How Network Geofencing Can Help Wineries and Tasting Rooms Increase Foot Traffic (Repost from Hearst Bay Blog)
As the most substantial growth period in U.S. wine consumption draws to an end, California wineries are looking for ways to take mobile advertising to the next level. Only a few years ago, all you needed was a website to increase foot traffic to your tasting room. Today, even the smallest, most boutique wineries are using best practices like brand storytelling to optimize their websites, and offer rewards like free tastings to increase the number of customer interactions on sites like Yelp and Facebook. As a result, even wineries that have optimized their online presence are facing increased competition for coveted consumer attention.
Geofencing refers to the practice of setting up a virtual boundary around a business using GPS or RFID (radio frequency identification) that sends a text or notification to mobile devices that cross it.
How It Works
There are two basic types of geofencing: App-based and network-based. App-based geofencing, as the name implies, requires building an app, and linking your geofence to the app. Because it tends to be more expensive for businesses (you have to create an app) and requires users to have the app installed and running to receive push notifications, we don't recommend app-based geofencing, and the remainder of this article will focus on network geofencing.
To receive calls and text messages, your mobile device is continuously communicating with nearby cell towers that accurately triangulate your position. If your device encounters a Wi-Fi signal or SSID, it captures that data and updates your location with even more precision. These services are known as “region monitoring” and are the reason your phone knows where you are at any given time.
Network-based geofencing utilizes these Wi-Fi and cell tower communications to track when a mobile device enters your pre-defined target area and trigger a response, usually a push notification. Because this type of geofencing doesn’t require consumers to download an app, visit a website, or match with a search algorithm, it is compatible with 92% of U.S. smartphones. As a result, Salesforce reports that 53% of consumers visited a specific retailer after receiving a geofencing alert, with 50% admitting that their visit was unplanned. Perhaps most importantly, Salesforce reports that 80% of consumers who use location-based services indicate that they want push notifications from businesses—meaning that your ad is not viewed as intrusive spam or junk mail, and many companies report a 90-97% read rate.
Let’s take a look at a hypothetical case study to see how this might work:
Vintage Vines Case Study
Vintage Vines is a small, family-owned winery that just opened a tasting room in Sonoma, CA. Because of budget limitations and real estate availability, this tasting room is located just off of the main drag, a short block and a half away from the town center where the most popular tasting rooms are nestled around the open and inviting Sonoma Plaza. Although Vintage Vines has already earned high reviews on Yelp and has a best practices traditional marketing strategy that includes actively engaging their social media followers and leveraging their wine club, the owners believe they are only getting 60% of the foot traffic that similar tasting rooms nearer the plaza receive.
After experimenting with online ads and free wine tasting offers on Yelp with only limited success, they hear about geomarketing from a customer and decide to try it. After reaching out to a few different agencies, they settle on one that helps them create a geofence that includes the central walking zones of downtown Sonoma, as well as two streets that are popular because of the free parking they offer. Based on prior research with their customers, they decide that the geofence will trigger a push notification offering a complimentary glass of wine with any tasting purchase. The ad will read “You are near our 2nd Ave locally owned tasting room. Come in today and receive a free glass of wine with any $10 tasting.”
Choosing a Saturday in June for the first test of their new geofence marketing system, the owners of Vintage Vines experienced both trepidation and excitement as they waited for the final tally of customers at closing time. As they wave goodbye to the last smiling tourist of the night, their sommelier hands them a piece of paper with the day’s tally on it. They had served almost three times the usual number of customers! Their experiment with geofencing was a success, and they looked forward to increased foot traffic throughout the rest of the season.
Why Geofencing Works
Geofencing works because it targets people who are already in the vicinity of your business. In places like Sonoma, Napa, and Paso Robles, where wine tasting is the main draw for tourists, a high percentage of the people passing through a geofence boundary will already have a strong inclination towards doing a wine tasting. A push notification from your business may be the only thing needed to direct them towards your particular winery or tasting room rather than a competitor’s. Even if you are operating your tasting room in an area that is outside of traditional tourism zones, demand is high enough among Californians in the Bay Area that geofencing can increase sales almost anywhere.
Consumers in 2018 are savvy, and anything that looks like an ad goes straight into the recycling bin in most households and workplaces. The same is true of digital advertisements that make it through the spam filters in most email inboxes. However, even though geofencing has been around for a few years, the novelty has not worn off, and conversion rates remain high, while costs are up to 57 times lower than other forms of digital advertising. Additionally, there are signs that it is not the novelty that makes geofencing useful, but rather the focused targeting that the technology allows. Wineries and tasting rooms that use geofencing and push notifications to offer discounts can elicit excitement and even gratitude among consumers seeking enjoyable experiences and affordable luxuries. After all, who wouldn’t be happy to discover a free or discounted wine tasting when walking through town on vacation?
A Creative Solution for Price Sensitive Connoisseurs
Silicon Valley Bank has identified a growing “frugal-hedonist” consumer category that is far more price sensitive than traditional age-segmented cohorts. The growth of this category is reflected in the decreasing number of visits to pricey wine regions like Napa and Sonoma, where the standard tasting fee is $38 and $21 respectively, and the influx of visits to wine regions like Oregon and Washington, where standard fees are $13 and $9, making wine tasting more of an affordable luxury.
Because geofences can be set up anywhere and anytime, creative marketing solutions for wineries seeking increased sales might include setting up geofences around strategically targeted grocery and liquor stores with push notifications linking to coupons for bottle purchases. Alternatively, you might even consider setting up a geofence around indirect competitors like restaurants, breweries, and taprooms to entice visitors who are looking for a casual and relaxed evening drinking with friends.
When creating a push notification for customers, ensure that you stand out from the crowd by creating advertisements that have an emotional connection with customers. Wineries can appeal to shared values by using terms like “sustainable,” “organic,” “family-owned,” and “female-owned” (of course, these should already be part of your brand story). Moreover, you can tie promotions to holidays or special events, like the Women’s March, Breast Cancer Awareness, and Red Nose Day.
In addition to using geofencing to push advertising to nearby consumers, you can also use the same technology to keep track of foot traffic at your competitors’ locations. This technique can help you track the effectiveness of your ad campaigns. For example, if you are having a slow day, but your competitor sees the usual amount of traffic, you should try a different push notification. However, if you are both seeing reduced traffic, there may be seasonal or regional reasons why customers are not visiting that day.
Increasing Direct Sales
Industry experts have been clear about changing consumer preferences in the wine industry. As millennials grow into the largest segment of the market (forecasted to occur in 2026), wineries that depend on the tasting room experience as the primary path to direct sales would do well to take note. Millennials are more price sensitive than other cohorts, and seek both a luxury adult beverage experience and “a good deal.” Wineries interested in increasing direct sales should experiment with using geofences to offer promotional coupons for bottle and bulk discounts.
In the crowded market of Northern California, where wineries and tasting rooms draw 23.6 million people each year, geofencing offers a way for wineries and tasting rooms to customize their marketing strategies to target consumers at key locations with custom advertisements. Such efforts are almost guaranteed to net a positive return on investment. Entering this location-based advertising space now, while the technology is still relatively young, also gives wineries and tasting rooms an opportunity to gain market advantage and be ahead of the curve.