Geofencing is a strategy that has been around for a few years, typically used by retailers to increase footfall to physical stores. The term refers to the use of GPS or RFID technology to create a virtual boundary around a particular location, which can trigger a response if a consumer goes in or out of it.

More recently, with the battle between online and offline shopping intensifying – and bricks-and-mortar stores looking for ways to trump ecommerce alternatives – it’s also being used in attempt to improve the in-store customer experience. 

Geofencing doesn't always guarantee customer satisfaction, of course. Back in its infancy, the technology was criticised for potentially offering more annoyance than anything of real value to consumers. In order to succeed then, geofencing has to go beyond the norm and actually change the customer's experience for the better.

So, what are retailers doing exactly, and what real value does it hold for consumers? Here’s more on the story plus a few brand examples.

Navigation and product search

Apps are no longer thought of as an isolated medium. Many brands now integrate this technology into the in-store experience to better fuse the online and offline worlds. For example, fitness retailer Under Armour allows shoppers to scan barcodes on products to find out additional information. 

Geofencing can be another valuable element of brand apps, further enhancing the experience of browsing and shopping in a physical location. 

Home Depot is one effective example, first rolled out in 2014. Its app automatically switches to an ‘in-store’ mode when a consumer enters, allowing them to gain additional features like the ‘product locator’ tool. By using location-based technology, the app automatically detects which store the user is in, giving them a map to specific products based on their exact position.

Book store Foyles also uses a similar feature when customers enter its flagship London store, albeit a much less sophisticated version that appears on the user’s browser after the customer connects to in-store WiFi.

However, both demonstrate the unexpected value geofencing can bring. While shoppers are unlikely to expect this type of technology, the help and added convenience can certainly enhance the customer experience (as well as make it less mundane) – which is also likely to stick in the mind of the consumer when they think about the brand in future.

(Image via Virtual Reality Times)

Greater convenience

Another way geofencing can enhance CX is to improve logistics, leading to greater convenience for both brands and consumers. 

In 2016, Mcdonalds started testing geofencing in its mobile app to optimise food preparation time. In order to avoid long wait-times and the potential for cold food, the app detects when a customer is getting closer. Staff are then alerted when they should start preparing the order, theoretically meaning the customer will arrive at the perfect time to receive it. 

Do customers really care enough about this feature for it to have any real impact on CX? It's hard to say, as the proportion of people ordering in advance at McDonalds might be quite slim to begin with. However, I can see how the added convenience might be beneficial.

Elsewhere, similar use of the technology can aid convenience in airports by providing information such as approximate walking times and shortest queues. For retailers, geofencing in airports can also lead to better targeting opportunities, with the ability to remind consumers about items or services they might need before travelling. 

In-store gamification

Geofencing is most commonly used to offer consumers rewards to encourage purchases. App creator Shopkick also goes one step further by helping retailers to ramp up in-store offers, extending it to dressing rooms and other pre-purchase behaviour.

For example, US retailer American Eagle gives customers so-called rewards to incentivise try-ons. To some extent, this turns the in-store experience into something of a game, with shoppers more likely to try on additional items in order to see what they might receive in return. As a result, this behaviour increases the likelihood of a purchase, as it forces customers to seriously consider items they might have otherwise left on the rail.

Furthermore, this type of beacon-technology can also help brands to retarget customers at a later date. If a consumer tries on an item in an American Eagle store, the retailer can then use this data to send a related email or product offer, also helping to connect the dots between offline and online brand communication. Again, retailers need to be careful here that they are not simply nagging customers, but are targeting those who demonstrate real interest (and not just a one-off interaction).

Immediate customer feedback

Finally, geofencing can also be highly beneficial to retailers that are continuously striving to improve the customer experience. This is because the technology can be used to prompt shoppers to provide real-time feedback, with consumers also more likely to deliver it when it is fresh in their minds.

There is the potential for annoyance again here, as shoppers could potentially be put off by being asked about their opinion or experience. That being said, it also shows greater interest from the brand, which could help to improve positive sentiment overall. The likelihood of this tactic working is also increased if the experience typically relies on good or fast customer service, such as in a restaurant or bank. 

All in all, this data can be highly valuable for CX-focused brands, even giving them a chance to turn around or address poor experience with a targeted apology or special offer.

Preventing geofencing becoming creepy

While the aforementioned benefits are likely to improve CX, that’s not to say that all customers are open to the idea of geofencing. Occasionally, this use of data can come across as creepy – even unfair if consumers have not knowingly given consent.  

The key to this is to be entirely transparent.

While geofencing automatically requires the consumer to permit their location data to be used by others (usually via an app), not all consumers will be aware that they have done so. As a result, it is vital for brands to fully state why and how they are using it in order to reassure users and convince them of the benefits (particularly where stricter data regulations apply, such as the GDPR).

Related reading:

Nikki Gilliland

Published 17 January, 2018 by Nikki Gilliland @ Econsultancy

Nikki is a Writer at Econsultancy. You can follow her on Twitter or connect via LinkedIn.

609 more posts from this author

You might be interested in

Comments (1)

Avatar-blank-50x50

Matt Lovell, Head of Customer Insight at Jack Wills

Some nice examples Nikki. To me the main restriction here still revolves around identifying a sufficient reason (or reasons) for why the customer should download the app in the first place but once they have, some great opportunities to drive engagement and ensure the customer finds it worthwhile / enhancing.

21 days ago

Comment
No-profile-pic
Save or Cancel
Daily_pulse_signup_wide

Enjoying this article?

Get more just like this, delivered to your inbox.

Keep up to date with the latest analysis, inspiration and learning from the Econsultancy blog with our free Digital Pulse newsletter. You will receive a hand-picked digest of the latest and greatest articles, as well as snippets of new market data, best practice guides and trends research.