Tuesday, May 25, 2010

Foursquare: The Next Airmiles?

I've had a few people ask me lately why I use Foursquare. Superficially, it seems like nothing more than a gift to stalkers all over the world. Users don't receive any direct monetary benefit, and it is impractical as a tool to coordinate social events. When I joined up, I had the exact same question: what is the benefit? The answer lays not so much in what you get from it now, but in the potential it has to function as a conduit for rewards programs.

Foursquare is pretty simple. It is a location based social application. You download it on your smartphone, and the GPS enables you to find the venue you're at, and 'check in.' There are a number of badges that you can earn, and if you've checked in more than anyone else, you become the 'mayor' of the place. This is the most that you will get out of Foursquare itself, but increasingly, venues are partnering with Foursquare to introduce their own rewards.

Though few establishments have began to utilize Foursquare as a marketing tool, there are some significant early adopters. The most notable of which is Starbucks. Starbucks has introduced a rewards program whereby the mayor of each location is entitled to a $1 discount of frappuccinos. That may not seem like much, but it is a start. Now that a major player like Starbucks has entered the fray, there is a good chance that competitors will feel the need to compete with similar rewards programs. McDonald's is actively developing a similar program in collaboration with Facebook.

There are two major hurdles to the spread of such reward programs. The first is that the market for location based social apps is still wide open. Competitors Google Latitude and Gowalla could well end up becoming the dominant technology. The second is a little trickier. Not enough people use any location based social app. Until they become widely used, there will be little incentive for venues to introduce rewards.

In the end, consumers will decide which platform wins out. Maybe location based social apps will die out altogether. It's difficult to forecast which technologies will be adopted by consumers. Only the market can determine this. Regardless of whether Foursquare thrives, the potential for location based social apps is immense. Immediate discounts, combined with social recognition could make location based apps more appealing than Airmiles for some people. I'd bet on it.

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