The World According to Mitch Fanning

Despite being April Fools Day, location-based marketing is proving to be no joke.

Location-based social networks such as Foursquare have been on the rise for awhile, but over the past few weeks the company has vaulted to new levels of growth. According to @mashable, just 12 days ago, Foursquare grew by nearly 100,000 users in 10 days, taking the total number of users north of 600,000. Now a recent update from Foursquare projects they might reach 1 million users by April 16th.  They also revealed a second stat: there have been over 22 million total check-ins by its users in less than one year.

But, wait there’s more…

What make this news even more exciting is that location-based social networking has emerged as a valuable tool for driving foot traffic to brick-and-mortar businesses. Services like Foursquare, Loopt, Yelp, and Gowalla enable any business with a physical location to not only engage customers online, but actually get more of them to walk into the door and potentially spend money — and that’s the exciting part.

From the consumer’s point-of-view, location-based social networks also allows people to interact, share, meet up, and recommend places based on their physical coordinate. Therefore, the question business owners should be asking themselves is no longer “Should I use located-based social networks?” It’s “How do I strategically use these tools to achieve my business goals?”

Once you’ve assessed your customer’s social activities and behaviours online (start here), decided on what you want to accomplish, and how you’d like your relationship with your customers to change (“the why”), the following steps will help you get decide on “what” location-based technologies to use for your business along with examples.

Step 1. Understanding the technology

Before going live with any location-based initiative, you need to understand how the technology works. People generally use location-based apps on their smartphones to “check in” whenever they go places. Global Positioning Satellites (GPS) locate the users and determine what “venue” they might be at, giving them options to select a location or create a new listing.

These “check ins” allow their friends to know where they are now, or where they frequently go (Note: only follow real friends for now). Some services allow users to leave location-based tips for others to discover later, and several involve social competitions, or the ability to unlock digital badges, stickers, and prizes. Businesses can announce specials or promotions through these apps, so when users “check in,” they receive notifications of nearby deals.

Step one is to become familiar with the popular platforms, which are Foursquare, Gowalla, Loopt, Brightkite, Yelp, and Google Latitude. You should also be aware of Facebook, which is now dabbling in location-based services. Sign up to a few, and download the apps to your phone if you can, so you can become familiar with how someone would use each one. Most of the networks have iPhone, BlackBerry, Android apps, and all of them allow you to “check in” via desktop and mobile web browsers.

Step 2. Sign up your business

At the very least, make sure that your business is listed correctly on each network. Don’t assume that users have added everything correctly. On some networks, once a venue is there, it’s stuck. Others let you edit. Don’t be afraid to contact the network itself to ask them for help if you can’t fix your venue listing.

It’s also recommended to put up signs (on the door, order counter, or table centerpiece, etc.) announcing “We’re on Foursquare” with your special offer for their users. This will motivate people to “check in”, spread the word, and even leave a recommendation.

Step 3. Create a hyper-local, compelling offer or promotion to attract mobile customers

Foursquare aims to encourage people to explore their neighborhoods and then reward people for doing so. On their mobile app, they call attention to venues who offer special treatment to Foursquare users. If a foursquare user is at your business, Foursquare will instruct them what to do in order to unlock your special offer. If the person happens to be across the street or two blocks away from your venue, Foursquare lets them know that your business gives special treatment to foursquare users and that they should swing by for a visit.

Examples:

Fashion giant Marc Jacobs has been one of the few brands that has fully embraced social technology from the outset, opting for cost-effective digital marketing methods over traditional events and expensive parties. For Fashion Week 2010, the brand decided to go beyond just digitally streaming their runway shows. It took the online interactions offline through Foursquare.

Marc Jacobs and Foursquare created the “Fashion Victim” badge, which allowed Fashion Week attendees (and others) to “check-in” at any Marc by Marc Jacobs stores in New York and around the country to unlock the badge. Four people who unlocked the badge in New York were randomly chosen to receive tickets to the Marc Jacobs show.

Lift Cafe, a coffee shop in Austin, Texas is another good example. “They offer 10% off every purchase” when you check in on Gowalla, which they include in their description and also as a reminder in the success screen after check-in.” What seems to be successful across all channels is a good local offer that caters to people making that quick decision when they’re out and about.

Common promotions include the following:

1. First check in specials (“Get 10% off your order when you check in for the first time.

2. Digital loyalty cards (“Check in 10 times, get a free coffee.”)

3. Raffles (“Every person who checks in gets a chance to win an iPod.”)

4. Specials for the user who checks in most often. This is the most popular of Foursquare promos right now (“Top user/mayor gets the first drink free every time he/she comes in.”)

Guidelines for developing effective Location-based promotions:

1. Advertise particular incentives or things to do in the area (that don’t compete with your business directly), rather than your business in general (“10% off between 1 and 3pm;” “Buy one coffee, get one free”).

2. On platforms that allow banner ads (such as Loopt), include your address and opening hours in the ad itself, when possible.

3. Be creative. For example, Incase, a bag and protective case maker, recently ran a promo with Gowalla to put virtual versions of its products into the app to be collected and traded. The promo was a success: Thousands of their virtual items have been distributed in Gowalla to an audience who could benefit from their products, but many of whom had not previously heard of Incase.

Step 4. Engage your customers

It’s a mistake to use Twitter as a one-way megaphone, never interacting with your audience. That’s a quick route to an audience of zero. One of the most effective uses of social media is personal engagement and relationship building with your audience. The same goes for location-based networks.

Step 5. Measure everything

Foursquare just released a slick analytics dashboard for venues to track their stats. Other networks have metrics you can view as well, and they’ll certainly be releasing better and better tools. From the data, you can study online qualitative observations at your own store, it’s important to keep track of everything so you can learn what promotions work with your audience. Be aware, though, that your ROI may not be directly measurable, and aside from increased sales, you’re primarily working for brand exposure and increased awareness of your business.

6. Integrate with other marketing activities

Location-based social network technology may be the newest and latest thing in social media, but it certainly won’t be the last. And in a year it won’t look exactly like it does today. Make sure you location-based strategy is part of an overall integrated marketing effort.  Also, be prepared to adapt your methods when features or customer behaviours change. Again, keep your objectives in mind, and be ready to keep up with new technology.

7. Avoid common mistakes

Here are several common mistakes you should try to avoid when experimenting with location-based marketing:

1. Don’t forget to monitor activity. Chances are if someone has a problem with their check-in, it’s a real-time thing: The patron is probably still there … so the business has a chance to make the experience even better.

2. Don’t leave fake tips or recommendations. They’re easy to spot, and you’ll lose all credibility immediately when people catch on.

3. Don’t throw up poorly designed ads. A badly designed banner ad performs so much worse than a good one.

Personally, I started using Foursquare in January 2010 and like the idea of seeing where my “real friends” are and what’s been recommended. Putting on my marketing hat, being able to connect web advertising, recommendations, and social media buzz to an actual person walking into your store has long been the holy grail of the advertising world. We spend lots of money and effort online to drum up business, but does it actually drive foot traffic? Using location-based social marketing gives you the ability to build an army of hyper-local, mobile advocates – Something most social networks cannot yet claim.

How has location-based services benefited your business?