Electronic Design

foursquare: When a Cell Phone Becomes a Handshake

Electronic design marketers 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 (www.foursquare.com/business).

Once seen as a quirky way to use your cell phone to broadcast your 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, businesses use the service to offer special deals to consumers who “check-in” at their brick-and-mortar locations with foursquare-enabled cell phones. So far, the service has been used primarily by merchants. But there’s no reason electronic design marketers can’t get in on the game.

Latest to the foursquare party is American Express, which rolled-out a campaign with foursquare earlier this summer 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 is offering a spend-$50-get-$20-back offer to foursquare users who make a purchase under the American Express promotion. An electronic design marketer, for example, could use the same promotion to offer a 10% first-time-consult discount to any American Express user. The same discount could also be offered at a trade show: a 10% discount, say, to the first 100 customers to show up at your trade show booth.

“The success of our pilot just a few months ago proved that American Express’ digital capabilities and foursquare’s expanding application created something extremely powerful,” says Ed Gilligan, American Express’ 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 American Express’ offer by downloading an app from foursquare’s Web site, which enables them to check-in with all participating businesses.

Generally, users redeem everyday foursquare offers by showing their cell phones 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. Instead, 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 consumers to register for its promotion at the American Express Web site (http://sync.americanexpress.com/foursquare). Once registered, card members “load” the specific store specials they want to redeem right onto their card, and American Express takes care of the rest.

“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,” says Dennis Crowley, foursquare’s CEO.

With the promotion, the card company also announced plans to release an easy-to-use online tool soon that will enable electronic design marketers and other businesses to create their own 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 business location simultaneously, and “flash” specials that are only good for a short period of time. Again, swarms and flash specials could also be used at a trade show, where most attendees are probably carrying a smart phone.

The service is also imbued with a sense of play. Members can use foursquare to alert other users to their precise whereabouts for spontaneous meet-ups. 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 earlier this year with its report that it had signed-up its ten 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 Web site.

Not surprisingly, some of the biggest guns on the Web are trying to elbow-in on the upstart’s success, including Google, which features check-in social networking as part of its Lattitude (www.google.com/cell phone /latitude/) service. Other key players scrambling for market-share include Gowalla (http://gowalla.com/), Yelp Check-ins (http://officialblog.yelp.com/2010/01/youre-gonna-want-to-checkout-yelp-for-iphone-v4.html), Groupon Now (www.groupon.com/now/about) and Loopt (https://www.loopt.com/).

This phenomenon in GPS social networking is seen as part of a larger trend by some market research consultants, 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, cell phone 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,” says Tom Buono, chief executive officer at BIA/Kelsey, a market research firm.

Overall, BIA/Kelsey predicts digital media — delivered to consumers via cell phone, 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 substantial increased foot traffic and sales for your electronic design business — although, to be fair, it can also be a complete dud. Best bet: you’ll probably have the greatest luck if your business is headquartered in a densely populated city that is teeming with thousands of young cell phone users.

With foursquare, businesses sign-up for the service by logging onto the foursquare Web site, searching for their business name in foursquare’s directory and claiming the establishment as their own. (If your electronic design business is not listed, you can easily add it yourself.)

Once you’re verified as a bonafide representative of your business, you can try out the service by activating pre-designed foursquare specials that have a proven track-record with other businesses. The company even offers an online dashboard, which can be used to track and distill which specials are working best for you. Featured reports include accounts of total daily foursquare check-ins over time, 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.

So far, there are seven pre-designed specials you can run with the click of a mouse:

  • Friends Special: Friends that arrive simultaneously as a group at your location 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 business at a specific time.
  • Flash Special: Perfect for foursquare types passing by your location, this special offers a discount or reward that may only last a few minutes.
  • Newbie Special: Any foursquare member who checks into your location 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 into your business, 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 business more than any other customer. The concept may sound goofy, but there are people who consider jockeying for Mayorship of a business as an all-consuming, never-ending, competitive sport.
  • Loyalty Special: This rewards customers who repeatedly check-in and buy a predetermined number of times, who repeatedly check-in during times when business is slow, and similar variations.

Given the ease-of-entry, experimenting with GPS-driven services like foursquare seems like a no-brainer. For the rabidly interested, there’s even a new online trade magazine exclusively devoted to tracking the burgeoning business of location-based services and advertising called Streetfight (http://streetfightmag.com).

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