If you hadn’t already noticed, there’s a new trend emerging from the socially connected and smart phone enabled in-crowd called location based sharing. Services and apps such as Foursquare, Facebook Places and Gowalla allow users to share everything about their day with anyone located inside of their social web. This information includes where they are and where they’ve been. Marketers and companies are both debating how valuable a location-based check-in is to a brand; and the ROI of these programs has yet to be properly tracked and documented. Its loyalty rewards
A number of different companies have been experimenting with various promotions and methods in order to gauge the kind of value these platforms can potentially bring to a brand. Companies like Best Buy, The Gap and Ben & Jerry’s have all tried to utilize the services to offer discounts and promotional incentive products to their consumers through check-ins. These attempts, though they have created some excitement around the brand, have yet to tap into the full potential of brand value and information available through these products.
The problem with location-based social networking as it stands right now is that merely checking in just isn’t enough. Any good businessman knows that just because someone’s showing up at your business, it doesn’t mean that they’re spending any money or driving your profit. They could be there just to check in because of some largely discounted item you’ve got; or they just stop in every once in a while because they’re loyal to your competitor. If a customer regularly visits multiple locations of a franchise, they’ll never become the mayor at any one of them; even though they’re a profitable and loyal customer. Loyalty and incentive programs for customers right now are limited to the interaction between two things: the customer and their spending. The best programs currently available allow the brand to know exactly how much a customer is spending and how frequently they’re shopping. The missing factor in this whole equation is the ability of a company to know how much and what kind of business a customer is giving to the competition.
The capability of loyalty programs and loyalty rewards programs built into this technology is tremendous when you think about it. If the location-based services began compiling and data mining the information of how much and how often and where all a consumer shops (including their likes and dislikes), their data could be used to create a whole new breed of customer loyalty programs that factor in every aspect of a customer’s spending habits. This would, in the long run, benefit brands, customers and location-based service providers alike. For example, say that every day someone goes to Chick-fil-A for a chicken sandwich, and then goes down the road to pick up their milkshake at McDonald’s. This kind of information would help both McDonald’s AND Chick-fil-A. If they were able to track that info and saw that a number of different customers were doing the same thing, Chick-fil-A could work to add a milkshake that aligned with their consumer’s needs and McDonald’s could find a way to improve on their sandwich offerings and perhaps get the consumer in for both the sandwich and the milkshake.
This kind of data would give businesses a much more organic view of their consumers’ habits and behavior, and could help them become much more relevant in their customers’ eyes. In the example given above, McDonald’s could even go so far as to find out if they’re going to competitors for the same thing they go to McDonald’s for, or if they go to McDonald’s for one exclusive item (i.e. milkshake) and that’s the only reason they come there. This information could then be used to offer smarter incentives to try some of their other offerings, and not just their milkshakes, in order to create a more rounded and more profitable consumer. Giving them incentives to buy milkshakes would be like throwing money away as they already happily buy them at full price. This practice also rewards the consumer because this form of a loyalty program allows the consumer to receive reward incentives that meet their needs better from brands they already like.
The possibilities for a company’s use of location-based services towards crafting loyalty rewards programs for their consumers is rich indeed. The marriage of these programs to this technology will provide a better relationship between company and consumer. This will create more customer loyalty and in the end will drive more sales. The possibility of incentives and rewards for all parties involved should show businesses that these location-based services are much more than just a game.
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