How Local Businesses Can Benefit From Mobile Social Networks

Local Businesses Can Benefit From Mobile Social Networks
The nearly mainstream social web is now evolving and graduating to mobile devices.  This emerging space of mobile-based social networks are empowering customers to find the best venues and prices, and offering savvy companies unique ways to cater to this new medium.  Yet, despite the emergence of applications like FourSquare, Yelp, and recently launched GoWalla, there are risks as customers talk directly to each other and opportunities for businesses who harness the tools.  Local businesses should approach the mobile social networking space by first listening to their customers, responding to commenters, provide special offers to advocates, and prepare for pricing to be impacted.

Mobile Social Network Offers Discounts Based On Location
Using FourSquare, a location based social network, I ‘checked in’ to the movie theatre indicator to my friends my location.  Immediately after the application identified my approximate location it offered a ‘special nearby’ which I clicked.  The Savvy Cellar Wine Bar offered me 50% off a wine flight to a store 2 blocks away. Using both my general location using 3GS on the iPhone and my explicit checkin to the location, it was able to serve up advertisements based on my physical location.  We should expect FourSquare to evolve and eventually offer advertisements based on your friends interests “John, Amy, and Allen all like Los Taqaritors, invite them now for a 20% off discount”.  Location based ads will soon connect with social information.

Catering To “Top” Customers Spur Word Of Mouth
The opportunities aren’t just focused on location based, but also provide opportunity for developing an unpaid army of advocates.  Take for example Foursquare’s point system, those who ‘check in’ the most to a location can become the ‘mayor’ of their particular store, indicating they’re the top customer.  Some savvy restaurants provide free drinks or other services to the mayor, who will continue to spread their affinity for a restaurant using social networks.   A few weeks ago, I spent time with Yelp’s marketing team and their community manager Connie who oversees many of the community facing events.  I learned that many local restaurants cater to Yelp Elite, and will likely provide them with quality service above and beyond, in fact, Yelp has launched a program for restaurants to offer a prix fixe menus for Yelp users. Expect to see Yelp’s mobile application advertise these special deals for Yelpers as they search for restaurants online using mobile devices.

Empowered Customers Check Prices In Real Time –Impacting Buying Behavior
Even if you don’t have a physical store, but offer a consumer good, consider RedLaser, which is a real-time bar code scanner that allows any phone to scan UPC codes and find them cheaper online.  This means that retailers with higher priced products may miss out as consumers can quickly buy it from a competitive store down the street or find it online.  If this trend continues, manufactures may shift their supply away from high-priced retailers to compensate for the change in demand.  (Thanks Andrew Hyde for the tip)

Innovative Market Dependent On Adoption
Despite the innovation, location based marketing and advertising has its limitations as it’s dependent on: total number of consumers with mobile devices, adoption of mobile social networks, and their desire to find location-based offers.

Key Takeaways For Local Businesses:
Local businesses should approach these mobile social networks in a four part strategy –not simply reacting without a plan.  Companies should approach this space by:

  • Listening In For Free Research. Local businesses should immediatly montior their brands on mobile social networks like Yelp and FourSquare.  Use this information as free research: find out the perception of customers opinions both good –and bad to learn about their market.
  • Responding To Reviewers. Use negative information as a way to improve products and services and let your community know you’re listening to their feedback.  Although there are always two-sides to any complaint use these same tools to respond to customers in public, but be sure to abide by the terms of service.
  • Rewarding Top Customers.  Customers that frequently patron your store and tell others on these mobile social networks should be rewarded.  Build both in person and online relationships with them so they’ll continue to advertise and market on your behalf.  Free drinks anyone?
  • Preparing for pricing impacts and positioning.  With disruptive tools like RedLaser appearing, customers can quickly find pricing of products and find them at nearby retailers.  Retailers like CVS, Walmart, Target, BestBuy, Safeway should take heed as consumers continue to become empowered through instant information.  Companies will need to respond by:  making product pricing more competitive, or offering other deals such as bundling, speed, time, or other value-based offerings.

Update: Here’s some screenshots, I learned how to take screenshots with your iPhone by holding the main button and power button.


photo photo

58 Replies to “How Local Businesses Can Benefit From Mobile Social Networks”

  1. Nice post Jeremiah, its been a while since I commented
    I think Yelp has a major problem though, its flooded with positive reviews and that definitely hurts adoption.
    If you look at most coupon/voucher company’s they are all moving to the web as quickly as is possible.
    I think foursquare may have something though, nice backers (same backers as twitter) that alone for me is a very interesting coincidence 🙂
    Imagine foursquare becoming a default twitter client with around 4-5 million mobile users, all checking in and all willing to accept bargains/vouchers/coupons
    add location to this and you have just found the holy grail.
    If this was to be built out correctly these users would have enough power to bring about incredible change in the cellphone space

  2. I think mobile social networking sites and local sites offer much more to a marketer than the general purpose sites. The ads can be more targeted and more context sensitive. I am from india and we have a local search engine called justdial.com which allows you to get local business listings via sms and voice calls. And also mobiles have a higher penetration and user base than personal computers.
    However i still believe there’s a lot more which can be done in this space. also i had read this article on the forrester blog http://blogs.forrester.com/consumer_product_strategy/2009/10/why-could-mobile-reinvent-social-computing.html which also stressed on the fact how mobile could be the center of our social life in the future.

