What is Geofencing and Why Do SMBs Need It?

What is Geofencing and Why Do SMBs Need It?

July 12, 2016
4 min read

Innovation equals growth. This sentence pretty much sums up the attitude of the great majority of entrepreneurs today. Startups from all around the world are all looking for a way to utilize technology in the best possible way in order to grow their companies and generate more revenue.

According to PwC, one of the big four international accountancy firms, innovation is the key factor of growth for almost every startup. After surveying 246 executives from all around the world, the PwC published a study which clearly indicates just how much is technological modernization important for CEOs worldwide.

Apparently, 67% of CEOs are well aware that innovation is a competitive necessity. Nearly 80% of the surveyed verified that they have a clearly defined strategy that should boost the overall implementation of modern technologies in their business. Finally, as a result, companies that are not afraid to innovate grow much faster than their counterparts. In fact, the average growth rate of an innovative company is 62% over the course of five years. Companies which do not share this characteristic will grow by 20% over that same period of time.

This is why it is extremely important to understand the potential of modern technologies. One of the latest trends that is quickly picking up attention is called – the geofencing. If you are not familiar with the concept, here is a brief explanation, and a thorough explanation on how you can use it to grow your business.

What is Geofencing?

The very term signifies a virtual border around an actual geographical area. This virtual perimeter can be utilized in many different ways, but what concerns us the most is its application in the world of small business.

Geofencing allows companies, entrepreneurs, startups and small business owners to target a specific group by concentrating on one crucial demographic – the location. The location-based mobile service helps you to communicate with people that are passing by your store by sending them a message once they reached a defined geographic area. That means, when a prospect approaches your place of business, you’re sending that potential customer a message in order to let him know that you are open for business.

This trend has been around for more than a decade, since 2002. While we already had the chance to see an actual application of this concept across many different industries, in the last two years we are also witnessing this trend rising in the world of marketing as well. Here is how it can help you to market your own product or service.

How it Helps Your Business

First of all, geofencing is the most powerful tool when it comes to engaging shoppers that are within your area. Since you are able to send a direct message to anyone who enters your defined perimeter, you are able to grab customers’ attention in a very innovative way. So once a prospect enters in your shop, or just approaches it, they receive a message with your advertisement. All that you need is an app and GPS coordinates. Ideally, you will use an app maker and build your own app that will have this feature integrated within your official app. Imagine entering a mall and getting an instant message about a discount that your favorite brand is promoting that very moment. It is clear why this trend is becoming so popular. Deploying custom ads to your prospects’ mobile device is certainly the best possible way to grow your business locally, but you should still mind the traditional practices of marketing.

For example, a company called 1-800-Flowers thought of the best way to utilize geofencing in order to drive business to their store. On Valentine’s Day, this flower store sent ads about their 20% off discount on bouquets to everyone who approached their store. The general idea was to drive traffic to their stores through a click-through map that clearly indicates where their store is located. In their case, this innovative idea proved to be profitable.

Furthermore, other brands across many different industries are even targeting their competitors’ place of business via their location based service, and push notifications once the prospect enters a competitor’s store. Imagine walking into a Burger King, and then you get a notification from McDonalds with a 20% off coupon. While this practice may be considered as non-ethical, the aforementioned company managed to use this feature to their advantage as well. The 1-800-Flowers company actually sent push notifications to people who entered other flower shops and jewelry stores, on that same day.

So although geofencing leverages particular locations, that doesn’t mean that you have to stick to your particular place of business. For example, a tire store could send a push notification to every driver that enters an auto-repair shop. The trick is to think about the context of your business and employ it in the best way possible to reach your target audience.


You can even integrate your app with your CRM system, and gain more insight about your local customers. So it helps you to get an advantage over your competition through data analytics, it helps you with targeting specific target groups, and it helps you with your brand awareness. What’s not to love about Geofencing?

The only thing that you should definitely watch for is that your notifications and ads don’t drive people away from your store. So don’t be intrusive, make sure that you are sending a clear message, and embrace this innovative feature because it could definitely help your business grow.

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Michael Brenner

Michael Brenner is an international keynote speaker, author of "Mean People Suck" and "The Content Formula", and Founder of Marketing Insider Group. Recognized as a Top Content Marketing expert and Digital Marketing Leader, Michael leverages his experience from roles in sales and marketing for global brands like SAP and Nielsen, as well as his leadership in leading teams and driving growth for thriving startups. Today, Michael delivers empowering keynotes on marketing and leadership, and facilitates actionable workshops on content marketing strategy. Connect with Michael today.

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