My May Greater Fort Wayne Business Weekly column focuses on the world of location-based social media. It’s an emerging trend, with special implications for retailers and restaurants, among others. Is it worth your attention? Read on to find out.
What makes social media truly social? It’s not a matter of using virtual conversations as a substitute for real-world interactions. It’s more about using social media to facilitate real-world interactions. And that’s the idea behind location-based services (LBS): They’re designed to encourage people to get together, face to face, in the same room — with serious implications for many businesses.
If you don’t know much about LBS, you’re not alone. According to a recent report from the Pew Research Center’s Internet and American Life Project, just 4 percent of Internet-connected adults use LBS at all, and just 1 percent use LBS on any given day. If you ask some leading social media thinkers, however, the future of LBS is decidedly bright. One location-based application, Foursquare, has been referred to as “the next Twitter,” and Adam Steinberg, the co-founder of PlacePunch, has said that LBS provides “unimaginable levels of sophistication for marketing to different types of customers.”
Understanding this potential begins with a basic understanding of LBS. Tools like Foursquare, Facebook Places, Gowalla and dozens of others allow users to “check in” at a specific location. Using a mobile device — a smartphone, in most cases — you can check in and “broadcast” your location so those in your network know where you are.
Those unfamiliar with LBS often ask, “Why would I want to do this?” Well, some may not. But those who do are generally motivated by one or more of the following:
They’re open to others in their network joining them at their stated location. Let’s say, for example, you and your significant other are out for a drink at Eddie Merlot’s one Friday night and you’re looking for some company. A check-in accompanied by a simple “Come join us!” tells your connections everything they need to know.
They are rewarded for their loyalty. Businesses — especially retailers — are keeping a close eye on LBS because it does what punch cards used to, helping them identify and reward their most loyal customers. The way this works differs from LBS to LBS, but it is simply a matter of rewarding behaviors the retailer would like the customer to repeat — in short, providing incentives for them to visit more often.
They are curious. LBS is still fairly new. Many people, therefore, are just trying it out, relishing the opportunity to be early adopters of what may just be the next big thing.
The implications for retailers are clear, but a couple challenges cloud the discussion. First, as stated earlier, adoption rates are low. And in a city the size of Fort Wayne, they tend to skew even lower than in larger cities like Chicago or Indianapolis.
Second, there’s no clear front-runner in the race to win the LBS battle. Many (including myself) thought the launch of Facebook Places last fall would serve as a death knell for smaller services like Foursquare and Gowalla. That hasn’t happened. In fact, Foursquare claimed 3,400 percent growth at the end of 2010, and Disney chose Gowalla as its partner for a location-based campaign promoting Disney World and Disneyland parks.
Amid all the opportunity and uncertainty surrounding LBS, how should businesses respond? There are four things you need to do:
Assess your goals. Is your business reliant on repeat customer traffic? Do customers visit you frequently, and is there potential that they could be encouraged to visit even more frequently? Have you ever used loyalty/punch cards to encourage and reward repeat visits?
If you make widgets, the answer to these questions is probably no. But if you’re a restaurant, a flower shop, or a dry cleaner, for example, the answer may very well be yes, and LBS may warrant your attention.
Know your audience. In addition to understanding if your audience has the potential is to visit you frequently, it’s important to know how many of them there are. Like other social media sites, LBS’s initial growth is being driven by young, tech-savvy early adopters. That will change, as it has with almost every social media site, but for now it’s important to understand whether such people are part of your core audience.
If you’re trying to determine whether your business might benefit from LBS, however, perhaps the best thing you can do is ask the experts: your audience members themselves. Find out if they value and use LBS, and ask them how they’d like to interact with your business in the LBS space.
Understand the opportunity cost. Like anything else in business, you get out of LBS what you put into it. If you want to achieve results, you’ll need to invest resources. If doing so will prevent you from investing those resources in other things that promise a higher return, LBS may not be worth your attention.
Keep an eye on LBS. LBS may not be right for your business today. However, just because it’s not right now doesn’t mean it never will be. Stay informed about LBS in your industry, and stay in touch with your customers to understand whether it’s becoming increasingly important to them.
The bottom line with LBS is that it has undeniable potential for many businesses. The potential will only become reality, however, when checking in becomes as natural as updating your status on a social media site. Like everything else in the social media space, things are changing. Checking out what’s happening with check-ins is your first step to knowing whether your business needs to make some changes, too.