Foursquare’s Loyalty or Groupon’s Trial?

by Bob Nunn October 6th, 2010 

4365033584_196d86a10a_z Theres been a bunch of hype on both. If youre a marketer which should you try? This post offers some advice for businesses and marketers curious about these new services based on my own experience as a user and research emerging from around the online world.

foursquare-logo

Foursquare " for those who havent tried it " makes a game out of how you move around in your daily life. The more places you check-in at and the more times you check-in to a particular place, the more points you earn. You even become a mayor of a place if youre the person who checks in the most there. Many marketers have experimented with rewarding the mayors and those who check-in.

But to me this is the worst kind of loyalty; the kind that subsidize the already loyal. If the customer really likes you they were going to come anyway. All you did was open your pocket and say here, grab some profit!.

Dont get me wrong. Im not against rewarding the loyal. Im a big fan of creating fans. But this isnt the surprise & delight your customer type of loyalty. Those rewards dont have to cost a lot and can have great returns. Stever Robbins " The Get It Done Guy " recently offered subscribers a secret chapter to his new book. Brilliant! That makes them feel special at very little cost.

image

But no, this is training them to only go to the place that offers them a deal. Hence, the reward you get as a marketer isnt going to last long because if theyre going to be swayed by this, theyre going to be swayed by the next guy who comes along with a slightly better Foursquare deal. Seth Godin talked about this recently suggesting that the word loyalty " as in loyalty programs " is getting misused by marketers these days as truly loyal customers are those that stick with you even if a better deal comes along.

Not surprisingly then, while McDonalds recent Foursquare trial promo boosted check-ins by Foursquare users within three days looks like traffic was back to normal and its unlikely to have any long-term effect. I took this chart from an excellent analysis Thomas Baekdal did of the promotion.

image

That may be because who doesnt know what eating at McDonalds is like? Its unlikely many of these people were eating there for the first time and, in fact, probably eat there fairly regularly. You probably just moved their visit from another day. What makes this even less worthwhile is that, while Foursquare has some rabid fans and impressive growth, it reaches just a fraction of a percent of people daily. Facebooks version of it " dubbed Places " may have the volume to give it more of a critical mass but that remains to be seen. Lastly, heres a link to five case studies dubbed Hits & Misses but none convinced me, so far, it was worth the effort.

Which brings me to

Groupon logo

Groupon, on the other hand, is all about trial. It can bring a ton of business into the top of your funnel by having your business featured as the deal of the day to its hundreds of thousands rabid subscribers. The only catch is you have to offer a very deeeeeeeeep discount. Is there a chance that these people are just coupon clippers; only loyal to the next deal? Yes but consumers are all shades along a spectrum. Just because they go after the latest deal doesnt mean they wont become loyal " truly loyal " to your product if its good enough.

Just make sure it is. Because if you have a product or service that sucks, Groupon can help you go out of business faster. See these examples:

http://www.businessinsider.com/how-a-successful-groupon-clobbered-one-business-2010-9

http://bit.ly/9QkXqE

In summation, think of Foursquare like a nip of alcohol. Initially a wee bit of a stimulant, then a depressant. Groupon meanwhile is like Red Bull: a good jolt to the system but one that could have leave you sleepless if you take too much.

Hope this helps.

Bob Nunn

Bob Nunn is an Internet Marketing Consultant in Toronto and the founder of BrandMechanics. Bob has a successful track record of helping companies fine-tune their online marketing and getting their brands revved up. He has won over 40 marketing awards for his work in advertising, new media, email and more for clients such as Yellow Pages Group ‘The Find Engine’, Blockbuster ‘Guaranteed To Be There’, FutureShop ‘You’ll like what the future has in store.’ and 3M ‘Innovation’ among others.

Brand Mechanics

You May Also Like

5 Responses to “Foursquare’s Loyalty or Groupon’s Trial?”

  1. Terry Van Horne says:

    Wow I couldn't disagree more… Groupon is one of many of these types of "crowd Priicing" sites, and IMO, Groupon take too much of the sale to make it feasable for a large number of bizs.

    This post totally disregards the 4square checkin as a benefit to visibility and raising brand awareness. I have not seen a business yet that was negatively impacted by rewarding loyal customers. In fact loyalty programs are huge, every major brand out there has/participates in some sort of loyalty program. Groupon … well… as my pal Steve said on the Radio show yesterday… You would be better off standing outside your store offering passersby $5 to come in to the store.

    • Bob Nunn says:

      Hey Terry, Glad you disagree as was hoping to provoke some discussion. Agree the Groupon cost is steep but 66% of businesses who did it found it profitable and vs. the $5 deal you've got masses who have a stated interest in what you sell. If you're a new business that needs trial and you have enough margin/repeat business, the evidence suggests it can work.

      As for Foursquare, I'm not in violent disagreement but it's just a question of whether it's worth the effort yet as it reaches just a fraction of a percent every day so the awareness lift is small and I haven't seen as strong evidence of it working, have you?

  2. Keri Morgret says:

    I'd be interested in seeing Groupon stats on which physical locations, which offers, which categories, and what price points result in one-time bargain seekers that only buy what is on the coupon versus who becomes a repeat customer that purchased more than just the coupon. I think that would help a lot of businesses make a better decision about whether to spend time and money on Groupon, Foursquare, or another option.

  3. Greg says:

    I have been subscribed to Groupon for a while now and love it. It is a great way to try out new activities/places/food etc. without any type of buyer's remorse.

    I have not used FourSquare but have definitely heard about it. Not too sure if I like the whole concept, but if it works for certain businesses then bravo!

    Either way, I think both of these platforms are good for local small businesses to try. Thanks for the post!