  3. Pat

    There was a recent report out Pat that said that most reviewers were 4.3 out of 5.0 stars. Yes, expect integration between 4Square and Twitter, the features are already there –agreed on them becoming a twitter client.

  4. Interesting post, Jeremiah! Since my consulting has evolved to helping small businesses use social media effectively, I’m always looking at different apps to help them. These are different, but since they are so new, I’m wondering if, at this point, they might be effective for small businesses in non-urban areas. For some, like restaurants, perhaps, but other businesses…well, it may be a matter of watching what happens with Foursquare, Yelp, etc., before recommending them to folks I work with. Thanks though 🙂

  5. So I’m trying to understand Gowalla (hadn’t heard of it until now). From my visit to their site, they appear to be a total replica of Foursquare (with the same phrasing like “checkins” and everything), except so far as I can tell the service isn’t restricted to major metro cities like Foursquare.

    Anyone used it/know what the deal is? I mean they must have something more unique than the location part.

  6. Interesting read Jeremiah. I am intrigued to see how this all plays out and trickles out to secondary markets beyond Boston, New York City, San Francisco etal. I fear that the biggest short term obstacle in making localized mobile more empowered via Social Network platforms is less the willingness for consumers to adopt mobile social networks and more so the barriers built by carrier arrangements for specific types of smartphones. That and it is the rage to make apps for iPhone, not so much for Blackberry and Android while I like their efforts is a bit too scattered it seems. Important market area, hopefully it is not stunted the way telecoms and cable battled over the early days of web bandwidth. More choice and less lobbying time the better.

  7. The iPhone application looks impressive but I’ve been somewhat disappointed with the Blackberry Storm (aka just go to the mobile web page) version of foursquare.

    Although it may already be too late (with new competitors like the Palm Pre and the Google Android phones showing up every day) if Apple breaks exclusivity with AT&T and is able to corner as high a percentage of the smart phone market as they have the MP3 market I agree that mobile/social applications like this will start to have a very significant impact.

    But … until/unless there’s a (near) universal mobile platform it’s going to be tough for these applications to get past niche status.

    I hate to argue for ignorance (or not knowing what’s being said around you) but I wonder how much bandwidth marketers should dedicate to monitoring conversions held in such narrow markets.

  8. Ryan

    Gowalla has several features that Foursquare doesn’t currently offer –but likely will. I found the user interface to be cleaner and easier to navigate. Gowalla allows users to create ‘trips’ or even design things to do for other users to tour, this is more robust than foursquares tips, which are ‘one–off’ pieces of data.

    I think the key thing you mentioned is Gowalla, should they get early adopter adoption, has a stronger chance at growth since they’re not limited to specific cities like FourSquare is.

  9. Jeremiah – Thanks for pointing me to RedLaser http://redlaser.com. That is a very cool iPhone app. I downloaded it onto my 1st generation iPhone and it worked very well. Provided me with a variety of prices and retailers for Rubbermaid and Sharpie products. We are definitely going to investigate further. I think the combination of price/retailer searching with consumer product reviews and coupons could be a powerful combination for consumers and provide excellent consumer insights for us.

    I have also been using FourSquare and am still trying to fully understand the game/social location/promotional aspects of the service. A lot of potential, but still early.

    Thanks again for the excellent post and pointing me to a very useful app/service.

    Bert DuMars
    VP E-Business & Interactive Marketing
    Newell Rubbermaid
    http://newellrubbermaid.com
    @bwdumars
    personal blog – http://socialmediaecosystem.com

  10. Even in areas such as California’s Inland Empire which don’t have the mobile concentrations of Manhattan or Silicon Valley, mobile services are penetrating – and using some old-fashioned methods to do so. When I went to Yogurtime in Upland a few weeks ago, I noticed that they had a Yelp sticker posted in their establishment. This was a mutually beneficial move, since it helped to promote Yelp in the frozen yogurt shop, and also helped Yelp-savvy customers to promote (or denigrate) the shop itself.

