What is Geofencing? A Complete Guide

What is geofencing? If you are a mobile marketer, it’s definitely a must-know. Are you new to it, or have an incomplete understanding of how it is used? Don’t worry, we’ve got you. This article covers 10 basic things you need to know. After reading this, you will be able to decide if it’s a good addition to your app strategy or if you want try our demo app and experience how it works right away.

Click on any of the links to jump to the corresponding section:

  1. What is geofencing?
  2. What is a geofence?
  3. What can marketers do with geofencing?
  4. How is geofencing used in different industries?
  5. What location technology is used for geofencing?
  6. How does geofencing compare with beacons and geotargeting?
  7. What should marketers know about geofencing and privacy concerns?
  8. What to pay attention to when choosing a geofencing partner?
  9. Is geofencing right for my business?
  10. How to get started with geofencing?
what is geofencing?

1. What is geofencing?

Geofencing is a process of using a geofence to target mobile users. Marketers use this technology to collect information about and target their customers as they enter, leave or stay in specific areas, known as geofences. 

2. What is a geofence?

Now, what is a geofence? A geofence is a virtual perimeter marking a real geographic area. You can see it as a virtual fence. The area it surrounds can be as big as a city, or as small as one building. Geofences can take different shapes. For more straightforward use cases it could be round. For complex situations, marketers could build polygon shaped geofences.

3. What can marketers do with geofencing?

On average, a mobile app loses 96% of its users within a year of its initial download. Keeping users engaged is difficult – due to the overload of commercial messages they receive, users filter out the noise. They only respond to what’s really relevant to their current mood and setting. Geofencing can provide a lot of insights about user’s context and surroundings, which can help marketers adapt their communications accordingly.

Marketer can do the following:

  • Collect location insights about user’s offline behaviors for audience segmentation, personalization, retargeting, competitive intelligence, and online-to-offline (O2O) attribution.
  • Send location-relevant content to mobile users based on their current or recently-visited location, in order to drive their engagement with the app.

4. How is geofencing used in different industries?

geofencing technology in action

Geofencing can be used in many different ways. Here are some examples of how marketers in various industries already get creative with it:

Retail:​ Sending promotional messages as shoppers pass by a store to drive visits.

Automotive​: Retargeting users that have visited a car dealership (yours or competitor’s).

Coupons​: Proving the ROI of coupons using location data to track store visits initiated by coupons.

Airline​: Upselling flyers with fast-track services as they walk in the airport.

Mobile​ ​payments​: Reminding users of places where they can pay as they visit them.

Hospitality​: Capturing feedback shortly after visitors step out of the hotel.

Travel​: Enriching user profiles with travelling history to supercharge future targeting.

Dining​ ​reviews​: Suggesting a list of popular dishes to a guest who visits a particular restaurant.

Coffee​ ​chain​: Giving discounts to returning customers to build loyalty.

Online​ ​store​: Geo-conquesting competitors locations with deals to lure customers away.

5. What location technology is used for geofencing?

The general functioning of geofencing is that it uses location services to detect a user’s device within the predefined zone – the geofence –  in order to trigger a notification or track visits. Now, which location services are used to do this can vary depending on the provider. It can use:

  • Cellular 
  • Wifi 
  • GPS 

While Cellular and WiFi are recommended for their reliability, GPS-based solutions are not. They are accurate, but this technology has proven to be extremely battery-draining (remember those times you used Google maps to get somewhere and ended up with a half dead phone? Yeah, so do we). If you’re looking for a geofencing provider, check out this list of most important features a geofencing provider should have.

It is important to note that your app users will have to opt in for location services in your app for geofencing to work. Similarly, your users can later opt out. Read our blog on convincing users to opt in if you want to know how to make sure as many users as possible give your app permission.

6. How does geofencing compare with beacons and geotargeting?

Geofencing, geotargeting and beacons are all used for location based marketing. Different providers choose to rely on either one or several of these technologies. However, the difference lies in the way they generate location data and their target range. The table below addresses the differences between the technologies and highlights how they are best used.

Location TechnologyIP-addressBluetoothCellular/Wifi
Target RangeLarge (state, zip code)Small (store aisle, bus stop)Medium to large (store, neighborhood)
Real-Time TargetingNoYesYes
Best ForBrowser marketingMobile & app marketingMobile & app marketing
Location Data CollectionNoYesYes
Hardware and MaintenanceNoYesNo

7. What should marketers know about geofencing and privacy concerns?

Geofencing relies on location services which naturally brings up customers’ concerns about companies accessing their location data. So here are a few things to guide you in this area:

  • The power is always with the customer. Geofencing requires customer’ permission to share their location data. Customer can easily revoke this permission at any time.
  • The key is being transparent. You need to explain to your customers why you need to access their location. They will be more willing to support you if they know why you are using their information.
  • The rationale behind you accessing and using your customer’s location and mobile phone data is important: it must benefit the customer experience, not just you.
  • Provide security to keep customer data safe.
  • As an app, you need to have a privacy policy that communicates all the assurances you deliver to your customers. It needs to be clearly documented and available online.
  • When communicating with your customers about location sharing, your choice of words is crucial, it can take all of their concerns away or scare them away.

8. What to pay attention to when choosing a geofencing partner?

  • It​ ​shouldn’t​ rely ​on​ ​GPS​ – GPS will drain your app users’ battery in no time.
  • It​ ​should​ ​be​ ​optimized​ ​for​ ​accuracy​ ​&​ ​battery​ ​usage​ – a good solution has a well-optimized balance between the two. Those that are extremely accurate come with battery drainage on the flip side, causing users to uninstall your app.
  • It​ ​should​ ​offer​ ​location​ ​data​ ​collection​ – geofencing is increasingly focusing on collecting data about users’ offline behavior to target them in a more personalized way. Solutions that just offer geofencing push notifications will soon be considered primitive.
  • It​ ​should​ ​allow​ ​easy​ ​geofence​ ​management​ – A good geofencing solution comes with its own dashboard and API, making it easy for marketers to create, manage and optimize their geofences
  • It​ ​should​ ​come​ ​with​ ​anti-spam​ ​tools​ – This is especially important for marketers that want to target app users in dense city areas with a lot of geofences and want to avoid sending too many notifications

9. Is geofencing right for my business?

As with everything, geofencing may not fit every company’s mobile marketing strategy. In our experience, if a marketer can relate themselves to one of the examples below, it’s most likely a fit.

  • My company has brick-and-mortar locations, such as retailers, food & beverage chains, airports, airlines.
  • My company has clients with brick-and-mortar locations, e.g. media sellers like coupon and flyer aggregators, reviewing platforms like Tripadvisor and Yelp, credit card companies connected to specific merchants.
  • My company has a strong connection to brick-and-mortar locations, such navigation platforms, travel guides, online retailers with offline competitors.
is geofencing right for my business?

10. How to get started

If you’re interested in using this technology, here are 5 practical steps to help you get started:

  1. You need to have an app.
  2. Choose a fitting geofencing software (use these 7 tips for guidance).
  3. Test this software (many come with a testing app).
  4. Implement the software into your app (you may need development help with this).
  5. Get creative with your geofencing notification campaigns.

The next step

Now that you have read this article, you should have a good understanding of what geofencing is and how you can apply it. Maybe you already have some creative ideas on how you would like to implement it in your app.

If you have any questions about geofencing, how you can use it or about the Plot Plugin and dashboard, please do not hesitate to contact us.

More questions about geofencing?