Cross-posted from schneidermike.com (with permission)
Making Money with Location
Data and Loyalty
ibilities – possible.
Cross-posted from schneidermike.com (with permission)
My guess is that I’ll be 50% wrong about what I’m about to say in this post… In baseball that’s a fantastic batting average. In surgery… not so much.
In case you didn’t hear, Facebook made it’s foray into the world of location-based services yesterday with it’s announcement of Places. If you haven’t checked it out yet, it’s pretty straightforward. To checkin, you must use the most recent version of the Facebook iPhone app or the iTouch mobile site for Facebook. Although I’ve discussed the potential negative impact Facebook could have on existing location-based service providers like FourSquare, Gowalla and Whrrl, I’m going to change my tune a little (this is where the 50% wrong part could come into play).
To that end, here are my five initial thoughts about Facebook Places (hat tip to friend and fellow LBS enthusiast, Mike Schneider, for helping push my thinking on this front):
If you hadn’t noticed, I’m on a bit of a location-based services kick these days. Not because I like technology for technology sake but rather because I see real business value that companies like Gowalla, FourSquare, Whrrl and even Twitter and Facebook are starting to provide through their offerings. For anyone that hasn’t seen the post I did a few weeks ago on location-based services, the comments are a MUST read (there are 45+ and still growing).
As a result of the aforementioned location-based post, I received an e-mail the other day from someone working on behalf of the New Jersey Nets regarding their current Gowalla campaign. The e-mail talked about the NJ Nets’ launch of a 225 x 95 foot painted wall at the corner of 34th and 8th Streets in New York City, just a few blocks from Penn Station and Madison Square Garden (the home of the New York Knicks). The wall features Nets owner and Russian billionaire Mikhail Prokhorov, and minority owner and hip hop legend Jay-Z. More important than the images of the two owners is the call to action at the bottom of the mural which states simply, “Check in Gowalla to get a special item.” Now I don’t know about you but even if I didn’t know anything about location-based services or Gowalla, I’d be tempted to jump on Google to find out more.
As a marketer, however, I was curious about what the goal of this program was. Yes, I’m sure it will generate hype and of course it will be a conversation starter (hell, it’s got a blogger like me writing about it so they are doing something right). But I wasn’t satisfied with that as my answer so I asked my new NJ Nets friend to give me more detail. He pointed out that with new ownership (Prokhorov and Jay-Z), a new coach (Avery Johnson), the third overall pick in this year’s draft (Derek Favors), and a new home in Brooklyn in 2012, that the Nets wanted to create an aggressive marketing campaign to let New Yorkers know the Nets are back and ready to compete. One way of sharing this excitement was by experimenting with new experiences like the one that Gowalla would provide.
To that end, I also like what Laura Castronovo, director of research and strategic marketing for the Nets, had to say about how this giant sign with the non-traditional call to action fit in with the Nets’ overall plans:
Digital Marketing is now a part of everything we do; whether it be driving traffic to our websites njnets.com and netsallnew.com or building up our social networking communities, having a digital presence is crucial. We also like to make our campaigns as interactive as possible. It made sense for us to include Gowalla on the Blueprint of Greatness 34th St wall so fans can engage in this campaign with us.”What are the results? As of this writing, there have been 90 organic check-ins to the spot. It also got coverage from TechCrunch which is never a bad thing (okay, mostly never a bad thing). But will this campaign help move the needle? I’m not sure. But you can bet I’ll be keeping my eye on how things progress. And you can damn well bet that next time I’m in New York near Penn Station I will be checking into Gowalla to see what kind of “special item” I’ll receive.
UPDATED on 9/29 based on panel information at the Location-based Marketing Summit in NYC.
This wall was just the first phase of the campaign. The important part of what the Nets did with @Gowalla is that they randomly gave away 250 pairs of tickets to a Nets game. People would win tickets when they checked in. The redemption rate was 15.2% which the Nets were very happy with. The key was that the nearly 80 people (2 x 40) were encouraged to take pictures, post updates, checkin on Gowalla, etc. This obviously led to a number of conversations and a good deal of earned media. With a franchise that’s struggling to regain some relevance in a town that has more than its fair share of successful sports teams, any kind of brand excitement was a net positive. To date, the Nets have been very pleased with the results.
If you follow my Twitter stream or listen to my weekly podcast, you’ll know that the question of whether I think FourSquare and Gowalla are shiny objects is a loaded one. Of course I am bullish on the value location-based services like FourSquare, Gowalla offer large and small businesses alike. Truth be told, however, I’ve had a hard time telling clients and prospective clients alike that it’s time to go guns a blazing with location-based services for two reasons:
And here is the presentation on SlideShare that David put together. Click through to get the details on each program.
So we’ve seen who is experimenting with location-based services like FourSquare but let’s take a step back and look at why companies might want to engage in location-based services.
At the end of the day, location-based services like FourSquare and Gowalla are ultimately going to be best at creating long-term loyalty with existing customers. Companies like Tasti D-Lite have started to figured this out by feeding their reward programs through point of purchase experiences which in turn check users into social sites like Twitter and FourSquare. And when a customer checks in, he/she earn points toward free food/drinks.
Let’s be honest, while it’s nice to earn frequent flier or hotel points, the act of earning them isn’t all that exciting. Yet earning bragging rights by becoming mayor or even showing off the fact that you are buying jeans at that cool new boutique downtown is much more fun. As a business, incentivizing more checkins and thus more opportunities to buy stuff and share that experience with your customers’ networks has nothing but upside for your top and bottom lines.
One of the things I like most about FourSquare from a personal perspective is the discovery element — both in terms of places and people. As someone that is still feeling his way around Austin, TX, I love watching colleagues like Natanya Anderson (big time foodie), Doug Wick and Kathy Warren alert me to good places to get a meal, watch a game or grab breakfast tacos to go. It’s also useful if I’m at a conference or sporting event to see where my friends are. Even if we’re not connected, many people cross-post their FourSquare and Gowalla status to their Facebook and Twitter pages.
Discovery also comes into play with people. If I’m at my local coffee joint, it’s fun to know who else frequents it. In some cases, it can lead to fun connections that one wouldn’t normally make. As an example several months ago my now friend, Jenna Oltersdorf, noticed that I was the mayor of her local Starbucks. Curious as to who the person was who laid claim to such an honor, she reached out to me via Twitter and asked if I’d like to grab coffee sometime (at that Starbucks of course). In related fashion, my colleague, Joe Jaffe, tells a similar story of him bumping into a prospective customer at a restaurant in San Francisco while seeking out the mayor.
Reach and Referrals
The win here is that while customers are working to accumulate points, bragging rights or free stuff by checking into your store on location-based services like FourSquare and Gowalla, they are also sharing you with their network. Better than that, they are also implicitly (and sometimes explicitly) endorsing you by letting others know they patronize your establishment. Think about the power of running a promotion where anyone that checks into your store more than three times over the course of a month gets a one day discount of 25% off all merchandise. In doing so, you’ve created a reason for customers to 1) visit your store multiple times and 2) let their friends know about it when they do.
Before I get you too hot and bothered, there are few additional obstacles that need to be overcome before location-based services really take off: