Location-based social networks: an opportunity for real-life retailers

Make no mistake about location-based services. There’s more to consider than their current low number of users, especially when you take into account the potential they offer to retailers who can learn much, much more about their customers.

At the beginning of this week, Forrester published a study on LBSNs or Location-based social networks. Only 4% of adult US surfers have already used an LBSN service, and only 1% uses it at least once a week.

Although it is connected to Facebook and Twitter, the real interest of Foursquare is limited to the ego boost when one wins points and badges.

But back now to the enormous potential of LBSNs, especially when it comes to click & mortar strategies. We see two reasons for that. First of all, the mobile phone is gaining field in the buying process and context. In its 2009 study, called The Emerging Opportunity in Mobile Commerce, Forrester found that of all Americans having used their mobile to buy a product, 62% have used it to find a shop nearby with the product on stock. 42% used their mobile to look for information on a product in the shop and 39% used it to compare prices within the shop itself.

To those who can’t see what this may lead to in the near future, we would recommend they have a look at this demo by Pattie Maes of the MIT.

Retailers such as Fnac have understood. They offer a barcode scan in their mobile application. And they link it to their loyalty card system.

This week CardStar announced it would link its application with Foursquare. CardStar’s mobile application has already been downloaded over 1,4 million times. It offers the possibility to group physical loyalty cards in just one mobile application.

This functionality is interesting because it increases levels as the customer knowledge increases. The activation of the card is only done when a payment is made but when you link the app to Foursquare, it is active the moment you step into the store.

Just like an e-commerce site that can track the number of connections of a client and his or her interest in products, the interconnectivity between the LBSN and the loyalty card is the key to a better customer knowledge in the physical network.

Taking things still further, it could lead to an integrated physical and digital customer knowledge.

As a result, retailers but also restaurant chains should digitalise their loyalty cards and link them with LBSNs, whilst pushing offers that reward customers who flag their shop.

The LBSNs offer the opportunity to enhance the offer, service and customer knowledge: it would be a pity if retailers didn’t take it…

by Olivier Legris