Location-Based Social Networks Introduce Deals

Image via Adquantify.com

Location-based social networks introduce deal feature so businesses can offer incentives to users who check-in to their location.

This is a huge step forward for location-based social networking, especially as a marketing tool. I looked at location-based social networking in an article last week “Will Location-Based Social Networks Catch On?”. Check it out for a quick analysis of hurdles the location-based social network medium must jump for it to catch on.

November 3, 2010 was the birth date of the newest form of marketing, location-based social network marketing. On this date, Facebook added Deals to its Facebook Places so users could see what offers are nearby and share those deals with friends. Location coupons and offers had been done by other location-based social networks like Yelp, however, Facebook’s Deals feature also allows for businesses to offer users incentives for check-ins. This is the game changer — an incentive for location-based social network users to check-in, plus an incentive to bring new users to location-based social networking.

Facebook Places offers four types of Deals: individual, friend, loyalty, and charity. These deals and donations are offered by the individual businesses, not Facebook.

Individual and charity deals are pretty straight forward. For example, check-in and get $5 off or check-in and the company will donate $1 to.

Friend deals require the user to tag their friends to share savings. While a clever way to have users promote the Place, this will be the least popular method and I can see this feature being eliminated all together. It seems exploitative. Maybe I don’t really understand what it is. Doesn’t Facebook Places already share where users check-in to the user’s friends? For example, Mir just checked-in at Starbucks and got a free White Chocolate Mocha. That is enticing enough to the user who reads it. Given the Facebook Team’s knowledge of the game, I hope that I am just not understanding what this feature is rather than it being what I think. We’ll see what happens.

Loyalty deals are high tech. These are deals that require multiple check-ins like a punch card. I really like this type of deal. Loyalty deals have the most potential, but this type of deal also needs the most work. The issue with loyalty deals through check-ins is that I can currently check-in to a Place that is half a mile away via my iPhone. What will prevent a user who lives next door to say a Jamba Juice from exploiting this feature? For this reason, loyalty deals should require an additional step. Maybe have the user check-in, then have some sort of verification where the user receives a virtual stamp after they enter a code that is provided at the store. Just throwing it out there.

Many companies have already started offering or have planned deals for their U.S. Places. As seen from the Mashable article above, the Gap free jeans deal certainly got a lot of people talking. But look closer. Look at the comment section. Whether it is a case of satisfied customers not having a reason to speak up (there are some positive comments), the fact is that some people felt cheated or lied to as a result of the Gap promotion. From reading what people have been writing about their experience, both on this and other articles, I can see that the Gap stores were not prepared to run this type of marketing campaign.

For example, some stores simply gave out the coupons to people who mentioned or asked about the promotion. Why? You would think customers would just go to the cashier with their pair of jeans and show that they are in the first 50 to check-in or something in that vein. At the very least, show people how and ask them to check-in. Not only is not requiring the customers to check-in for a check-in deal counterproductive, but it is also infuriating to the person who checks-in as #2 and is told you already gave away your 50 pairs. Basically, if you are going to offer a free product to the first x number of people who check-in, make sure you offer it to the first x number of people who check-in.

Some examples of deals companies will offer users who check-in on Facebook Places are:

24 Hour Fitness: Donating $1 to Kaboom to support children’s health for everyone who checks in to its fitness clubs.

Gap: Giving blue jeans to the first 10,000 customers to claim their deal.

H&M: Offering 20 percent off.

McDonald’s: Giving $1 per customer to the Ronald McDonald House Charities.

The Palms: Upgrading your room or extending your weekend at the hotel another night–on the house.

San Francisco 49ers: Giving the first 200 fans who check in the opportunity to buy tickets to a subsequent football game for $49.

If you want to offer deals to your customers through Facebook Places, click here for a video tutorial by Facebook on “How To Create a Deal”. 

Facebook Places is not the only location-based social network to introduce deals. Last week, Yelp announced it will be expanding upon Yelp Check-ins by introducing Check-in Offers later this month. As of this writing, Yelp has not provided specific info about this new feature, but from the image we can surmise that there will be three categories: percent off, free offer, and fixed price.

Will businesses be able to offer deals that require multiple check-ins like a punch card? I would assume that if not initially, Yelp will eventually implement this type of offer. Other than that, it seems Yelp’s system is pretty similar to Facebook’s.

Facebook vs Yelp for control of location-based social networking will be an interesting battle. Facebook has a larger user base, but Yelp has been in the location game for years and its user base is more targeted at location services. I wouldn’t be surprised to see the two team-up to create the ultimate location-based social network.

In closing, be careful not to dismiss location-based marketing as just a fad. Remember that marketing through location-based social networks is only in its infant stage, not even crawling yet. Who knows what the future holds?

11.16.2010 Update

Fellow Bruin Jennifer Van Grove’s article brought Shopkick to my attention.

Target joins Best Buy, Macy’s, Simon Malls and handful of other retailers as partners that have all installed a special Shopkick box, which costs roughly $100 per unit and emits a signal picked up by mobile devices to verify and automate checkins and points for rewards.

Unlike Facebook and Yelp, Shopkick is not a location-based social network. There is nothing social about it. It is simply a location-based shopping application. It can be used socially if linked with the user’s Facebook account, but the app itself is not social.

I updated this post to mention Shopkick because it has done the most to solidify itself as the best service for retailers to market to the smartphone audience (Android app coming soon). While both Facebook and Yelp have an advantage due to their existing large user base, Shopkick has solidified its spot, at least for now, by signing deals with major retailers — Macy’s, Best Buy, and Target, among others.

If you are a retailer or business who would like to partner with Shopkick, contact partners@shopkick.com.

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