Location based applications are hot right now. Foursquare, Gowalla, Facebook Places - the list of services is growing and users are catching on. Not familiar with these types of applications? Put simply, these applications are a way for you to "check in" to a specific venue or location (e.g. a restaurant, park, retail store) through a mobile device (e.g. iPhone, Android phone) and share that location with your friends and followers.
What's the value, you may ask? By sharing their locations, users can see where their friends are and schedule a spontaneous meetup if they are within close proximity to one another. Most of these services also feature a "mayor" (in Foursquare speak) - this is the user who has checked into a particular venue the most.
So why would anyone be a "mayor"? Well there is an element of having bragging rights, but probably more importantly, businesses are starting to reward their "mayors" special perks, such as a gift certificate or special discount. Businesses are essentially rewarding customer loyalty and these customers are competing for these special rewards by frequently visiting their favorite stores.
What's in it for businesses? Location based marketing. With these types of applications, you can market to consumers if they are in close proximity to your business. In Foursquare, for example, a "Special Nearby" banner shows up if you have a special offer available and a consumer is nearby to your business. Through this technique, you can attract new customers because they are just around the corner and may be interested in your special offer.
Businesses can also foster customer loyalty and repeat visits. One of the most popular examples is the "free chips and salsa" that you can get at your local Chili's restaurant, simply by checking into Foursquare and showing your check in screen to your server. Just recently, McDonald's head of social media, Rick Wion, mentioned that there was a "33% increase in checkins" from a Spring pilot program using Foursquare. With this campaign, McDonald's randomly awarded $5 and $10 gift cards to those who check into Fousquare. How much did this cost the large corporation? $1,000 for the gift cards - probably one of the most inexpensive marketing campaigns run by the fast food giant.
What's the downside? Well, according to a Forrester Research report, only 4% of US online adults have ever used location based applications - definitely nothing to get too excited about - yet. Even certain business staff who are supposed to be aware of these campaigns are not familiar with their existence (the local Chili's management wasn't aware of the free chips and salsa deal, or even Foursquare, when I showed the check in screen to them). But like social media marketing and marketing in general, experimentation is key. While the numbers don't indicate a significant reach for any campaign, the McDonald's campaign suggests that good results can occur with an extremely low investment.
Will it work for your business? Like any other marketing initiative, experiment and see.