If you haven't paid attention to location-based services like FourSquare, Gowalla, Whrrl, etc. its about time you do. Location-based services are at the intersection of where online and offline circles meet. When someone checks into a location on LBS they can allow their online community to see their physical location through the service or through pushing the update to Facebook or Twitter. This is free word of mouth marketing for the business location they are checking in at. By offering rewards for frequent check-ins businesses can build customer loyalty and attract customers they may not have otherwise. It also allows businesses to see what their loyal customers are sayingabout them and gives them an inside look to their behavior. Last week I read an editorialtitled How Foursquare Will Become the Google of Local. While I’mnot convinced of this, I do think the potential of location based services is undeniable.Adebate started a few weeks ago when Aaron Strout posted the blog Are FourSquare and Gowalla just shiny objects? Many chimed in with comments, most trying to poke holes in the viability of LBS, citing issues like the integrity of GPS accuracy, privacy concerns, or the adoption of the masses. FourSquare did surpass 2 million users this past weekend which is still small incomparison with the over 450 million users of Facebook, but the numbers are continuing to grow rapidly. In my opinion location based services aren’t a fad or going away anytime soon, and it would be foolish for customer focused businesses to ignore them.
Why should you pay attention?
Community – LBS combines online and real life interactions. When you check in you can see what your friends are doing, get recommendations, and through layering, see a city through the eyes of a trusted source.
Loyalty– People appreciate when their loyalty to a brand is rewarded. With a mayorship program, points system, or number of check-ins program, businesses can easily reward patrons for their loyalty. Game aspect – Its fun! Gaming is a multi-billion dollar industry. Some are motivated to use LBS for the gaming aspect. They want to say they are the mayor or have the most points for checking in. This is one reason I believe FourSquare is leading in the LBS area right now because it has a more game type feel than the others.
People love to tell people what they are doing – if this isn’t clear with the 450+ million users of Facebook posting more than 60 million status updates per day, I don’t know how to make it clearer.
Data mining – Companiesare already figuring out ways to pull the data out of these systems and learn more about their audiences preferences and habits. May sound scary but they’ve been doing it in other ways for years. This benefits the business in knowing more about its audience and benefits the user because the offers will be more tailored to their desires. Special offers – Believe or not, people still clip coupons and still check their grocery circular for the best savings when making their grocery list. Offering any type of savings motivates people. Don’t believe me, see what people had to say below. After hearing some criticism that the specials currently being offered weren't enough to motivate people, I decided to survey users some of which I'd consider heavy, moderate and mild users to see what they had to say.
Heather: I used it in NewYork, went to Stone Rose Lounge specifically because they were offering 30% off, and basically got a free drink out of the deal. I used Guides by Bravo that indicated the perks and location; then checked into FourSquare. Belinda: I am more likely to go to Pinkberry for 10% off yogurt and Race Trac for a free taquito since its based upon check in because I don’t frequent some other places offering specials enough to be the mayor.
Chris: Saw a great special at a hotel in South Beach. Free drink at your FIRST check in!
Randy: Not seeing a lot of specials yet on FourSquare. I would definitely take advantage, especially if I was deciding between two places. It might be a deciding factor. Babar: I haven't seenmany interesting specials ... most were for mayors. :( Special would definitely motivate me ... always happy to try new places
Matt: So far I've used Hacienda's20% off for checking in and saw a few others over near there. It's finally taking off! I'm working to encourage some local peeps in Frisco/Plano to take adv of.
Shannon: Primarily, it's been Starbucks that I've seen "special" come up on the screen. However, I figure if one business is doing it, others will follow suit.
Chris: Checked in to foursquare at Trinity Hall received a 20% off coupon - used it Awesome!
Ben: I love using Gowalla but I haven't seen any kickback from using it. I'd love to see a discount (even if it's small) for multiple check-ins in aweek or something like that. I don't think I'm alone in wishing there was more of a reward in that sense - the businesses get free PR sometimes when I post a photo or whatever. Tanya: I received a free side dish at a yummy NYC restaurant last month! It was really fun to redeem it.
Of course like with anything else there are some challenges. These are the biggest challenges Iseeright now:
Scale - I see some local businesses doing a great job at connecting with peopleandbeing very personable, which goes a long way. Frankie's Sports Bar is a great exampleof a businessthatdoesthis really well. The challenge is, taking that model to large corporation and making it work from thetop down. A great use I’ve seen in local restaurants iswhen they know there will be a slow period until the dinner rush, they offer a free app or drink. This might be a challenge with larger corporately ownedbusinesses. Education - One of the complaints I hear from those that use the services is that when they tell the staff that they are the mayor on FourSquare, the staff doesn’t always know what that means or how to check. Businesses need to do a better job explaining offers and how they are redeemed to any staff that may be involved.I just saw a greatpostabout how Chili's has trained employees on FourSquare in "8 words".
Uncertainty - There isn't a lot of research on the effectiveness of campaigns in this area yet. There is some debate around which platforms are worth spending time on. FourSquare has been the leader but in the past few weeks I've seen a shift of my friends to whrrl and with Facebook in the market, its hard to advise which platform(s) will be the Facebook or Google of LBS. It is pretty clear though, ignoring them all together wouldn't be smart.
B2B - This post is mainly restaurant focused because it's where it's easiest to see the biggest opportunity right now. Retail is the other industry to adopt LBS. I haven't seen a lot of stories about it working for B2B or other industries but have been brainstorming on opportunities there. Maybe that will be another post.
Yes, GPS accuracy and privacy are issues but I believe they will become less and less of an issue. Platforms are continuing to improve GPS accuracy and parameters. As far as privacy, I'm a single female, so I don't publicize my home address and tell the world I'm home alone. You can control who sees your updates, and just like what you choose to put on Facebook, its a matter of your privacy controls... and common sense.
I'm looking forward to seeing where this goes and would love to hear your thoughts on it.
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