Business Report

How Companies Are Using Data from Foursquare

The location-based service might feel like a game to its users, but it’s producing worthwhile data for businesses.

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.

It’s a deal: Foursquare users see promotions like this sample; in return, businesses get abundant data about who their visitors are and when they are most likely to come.

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.

Companies customize campaigns by offering different types of “specials” to users, and they can track aggregate statistics throughout the campaign. While RadioShack and others aim to attract new customers, Applebee’s launched a “swarm offer” in an effort to bring in the late-night crowd. Everyone who checks in gets free mozzarella sticks, as long as at least five people in the restaurant check in after 9 p.m.

The real value of Foursquare is likely to become apparent when companies move beyond pilot tests and integrate its data into their broader marketing tools and systems for customer-relationship management. Parker says RadioShack is looking to combine data from Foursquare and other social-media tools, such as Facebook Places, Google Places, and Twitter, into an overall content-management system and customer database.

For companies without physical locations, like content providers or consumer packaged-goods companies, it’s not so simple to analyze the effectiveness of marketing through Foursquare. Companies can try to increase loyalty by creating brand pages where Foursquare followers can see tips for things to do in different cities. For example, the New York Times’ more than 90,000 followers might be advised to try the cereal-milk soft-serve ice cream at New York’s Momofuku Milk Bar. As with Twitter “followers” or Facebook “likes,” companies can monitor their follower count and track how many people have followed up on a certain tip (148 for Milk Bar). But Foursquare’s Friedman says, “We are just beginning to scratch the surface on what that [following] means … and thinking a lot about how to make that data available.”

Carine Carmy is a senior consultant at the strategic advisory firm MarketspaceNext, where she analyzes the implications of emerging media and technology on businesses.

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