What is Geo-Fencing and How Can It Benefit Car Dealerships?

Geo-fencing refers to the use of GPS technology to put a virtual perimeter or “fence” around a particular location. When a mobile user passes in or out of this location, this change can be registered by a user’s mobile app, and this change can then be used to trigger particular app actions or notifications. The automotive industry has recently put geo-fencing technology to use, and, for many firms, geo-fencing assisted marketing has become a major customer acquisition channel. However, how exactly are these dealerships using geo-fencing to increase revenues? In this article, we will list several important use cases of geo-fencing.

On-Premise Notifications & Offers

When a prospective buyer is on your lot, this is your “time to shine” as a dealership. The customer is highly engaged, and you have their attention and interest directed towards your store an inventory. As these customers tour the lot, there are plenty of moments where the user opens their phone. Whether checking their social media, contacting a family member regarding a potential purchase, or even checking out competing offers online, these mobile interactions are an opportunity to show these customers limited time offers and deals that help you close the deal. Geo-fencing technology allows car dealerships to target hyper-specific ads to these on premise individuals.

Off-Premise Notifications & Offers

Just as a car dealership can make a geo-fence around their perimeter, they can also make a geo-fence around the perimeter of competitors. This allows your dealership to hyper-target your special offers and deals to customers who are in the car buying search. With smart, targeted offers such as car-servicing agreements and financing deals, your car dealership may be able to pull this buyer away from your competitor and onto your lot. Additionally, your car dealership can place a geo-fence around the competitors or nearby car servicing centers. This can help your dealership target customers in need of car repairs and car servicing to come to your dealership in the future.

Improvements to the Customer Experience

One way to implement geo-fencing is to use GPS technology to mark a virtual perimeter, however an alternative is to use Radio-Frequency Identification chips (RFID) and RFID readers. These small chips can be easily placed on the dealership’s sold cars, and RFID readers can be easily placed at the entrances to the dealership. When a sold car re-enters the lot, the RFID reader can then trigger a notification that informs the car dealership that a previous buyer has entered the lot. The car dealership employees can then quickly review the customer’s profile, preferences, and any other personal information. The car dealership can then greet this individual by name and have their preferences and history with the dealership top-of-mind for any interactions. In this case, geo-fencing helps a car dealership provide a more personalized and personable experience to their customers.

Dynamic Inventory-Based Ads

If a potential buyer is using a custom mobile app of your car dealership, you may be able to use data from this mobile app to create dynamic inventory-based ads. For example, if a customer repeatedly browsed a particular car brand on your car dealership’s mobile app. Your car dealership can show this customer special offers on this particular brand via push notifications through the customer’s mobile app. Additionally, you could show this customer higher-priced vehicles with financing options that make his monthly payments similar to the car models that he showed interest in.

As discussed, geo-fencing can benefit car dealerships in a variety of ways. In order to stay competitive, car dealerships must leverage geo-fencing and other mobile based technology in order to communicate the best offers and promotions to their customers and provide the best customer experience. To read more about mobile technology in the automotive industry, check out our blog post on mobile-ordered and home-delivered test drives.