Last week Forrester released a report advising most marketers wait to use location-based social networks (LBSN) as only 4% of the US population is currently using platforms such as Foursquare (the current market leader), and that the networks skew heavily male. They advise that brands that target young males experiment with the services and other brands adopt a “wait and see” approach.
I couldn’t disagree more. Here are my 5 reasons why it’s smart to start experimenting now.
1. First Movers.
There’s something to be said for getting a head start on your competition in the digital space. Brands like Starbucks, Dell, Pepsi, and Nike have all taken advantage of the emerging channels and reaped the rewards of building a strong early foundation with consumers.
While you should not rush into a new tool without understanding your strategic goals and how it integrates with your business objectives, experimenting with emerging technologies that are opt-in and potentially have a direct customer impact is smart.
When Facebook opened their gates to the general population in 2006 they had a small user base of university students. Four years later they are a behemoth. Twitter adoption rates have been increasing exponentially year over year since their launch in 2007 and the tool is now considered a “must use” for social business. Considering Foursquare launched about a year ago, can we expect to see the same type of growth curve as the early adopters begin to influence the early majority? (see “Crossing the Chasm” adoption curve)
2. Google. Facebook. Oh My.
Location-based services are not limited to the current apps we have been hearing about. Facebook has expressed they will add a location-based offering soon, Twitter has added “Tweet with your location” to their service, and the biggest news is that Google is adding a Places API to their eco-system, as well as adding LB data extensions to their mobile advertising product.
LBSN will become mainstream sooner rather than later, and it will be the big players, not the niche networks that will drive the adoption. Testing and learning now, before it becomes ubiquitous should be something on every marketers radar.
3. Data and utility.
There is an enormous amount of insightful and actionable data that can be gleaned about your customers and prospects from mobile & LBSNs. Eventually this data could be used to inform inventory control, staffing levels, consumer tastes and trends, etc. The data can also be used in loyalty programs, to identify influencers, test new products, and as real-time service focus groups.
Companies already testing the waters include:
Nike with True City; Starbucks with their Foursquare offers; The Pepsi mobile branded app; and the City of Chicago with their Tourism campaign.
4. Sales, Coupons, Offers, and more.
Part of the Forrester analysis identified that mobile couponing is widely successful with the users currently using the services, which is interesting as the base is primarily young males, not the average coupon-consuming demographic. Gone are the days of clipping coupons in the Sunday paper, now you can serve relevant offers and drive foot traffic and purchase directly to a mobile device. These offers are opt-in, and contextually relevant, not SMS spam. Testing offers, tips, and messaging via mobile should be on every retailers plan for the next year.
Of course one size doesn’t fit all and ensuring that your product or service fits within the make-up of the demographic, depending on service (existing or branded), is a must.
5. Mobile usage.
Of course mobile, and specifically smartphone, usage is soaring year over year. Ignoring mobile at this point is like ignoring the Internet in 2002 because broadband wasn’t prevalent yet.
Bottom line for marketers:
Experiment. See what fits, what your customers are looking for, and where you can add value. Don’t wait until it becomes mainstream, because that will be sooner than you think and you’ll be playing catch-up.
photo credit: john weiss via Flickr
written by Tamera Kremer
Great post, Tamera (he said, expecting nothing less..). I’m firmly in the experiment, learn, optimize + succeed camp but would suggest a couple of cautionary guidelines:
1. Experiment to the point it makes sense for your brand. Does the user base map well onto your key target demos? There are plenty of ways to validate that but it’s an important first step. There are plenty of other (still emerging for most brands) mobile channels available before stampeding towards a LBSN :)
2. Give a lot of fore-thought to how you’ll manage scale + experience. The Starbucks mayor examples are interesting but fatally flawed as employees weren’t blocked from entry and given traffic at those destinations it’s extremely difficult to get a mayorship and begs the question if 50 check-ins (for example) warrants a buck off a frappachino. Moreover, many POS staff were unfamiliar with the promotion creating confusion, delayed line-ups and ill-will. Failing to balance the value exchanges (requested activity vs. reward) could do more harm then good if the experience is poorly designed or not properly thought through. If you’re using other discount-driven value exchanges, how does exceeding expectations look against your bottom line (admittedly those may be acceptable risks)? Even more importantly, have you considered how to leverage the heightened brand engagement you generate by being active in the channel? So, you’ve driven footfall with a coupon, can you capitalize on that to continue the interaction or even deepen the in-store experience via mobile (hyper-local check-ins for added discounts? QR codes for product engagement? SMS opt-ins for future deals? etc, etc…)?
I think the biggest benefit is what you’ve outlined in point 3 – data and utility. The customer, product and program insights you can gain from tools like LBSNs that marry mobile’s relevance and location dimensions are truly immense and a very solid foundation for future efforts if properly applied.
Checking out for now…
Hey Jonathan!
Totally agree with your comment – experimenting strategically is a must.
In terms of Starbucks, I’d say that’s a perfect example of something that should have been a pilot with a bit more planning behind it. Your points are spot on about the confusion and what they could have done differently. I have heard that they recognize that (and some of those issues are lack of robust features on Foursquare’s part that should have been taken into account prior to launch), and are taking steps to fix the known issues. But like with any experimental project (or Beta ;)) there will be bugs at launch. My opinion is that if you plan to be iterative and communicate that up-front you’ll mitigate a lot of negative sentiment.
In terms of other mobile options: for sure. QR codes, SMS, etc. are all worthy to add to the list. I tend to think of them as an extension of location-based services however as they are most relevant if they’re targeted vs. a spray (unless you’re Wal-Mart or McDonald’s).
Cheers,
Tamera
Here’s an interesting article about LBSNs and how it applies to teen markets. “All Interactive Youth Marketing Will Soon Be Location-Based.”
Reasons why:
- Desktops are dead
- Smartphone adoption will hit critical mass
- Privacy is not nearly as important for most teens as the media portrays it
- Most young people are single
- Mobile data costs are decreasing by upwards of 25% every year
And how to experiment:
- Create integration points of loyalty and rewards systems
- Get ready to be hyper-local with your messaging
- Get “mobile social” … fast
http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=133297
I think we should not be careful with location-based social networks. Where there is light, there is shadow. I mean, there are benefits, no question. But when it comes down to peoples right of informational self-determination, we need to ask ourselves more questions. Are we allowed to do everything we technically can? Should we do so? Hey, I’m not some hillbilly or somthing. Actually I love technology as long as it is under control of the people who uses it. And thats the problem I see – millions of people use technology they did not even understand. And allow me some honest question: Why do people are actually interested in sharing their current location with the world? Availability (through the mobile phone / mobile internet) seems not to be enough anymore and I really ask myself why is that so.
Regards from Europe,
Peter