When Foursquare began, it was easy to wonder what the point was beyond the game. It asked people to “check in” when visiting places like shops, bars, or restaurants and then gave them a chance to compete for virtual prizes, like badges and recognition as “mayor” after visiting a place more than anyone else. Now, with more than nine million users, Foursquare is beginning to prove its value to businesses. It is becoming the rare social-media service that lets them directly analyze whether promotions lead to sales.
Take RadioShack, a company aiming to survive the price wars in consumer electronics by driving in-store sales. It first partnered with Foursquare last August to offer a 10 percent discount to anyone who checked in on a phone at one of its locations and 20 percent to any RadioShack “mayor.” By analyzing the resulting data, RadioShack found that Foursquare users generally spend 3.5 times as much as non-users per transaction. Also, they often buy wireless devices and accessories, products that lend themselves to repeat purchases.
After the initial promotion and a successful holiday campaign, the company launched a “newbie special” to target more Foursquare shoppers. Those who had never checked in at RadioShack before would receive a 20 percent discount on some purchases. The technology works in such a way that people who open the app on their phones can see the specials in their vicinity. According to RadioShack’s social-media director, Adrian Parker, 50 to 60 percent of transactions by Foursquare users have been prompted by this campaign. The costs of such promotions on Foursquare are minimal, and the results are measured in dollars, not nebulous terms such as customers’ level of “engagement.” “We’ve seen excellent returns on our investment,” Parker says.
Foursquare now provides its merchant platform to more than 300,000 businesses, which can track their customers through a newly launched analytics dashboard. Merchants can analyze various metrics over time, including how many check-ins are recorded each day, who the most recent and most frequent visitors are, how visitors who check in break down by gender, and what time of day the most people check in; businesses with multiple locations can aggregate statistics to fit their needs. Foursquare provides the same platform “for Joe’s coffee shop and Starbucks,” says Eric Friedman, Foursquare’s director of business development, but companies use the tools and data in different ways, depending on their specific objectives. “Some people are using it directly to measure [differences between] top-performing stores and low-performing stores,” Friedman says. Others might track geographic differences.