Linking Customer Loyalty With Social Networking (New York Times)
Finally, the long predicted combination of GPS and interactive promotion is working, at least at a small level. The idea behind the integration of these two technologies rests with the ability of marketers to display ads and promotions to potential customers as they approach locations where a product can be purchased. Marketers see geo-targeted promotions as an excellent opportunity to stimulate impulse purchasing. For instance, knowing a customer is in a downtown shopping area at noon could be an ideal time to send a special lunch promotion for a nearby restaurant.
For geo-targeted promotions to be successful, the marketer must somehow determine when a customer is within range of outlets selling the marketer’s products. This is where GPS-enabled mobile devices, such as smartphones, come into play. As reported in this story, several companies, including Starbucks, Macy’s and Pepsi, are experimenting with delivering ads and promotions to smartphones. These promotions are triggered when a customer is close to a predetermined location. Currently, most of the companies mentioned in the story are using Foursquare, a geo-location social network, whose software is downloaded to users’ GPS-enabled mobile devices. Users can then choose to have the software submit their location to friends (and marketers).
While some may find the concept of automatic geo-location a little hard to accept, especially in terms of privacy concerns, this service appears to be gaining traction and marketers are encouraged to monitor this closely.
Through smartphones that signal someone’s location, stores and brands like Starbucks, Tasti-D-Lite, Macy’s and Pepsi are getting live information about when and where people are shopping. Some companies are turning Foursquare into a virtual loyalty-card program, while others are creating their own location applications, customers discounts or other rewards for shopping.
What are the potential threats to Foursquare and their business model?
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