SEMA News—September 2011
When a Cellphone Becomes a Handshake
Auto parts businesses with a demographic that skews toward the young and techno-lusty may want to check out some interesting marketing opportunities offered by free GPS-driven social networks, including Foursquare. Once seen as a quirky way to use a cell phone to broadcast the user’s precise location to friends, complete strangers and/or local merchants, foursquare is being embraced as a serious marketing tool these days by hundreds of thousands of businesses and organizations.
Essentially, merchants use the service to offer special deals to consumers who “check in” at the store’s brick-and-mortar location with foursquare-enabled cell phones. The latest enterprise to join the party is American Express, which rolled out a campaign with foursquare in June that automatically processes discounts and specials for AMEX users who check in and make a purchase at participating retailers.
Some of the deals are fairly aggressive. Sports Authority, for example, is offering a spend-$50-get-$20-back offer to foursquare users who make a purchase under the American Express promotion.
“The success of our pilot just a few months ago proved that American Express’s digital capabilities and foursquare’s expanding application created something extremely powerful,” said Ed Gilligan, American Express’s vice chairman. “We’re thrilled to take this partnership to the next level. For us, this is just the beginning.”
As with all foursquare promotions, consumers take advantage of the offer by downloading an application from foursquare’s website, which enables them to check in with all participating merchants. Users generally redeem foursquare offers by showing their cellphones to a store cashier, who reads a coupon code off the phone and then punches it into the register for the discount. But the American Express promotion is more elegant: Store personnel simply swipe the foursquare purchase with the American Express card, and the special discount or other deal is automatically processed by American Express.
The card company is able to pull this off by requiring shoppers to register for its promotion at the American Express website. Once registered, card members “load” the specific store specials they want to redeem right onto their cards, and American Express takes care of the rest.
|Once seen as a quirky way to use a cell phone to broadcast the user’s precise location to friends, complete strangers and/or local merchants, foursquare is being embraced as a serious marketing tool these days by hundreds of thousands of businesses and organizations.|
“The load-to-card functionality of the Smart Offer APIs provides the millions of American Express merchants with an effortless way to serve up specials,” said Dennis Crowley, foursquare’s CEO. With the promotion, the credit-card company also announced plans to release an easy-to-use online tool soon that will enable retailers to create other coupon-less offers backed by American Express.
During the past two years, increasing numbers of businesses have made foursquare popular by texting electronic coupons and similar specials to passersby’s foursquare-enabled cell phones. For some, the effort has resulted in significant gains in spontaneous foot traffic. In addition, foursquare has attempted to stoke interest by offering a number of other pre-designed sales incentives. These include deals for “swarms” of friends who visit a store simultaneously, and “flash” specials good for only a short period of time.
The service is also imbued with a sense of play. Members can use foursquare to alert other users to their precise whereabouts for spontaneous meetings. And they can post reviews of restaurants, nightclubs and other gathering places on foursquare, which can be shared with the foursquare community.
Already on the social media radar, foursquare turned heads again earlier this year with its report that it had signed up its 10 millionth user worldwide. Currently, more than 3 million people check in to foursquare every day, and more than 400,000 merchants and organizations are promoting with the GPS service in some way, according to a report on the company’s website.
Not surprisingly, some of the biggest guns on the web are trying to elbow in on the upstart’s success. Facebook offers a similar check-in service that it calls Places. And Google features check-in social networking as part of its Latitude service. Other key players scrambling for market share include Gowalla, Yelp Check-ins, Groupon Now and Loopt.
Some consultants see this phenomenon in GPS social networking as part of a larger trend in which digital media is expected to devour an increasingly larger share of local advertising dollars.
“Our analysis indicates that as advertisers move to online, mobile and, particularly, the variants of social media, we are fast approaching a tipping point where digital media will soon become a dominant segment of the local advertising marketplace,” said Tom Buono, CEO at BIA/Kelsey, a market research firm.
Overall, BIA/Kelsey predicts that digital media—delivered to consumers via mobile, Internet or other electronic methods—will grab 23.6% of all local ad spending by 2015. Fortunately, testing the waters with foursquare and similar services generally takes only a few minutes and can translate into substantially increased foot traffic and sales—although, to be fair, it can also be a complete dud.
With foursquare, retailers sign up for the service by logging on to the foursquare website, searching for their store in foursquare’s directory and claiming the establishment as their own. (If your store is not listed, you can easily add it yourself.) Once you’re verified as a bonafide rep of your business, you can try out the service by activating predesigned foursquare specials that have a proven track record with other retailers.
The company even offers an online dashboard, which can be used to track and distill the specials that work best for your store. Featured reports include accounts of total daily foursquare check-ins over time at your store, your most recent visitors, your most frequent visitors, the gender breakdown of your visitors, the time of day people are checking in and similar stats.
Foursquare co-founders Naveen Selvadurai (left) and Dennis Crowley.
So far, there are seven pre-designed specials you can run with the click of a mouse:
- Friends Special: Friends who arrive simultaneously as a group at your store get a discount or other reward.
- Swarm Special: Designed for the more adventurous, this special rewards a pre-determined number of complete strangers with rewards for “swarming” your store at a specific time.
- Flash Special: Perfect for foursquare types passing by your store, this special offers a discount or reward that may last only a few minutes.
- Newbie Special: Any foursquare member who checks in to your store for the first time gets a discount or other reward—one of the easiest ways to create new customers.
- Check-in Special: A coupon or reward for anyone who checks in to your store, whether they’re completely new or a longtime customer.
- Mayor Special: One of the most commonly used promotions, this generally rewards a person who frequents your store more than any other customer. The concept may sound goofy, but there are people who consider jockeying for Mayorship of a store as an
all-consuming, never-ending, competitive sport.
- Loyalty Special: This rewards customers who repeatedly check in and buy a predetermined number of times or repeatedly check in during times when business is slow and similar variations.
Given the ease of entry, experimenting with GPS-driven services such as foursquare seems like a no-brainer. For the rabidly interested, there’s even a new online trade magazine devoted exclusively to tracking the burgeoning business of location-based services and advertising called Streetfight.