The Power of Location: Aspiration and Meritocracy Are Needed
In real estate, the mantra has always been “location, location, location” to underscore the value of being in the right place. Now, with the advent of geo-location social networks like FourSquare, GoWalla, Hot Potato and CauseWorld that mantra extends to the digitally connected world. Only now, the physical location takes a back seat to the sharing of physically being at the location. And, that sharing of location check-ins is valuable for both the providers of these services and marketers. Which is why Twitter began enabling geo-tagging tweets this past March and why Facebook announced earlier this month it would soon enter the geo-location fray.
For brands with a physical presence, there is an opportunity to drive trial and loyalty as these companies are trying:
- MTV Networks and Starbucks have partnered with FourSquare to offer frequent check-in users’ special offers and badges.
- Citi, Kraft, P&G and Sears have partnered with CauseWorld to offer karma points for social good redemption opportunities.
- The Gap, Burger King, Universal Records and Starbucks have joined LooptStar’s virtual loyalty program.
They can also, if these programs reach scale, gain insights on who comes to their physical locations. For most bricks and mortar businesses — particularly if they do not have a loyalty program — it is difficult to know who their customers are. And, this problem is even more acute if the business has multiple locations. Location based services, though, can solve this information gap by offering businesses data on who checks-in and aggregating across retail locations. So, now, for instance, Starbucks will know that there are four locations — one in NJ and one in NY — that I routinely frequent. And, they’ll also see when I go out of the tri-state area, that I’m likely to stop in a Starbucks location for my daily caffeine fix. Information that they would not know since I don’t belong to their loyalty program, I don’t use their pre-paid cards and I don’t charge my transactions.
But, despite the proliferation of programs and offers, these programs still lack two important ingredients of a compelling rewards program: aspiration and meritocracy.
Aspiration
Give us something we secretly lust to drive us to try your location — and keep coming back. For instance, Nieman Marcus’ InCircle rewards has offered over its 20 plus years aspirational rewards like private trapeze lessons, a custom maserti or a year’s worth of cooking class at the Viking Cooking School. American Express’ Membership Rewards has aspirational rewards like private golfing lessons or fabulous vacations. It’s these aspirational rewards that airlines hooked into years ago when they created their own loyalty programs. These rewards require effort (spending) on the part of the programs’ members. And, more importantly, they drive bottom line results for the businesses. This is not to say that location based services should replace their current promotions with aspirational promotions. Rather, they need both. Aspiration to acquire; mundane to keep engaged. Without the aspirational component, these programs are little more than mobile, multi-retailer grocery reward programs: pedestrian and not compelling.
Meritocracy
The other shortcoming of these programs — and this is particularly the case for Foursquare — is that there is no “meritocracy.” Meaning, these services reward just the “mayor.” While from a business point of view, it minimizes the financial risk (less that needs to be paid out), it also de-incentivizes anyone who checks in regularly but is not the “mayor.” So, if I can check in every day to a Starbucks — but it’s not the same one — am I a less valuable customer to Starbucks than the person who checks in to only one Starbucks’ location? Probably not. Yet the promotions aren’t structured to reward both types of brand loyalist. (In fact, you could argue that the person who goes to multiple locations is truly the brand loyalist)
So, if you’re thinking about experimenting in location based services for your business, remember to create a program that is both aspirational and merit-based.
