Hutch Carpenter
by Hutch Carpenter
Parker Smith wrote a piece that got me thinking. In Foursquare: Democratizing the Loyalty Program, he posits that Foursquare could be the loyalty program provider to small businesses. I think he's right.
Then I noticed these identical product benefits touted by the companies themselves, Foursquare and Jack Dorsey's Square:
"For example, foursquare can tell you how many times a customer
has been to your venue or the frequency of their visits. Many venues
are now using this data to reward their most loyal customers with
freebies or discounts." - Foursquare
"If
you frequent a place that accepts Square, we'll let them know you're a
repeat customer. That 10th cappuccino may be on the house, no paper
coffee card required." - Square
Would you look at that? Are these guys going to end up competing with one another?
A
few years back, I was the personalized marketing product manager at Pay
By Touch, which offered the ability to pay for items with biometrics
(i.e. your finger). Once you could identify the customer and her
spending, interesting loyalty program solutions became available.
Which
brings me to what Foursquare and Square are doing. Square is still in
beta mode, so it's hard to predict fully its uptake in the market. But
let's assume Twitter co-founder Jack Dorsey and his backer, Khosla
Ventures, are on top of this opportunity. And Foursquare is growing
quickly.
Each provides pieces of what would be needed for a
small business CRM. The companies are independent, but I can see new
value created if they were to work together.
There is no CRM for offline small businesses
At
least, not for businesses that operate in the physical world. Dry
cleaners, restaurateurs, retailers and other small businesses. They may
have loyalty punch cards, but generally don't have any programmatic way
to track and engage customers.
But they could use CRM as much as
a large business does. I like this customer lifecycle framework by Gary
Hawkins in Customer Intelligence:
It
shows the stages of a business's customers: new, existing, declining,
lapsing. And the ability to tier active customers also is valuable.
Each tier has its own dynamics. There is much more to CRM than a simple
frequency loyalty program. It's a deeper level understanding of the
customer base. Understanding the statuses of customers from this point
of view is powerful marketing information.
Modern CRM is more
than the analytics and outbound campaigns. The social CRM movement is
gaining strength, and it's incorporating many social network principles into the customer engagement process.
And
it's not readily available for small businesses that operate primarily
in the "offline" world. Unlike the digital platforms of e-commerce,
offline transactions are not measured. At least not beyond the credit
card transaction for consumer transactions.
This is an area of
enormous opportunity. The company that solves the CRM issue for the 4.3
million small businesses in the U.S. has an enormous opportunity in
front of it.
Complementary CRM strengths of Foursquare and Square
The two services each bring unique strengths to a small business CRM solution. Take a look:
Start with the commonality Diagram. Foursquare and Square both provide:
- Customer identity = who are your customers?
- Visit frequency = Foursquare check-ins, or Square credit card swipes
When
you see them both tout free products for repeat customers, this is how
they’d do it. Identity + frequency = loyalty punch card.
But what about the services' other features?
Foursquare provides the social fuel:
- Social incentives:
It's fun to build up points relative to your friends, show off your
Foursquare badges. And who doesn't want to be Mayor of some local
business?
- Social interactions: People use
Foursquare to to broadcast their location. This lets other meet up with
them. Or in the case of crowded venues, find someone else there.
- Game dynamics:
This reporting in on your locations is an addictive game for many. It's
cool to get your first check-in daily bonus, to unlock a new location
(hooray!) and oust someone as the Mayor of a place.
- Social media word of mouth:
By following people on Foursquare or Twitter, you can see where your
network hangs out. This raise awareness for businesses, an incredibly
important benefit.
Here's an example on that last point. Socialtext CEO Eugene Lee often tweets this:
"I'm at Coupa Cafe (538 Ramona St, at University Ave, Palo Alto). http://4sq.com/IITeJ"
I
don't spend much time in Palo Alto, and I'd never heard of Coupa Cafe.
But you know what? If I find myself in Palo Alto needing lunch or a
coffee, guess which place I'd specifically look for?
Square provides the transaction processing power:
- Dollar spend:
Incredibly valuable information to track. Does someone come in a couple
times a week, but spend heavily on food? Or do they frequent the cafe
more often, but only buy coffee? Dollars spent is an important
complement to simple visit frequency.
- In-the-flow process:
Square captures its information in-the-flow. That is, you don't have to
do anything extra. You're have to pay, it's part of the normal process.
Foursquare requires a check-in, which is outside-the-flow of regular
small business-customer interactions.
- Transaction handling:
By owning the transaction handling, Square can implement
low-maintenance marketing programs. Businesses can create promotions
tied to specific accounts, and execute them at the point-of-sale via
Square.
- Merchant account process: The process of
getting businesses signed up for these programs isn't trivial. It is
standardized, but there's a lot to tackle to provide good service. Some
early reports indicate that Square has a superior merchant account
set-up process, which may be its best innovation.
The
in-the-flow nature of Square should not be underestimated. Getting
adoption for any service is tough, and removing whatever friction to
participation that exists is a critical element. This commenter on a post about Foursquare makes a good point:
"The
sort of people who will stop and record their restaurant visits and who
have friends who also stop and record their restaurant visits and then
write reviews of same. And while that's a prime demographic, I'm
thinking it's not nearly as large as you'd hope. Most people just don't
have the time or inclination to 'play' FourSquare."
This is why putting the process of playing Foursquare in-the-flow would be valuable.
Making it happen
The
challenge is in connecting a credit card transaction to a person's
Foursquare account. Then I realized Square's intentions are much bigger
than a simple transaction swipe. The company lets people set up their
personal accounts on Square. I assume you will enter your credit card
number online, and when that number comes through in a transaction,
it's associated to your Square account. Thus Square can manage loyalty
punch card programs.
Well, why not associate your Foursquare
account to your Square account? When you swipe your credit card at the
local business, Square processes the transaction the way it normally
does. But it also does something else. It prompts an update to your
Foursquare account.
I'm not talking a Blippy-style
broadcast of your credit card purchase amount. Rather, your location
status is updated automatically on Foursquare. Just as if you'd updated
from your iPhone.
The small business then gets the social part of the CRM program.
What
do you think? Two great tastes that taste great together? Small
business could use the combined elements of Foursquare and Square.
Hutch Carpenter is the Vice President of Product at Spigit. Spigit
integrates social collaboration tools into a SaaS enterprise idea
management platform used by global Fortune 2000 firms to drive
innovation.
Source www.businessweek.com
