Four Rules for Location-Based Marketing Without Creeping Out CustomersNow companies can pitch location-based offers to smartphone customers instantly--and potentially make them feel uneasy.

Robert Marshall of Marshall's Fenway Farm Stand uses geo-fencing technology to find customers and push deals to their smartphones.

Photo© Dan Hallman

When Boston gets hit with a snowstorm, Robert Marshall's produce business, Marshall's Fenway Farm Stand, usually takes a hit in terms of traffic and sales. But during a January 2011 blizzard, he used the location-based marketing app Peekaboo Mobile to push outcouponsto customers in the immediate area, offering 20 percent off to anyone who braved the elements and made a purchase between 4 p.m. and 8 p.m. Marshall claims the promotion helped pull in about 15 percent of his regular traffic on a night that would otherwise have seen almost no one.

Location-based applications, in which businesses such as Marshall's send offers to people within a specific geographic area for a limited amount of time, are changing the marketing game. The roots are in a technology called geo-fencing, which erects a GPS-powered virtual "fence" around a particular location and automatically shoots out content to anyone who enters the space. This allows businesses to track customers' movement--the creepy part--and deliver promotions when those customers are most likely to act on them.