Geofencing identifies shoppers' locations

For years, managers at Acton Toyota of Littleton (Mass.) believed they were missing opportunities to sell autos to nearby residents of New Hampshire.

Why? Because folks in New Hampshire were unaware that they were exempt from Massachusetts' sales taxes on autos.

Every month, the store would get brisk Web traffic from New Hampshire. But those shoppers weren't making appointments or driving the 20 minutes south of the state line to buy a vehicle, said Justin Brun, Acton Toyota director of marketing and e-commerce.

The solution? An Internet tool called geofencing. The tool lets online marketers identity shoppers' locations, using the global positioning system or radio frequency identification, and tailor texts and emails accordingly.

For example, after Brun signed up in November with geofencing software company Cloud Engage he drew a virtual fence around the whole state of New Hampshire.

That done, every time a New Hampshire resident visits Acton Toyota's website to shop, the software tracks the visitor's location and sends him or her a special message designed by the store.

The message says that New Hampshire residents don't have to pay Massachusetts' 6.25 percent sales tax and they are eligible for other perks, Brun said. The sales tax exemption is especially meaningful to New Hampshire residents because they don't have one.

The Massachusetts tax is $1,875 on a $30,000 vehicle.

"It allows you in a targeted way to throw out a little bit of bait to maybe attract [people] outside their comfort zone," Brun said.

Geofencing is a key strategy for big retailers such as Target. But only about 10 percent of auto dealers use it, estimates BreAnna Fisher, vice president of business development at dealership app vendor AutoMotion.

For about three years, AutoMotion has offered geofencing to dealer subscribers as a defensive strategy to try to keep customers from going to competitors.

Customers download dealer-branded apps offered by companies such as AutoMotion and DealerApp Vantage to be kept apprised of promotions or to ease service scheduling.

But geofencing takes the app's value a step further. Whenever a customer with a dealership app on his or her phone arrives at a competitor with a geofence around it, the customer is served a coupon or offer aimed at bringing the person back to the store, Fisher said.

She declined to disclose how many dealerships use AutoMotion apps. But the company has persuaded thousands of visitors to dealership websites to download their dealers' apps by prominently offering them when they first arrive, she said.

AutoMotion added a product this year that serves specials to app-carrying shoppers. When they pass a vehicle on a dealership lot fitted with a tag with a tiny electronic beacon, the shopper receives a message via the app.

Brun said Cloud Engage allows Acton Toyota to geofence without having to rely on app downloads.

Since geofencing New Hampshire in November, the store has sent notifications to more than 500 residents who have visited the website looking for inventory or service, Brun said.

The store now has a total of 20 fences drawn around local cities and competitors to hit shoppers with custom messages when they call on the website, Brun said. Acton Toyota attracts about 40,000 unique visitors to its website every month, he said.

From a geofencing campaign launched in the nearby city of Westford, Mass., six weeks ago, Acton Toyota sent 137 promotional messages to town residents for zero-down leases. The messages yielded four requests for more information from prospects, he said.

Acton Toyota establishes its own geofencing boundaries and marketing messages, Brun said.

Dealer Success, a Vancouver, Wash., company that is the exclusive automotive reseller of Cloud Engage, offers a turnkey product in which the vendor draws the fences around locations and develops the messages.

The service costs $890 per month, says Joe Orr, who co-owns Dealer Success. Orr is the longtime general manager of Dick Hannah Honda in Vancouver, Wash.

A less expensive version in which the dealer handles some software chores is $499 per month.