Check-ins, badges, Mayors, stamps on passports, rewards, and other new concepts from the past are flooding the net as the latest trend in location based services applied to marketing purposes. While looking at those new tools I had a strong sense of déjà vu, and I tried to learn some lessons from the future.
Sub sole nihil novi est
"...There's nothing new under the sun..."
It all started last week when I was watching with my son an episode of Seinfeld, which was originally aired on December 1997. Besides introducing the concept of “Festivus”, one thing caught my attention: Elaine was looking for a reward card from a place called Atomic Subs. She had already eaten 23 bad subs because she wanted to “…become the Submarine Captain and have a free sub…” . Interesting enough, 13 years ago she wanted to have the free sub but ALSO get the title of “Captain”. Sounds familiar?
Looking around other concepts, I found that the idea of stamps was introduced in US around 1896 by S&H Green Stamps. During the 1960s, the company printed three times as many stamps as the U.S. Postal Service. Customers received stamps on retail stores, gas stations, supermarket at the checkout time. Customers collected those stamps to trade them for different prizes.
The above mentioned were Check-outs. A full scale rewards system for Check-ins on the other hand, was introduced by American Airlines in the early 1980s.
The intrinsic value of Check-ins and Check-outs
There is a huge difference though between the old check-ins / stamps and the new ones. Note that Checking out at a supermarket or checking-in in an airplane connote an exchange in value, most commonly known as “customers paying for something”. The current rewards, on the other hand, are offered to individuals (not customers yet) that just showed up. At times where online shopping took a great deal of business from brick and mortar stores, I can understand the excitement on bringing the customers back to the door. Nevertheless, while it’s true that the first step to have a sale is having the customer there, rewarding them just for showing up without following up on a sale doesn’t make much sense in the long run.
The real value of Check-ins, stamps, and other incentives should reward more than just physical presence. Moreover, the real question is how you get the customer to the door from the beginning. Can geo-social check-in applications significantly extend the customer reaching radius around retail locations? For that, there are other effective Location Based Marketing solutions – some of them don’t even require a smart phone or GPS, but that is a topic for other discussion.
Using games for serious business is not a game
Loyalty is an emotion-based bond between the customer and a company, and using games to create that relationship is clever. But the ultimate goal for that bond is to create profits, and the question is if we are creating a long term relationships or just short-term impulsive purchase behavior.
The emphasis in Location Based Marketing in general and Geo-Social Marketing apps in particular shouldn’t be on Location or Social, it should be on Marketing. That’s why having a marketing professional involved in the process is so important. While this might sounds obvious to some of the readers, I found many cases where SOME “social media consultants” without formal marketing training or background make an upgrade from social to geo-social and now they become also the face of the Location Based Marketing practice. Location is an extremely useful tool, and geo-social games are only a part of it. Location Based Strategies should be incorporated AS PART of the marketing mix and with the overall marketing strategy in perspective.
Back to the roots
A few years ago I joined a valuable organization called MENG (Marketing Executives Networking Group). If you are a senior marketer, I strongly recommend joining. One of the benefits of MENG is having the opportunity to send questions to a huge membership composed by senior marketers.
Many MENG members created and manage some of the largest loyalty programs for leading brands. Last week I asked them: what are the costliest mistakes you can make when building a loyalty program. I took a few of the many responses and I’ll try to look those through the Location Based Marketing lens.
Across the board they all agree that treating all members equally is a big mistake. Profitable members are not equal to less valuable members. In LBS terms, customers that check-in once a week and buy $150 worth of breakfast for the office colleagues should be more important for the business than the one that checks in every day and buys a coffee for $4.5. Moreover, the business should have an employee policy regarding check-ins, otherwise nobody can “compete” with them as they check in every day.
The second most commented mistake is about lacking data mining and customer purchasing behavior tracking. Understanding, segmenting, and serving customers according to their buying behavior and demographics is key. In LBS terms, it’s not enough to have information about unique visitors, check-ins per day and time. The focus should be on what they purchased and their demographic profile. When and where are more logistic oriented; who, what, and why are the ones you should focus on, and the combination of the five makes a killing solution. At this point I see Facebook Places as the one with the best profiling capabilities, but we still need to see how privacy issues will be resolved.
Loyalty programs should be customer centric, and strive to provide rewards that fit the specific individual. You should engage the customer on a regular basis. In LBS terms, you should incorporate Location to communicate with your customers when they are there, but also use other channels to bring them to the door when they are away.
Location can be expensive and the last mistake I should mention is spending more than is necessary to keep a customer. In LBS terms, over-rewarding customers that would have shown up in your store anyway.
New meet old
New technologies pose new challenges, opportunities, processes, and best practices. Location Based Marketing solutions in general and Geo-Social games and apps in particular can be a powerful addition to your marketing mix, when implemented correctly. Just remember that technology is the mean to reach an end, not the objective itself. Technology can perform tasks in a smart way but that doesn’t make it intelligent. In order to make it work for you, you need a professional marketing team that understands consumers and technology.
I invite you to continue our conversation, or approach the marketing professional closest to you. And this time “closest” doesn’t necessarily have a geographical connotation.
P.S. – While this article not necessarily reflect their personal views I would like to thank my good friend Monica Z. and all the MENG members that provided me a valuable insight! Claudio Schapsis