GPS for Goodies

Foursquare is the latest buzz-generating addition to the social networking scene, and could be the one with the greatest upside for retailers.

A location-based social network synced to Twitter and Facebook accounts, Foursquare users “check in” via smartphones and receive points for their loyalty. If they check in and inform their social world they’re at these places, they earn virtual badges and can even become “mayor” — until somebody receives more badges.

This is where the retail potential comes in. According to compete.com, a web analytics site, Foursquare had more than 6 million visitors in March; it has more than a million active users, and 77.4 percent of them check in 30 times a month.

The user-friendly self-service platform makes it relatively simple for storeowners to create different kinds of Foursquare specials. Common ones include the “mayor specials” that can be unlocked only by the mayor of the respective venue; the reward could be something inexpensive like an order of fries or a soda, says Tristan Walker, director of business development for Foursquare. There are also frequency-based specials that provide rewards for reaching a predetermined threshold.

Who’s using Foursquare?
Many businesses currently using Foursquare are on the small side, but some big names are catching wind of its potential. Pepsi became Foursquare’s first sponsor in December 2009, appearing on leaderboards that show who has checked in the most. For one week, Pepsi donated 4 cents to CampInteractive, an organization that empowers inner-city youth through technology, for every point added to the leaderboard.

The network has proven viable for several medium-sized retailers, as well. Daily’s, a Tennessee-based convenience store chain with more than 100 locations, uses Foursquare and found that the geolocation methods became a major priority.

“We love the communal atmosphere, with Foursquare updates linking to Facebook and Twitter,” says Daily’s spokesman Mike Schaffer. “There is no overhead cost after adding all of the venues and the branding ROI is through the roof. If you are near any Daily’s, the mobile app tells you.”

These tools let shops see who their most ardent customers are, says new media consultant Christine Harmel. “Stores may not yet realize how powerful geolocation can be for their business,” she says. “Geolocation tools like Foursquare have the power to create foot traffic into your store by immediate, local passersby. You can broadcast offers to those people who are in the area.”

Retailers can also connect loyalty rewards cards to Foursquare accounts. Tasti D-Lite did this with its TastiRewards program, where consumers earned one point for each pre-tax dollar spent on qualified Tasti D-Lite products and extra rewards by connecting their loyalty accounts to Twitter and Facebook. By automatically sharing their experience with friends and followers, users received a free treat.

Aaron Strout, chief marketing officer of social media agency Powered, says Foursquare is a great discovery tool to attract customers through their peer networks.

“A potential customer can see that their friends are always checking into a certain retailer or restaurant,” he says. “Seeing multiple check-ins is akin to a recommendation/word-of-mouth suggestion that urges people to try a store because their friends enjoy the experience.”

Still, while Foursquare is undoubtedly hot – Yahoo! has reportedly offered $80 million for it – it does have competition in this space. Gowalla, Brightkite, Tellmewhere and MyTown, which recently passed 2 million active users, do pretty much the same thing.

“They all have different positionings and there are plenty of new names coming in,” writes Forrester analyst Thomas Husson.