Your Target Market

We’ve established that sending targeted messages to your ideal customers is essential to creating successful campaigns. So how do you identify your intended customer base?

Demographics

Since demographics can significantly affect consumer preferences, you must understand what factors you should consider when identifying your target consumer. Here are some metrics that help create an accurate customer profile:

• Gender: Do your products and services appeal to a specific gender, or are they universal?
• Age: Are your ideal customers young, old, in between age groups or multi-generational? 
• Lifestyle: What are your customers’ hobbies and interests?
• Income: Are your products economical, in a luxury category, or in between?

Behavior 

Understanding customer likes and buying patterns helps create campaigns that capture attention and even predict future purchases.

• What pages on your website have customers visited? 
• What products have they found interesting or have they already purchased?
• How often do they buy from you?

How to Measure Location Marketing Success

How do you know if your efforts are successful? Measuring your success by meaningful metrics is the best way to determine which areas to tweak – or which to do away with altogether.

Determine ROI

Are your location-based campaigns generating the number of sales you were anticipating? If your return on investment doesn’t meet expectations, you may want to consider making changes to improve your campaign’s reach or effectiveness.

Perform A/B Testing

There is no “one size fits all” marketing campaign. However, when you are using location marketing, creating ads or messages that will be attractive to many improves your chances of conversion. 

Make sure to test different types of content and play around with your campaigns. For example, if you own a small coffee shop, you may find that a free cup of coffee engages more people than a free croissant. Also, don’t forget to test your geofencing location, especially if there’s a direct competitor nearby. You want to set an area that will be competitive but doesn’t overlap a competitor’s territory.

What About Privacy?

Honoring customer privacy concerns is vital to any marketing campaign. The difference between creating relevant offers for your customer base and digitally “stalking” them can be quite slim. In addition, concerns about cybercrime and theft of personally identifiable information (PII) make customers wary of marketing communications that violate their privacy.

To address these concerns appropriately, make sure you:

• Get customers’ permission to send them SMS texts
• Give customers the ability to opt out of marketing communications at any time 

Top Companies Using Location-Based Marketing

There are many ways to use geofencing. Some methods work better than others, depending on your industry. Let’s look at specific examples of geofencing strategies by some successful brands. While some practices rely on push notifications in apps, you can implement a similar approach just as efficiently through geofencing.

Uber

Uber’s entire business model is based on GPS tracking. When a user opens the Uber app to find a driver, the app shows how many drivers are available in the area, where they are, and their estimated arrival time. Uber then sends users a notification once the driver is approaching the area.

Apple Maps

Did you know that Apple Maps constantly tracks its users’ location? For example, the app records customer transportation habits and the places they go to most often. Consequently, if a user is outside their “normal” geofenced area, the app will send a push notification about the estimated time to arrive home, traffic, etc. 

The app also sends notifications about changes from the usual route — namely, accidents, road work, and other reasons for abnormal traffic. This information helps users adjust their timing or look for alternate routes, which the app also suggests. 

Taco Bell

One of the biggest fast-food chains in the U.S. also utilizes geofencing technology to leverage sales. Taco Bell has a mobile app for customers to order food from their mobile devices. The app is a huge convenience for those users who can’t or don’t want to wait in line at stores and drive-throughs. 

Whenever a user drives by or is close to a Taco Bell location, the app sends the user a push notification. The notification is a simple reminder that proved to be a big success. After the launch of this campaign, the company saw a 6% sales increase. So it’s clear that if used correctly, geofencing can be very beneficial for restaurants of all kinds. 

Choose Textedly For Location-Based Marketing Campaigns

Location marketing is easy to use and versatile – you can tailor it to your business needs with just a few clicks. Location-based marketing also provides data on each sale and tracks it, which you can use to improve your future marketing efforts. However, an effective SMS geofencing strategy could be necessary to ensure you leave nothing on the table.

Need a hand with location-based marketing? Textedly provides easy-to-integrate solutions for your business. Get started with Textedly’s free trial to kick-start your next location marketing campaign.