    I am currently FourSquare mayor of the Upland Yogurtime, but I haven’t approached them for a free topping yet. 🙂

  11. A follow-up comment on Brian’s and Jeremiah’s comments above.

    Remember that not everyone in the world has an iPhone or a Blackberry. I have a first-generation Motorola Q running Windows Mobile 5 (one early adopter blogger has referred to it as my “8-bit rotary phone”), but I’m still in the minority of people who have smartphones; most people do not have smartphones.

    As it stands currently, Gowalla is not an option for me, and unless they make a major change in their strategy, their growth is going to be limited.

    As for FourSquare, I can access it without any special app using my mobile web browser. And even if I didn’t have a smart phone, I could use FourSquare (albeit in degraded form) via SMS.

    Any service that relies heavily on a single channel of distribution is going to be hampered from the start. And before one assumes that Apple can dominate the phone market as it as dominated the music player market, remember that even Apple must shudder and tremble in front of the AT&Ts, Verizons, and other service providers of the world. The only way that Apple is going to get a huge smartphone market share would be to offer a low price to consumers, along with corresponding high revenue to the phone providers – such a strategy is not in Apple’s DNA, which prides itself on being a high-end solutions provider rather than a cut-rate mass-market provider.

  12. Great post Jeremiah. As always a fresh look at new (and supposedly better) things. I can’t believe how long it’s been since I read comments one by one, especially after a post been up for several hours. But this really sparked a conversation full of resources and links that I hope visitors enjoy as much as I did! Will talk to you soon again. –Paul

  13. I think services like Foursquare have a huge upside for small businesses and nonprofits to work together on cause marketing programs.

    Check at my post from last week “Foursquare: Social Media for Cause Marketing” at http://www.selfishgiving.com.

    Jeremiah, I’d love to see the “Special Nearby” function in action here in Boston. I haven’t run across that yet.

    Joe
    @joewaters

  14. Very thoughtful writeup Jeremiah — Thanks for the kind words. We do realize that while Gowalla in theory works everywhere, it does not necessarily work for everyone yet due to it’s iPhone-only status. This is a top priority for us to remedy. Our goal is to support as many GPS-enabled smartphone platforms as possible. In the near term, this means Android, Blackberry and Palm.

    We recently relocated our company to Austin, a very local-business friendly city, for the reasons you describe above. I definitely think the future is bright for Mobile Social Networks.

  15. Thanks Josh. I do realize this is an early industry. The “iPhone only” state is similiar to the “this site only works in IE or AOL” browsers in mid 90s. Emerging space, and very exciting for you!

  16. Jeremiah:

    Glad you receive our offer for 50% your first wine tasting flight. You didn’t mention whether you took advantage of it when prompted or not.:) Based on our check-ins on Foursquare, it appears you did not. So like a lot of these location-based services and promotional avenues, it begs the question: do they really deliver results. In your case it may have assisted in generating awareness of our establishment. But awareness that doesn’t translate to foot traffic and paying customers doesn’t pay our bills.:) For us, overall it is too early to judge – there is some early and anecdotal evidence that appears promising.

    One of the factors that may be influencing impact on local businesses is the “density of distribution”. Despite the proximity to Silicon Valley, our location in Redwood City is not a dense, urban center. I would hypothesize that these services might be more effective in places like SF.

    We will continue to experiment with Foursquare and other local merchant services. But to date our most effective vehicles to drive retail foot traffic has been email, Facebook and Yelp and Twitter to lesser extents.

    Regards,
    Brent Harrison
    Owner, Savvy Cellar Wines

  17. Brent

    Thanks for the offer! I wasn’t able to visit your wine bar again as I had a commitment at the movies –then dinner. I’ve come in twice before, and enjoyed the nice atmosphere and a few glasses of red.

    That’s right, these services may be more useful for urban density, certainly in metro centers in Europe and Asia where driving isn’t the norm.

    i hope to meet you soon.

  18. Discounts per location? The type of customer that fiddles with mobiles incessantly, and shops based on “proximity”, tends to have short attention spans, aren’t that ‘random-about’ curious, and won’t be repeat customers. And some people deeply resent the privacy-intrusive-spam factor. The LBA data just isn’t there, people shop for products, LBA usually tends to be a single-transaction, reaping no long-term benefits.

    Catering to Customers PERIOD spurs Word of Mouth. Every customer should be treated as the best customer. Service Levels should (ideally) be uniform. Creating reward systems and other hoop jumping tricks, in creating a customer hierarchy, can’t sustain itself long-term, people are fickle and always demanding. And “best” is relative, and should always factor in the “future-tense”.

    “Empowered customers” checking prices…won’t matter, people still want it now, the big box stores still thrive, cheaper click never replaced expensive brick. And some of those “un-savvy” customers have well learnt, immediate gratification can pay off, per convenience and the lack of killer shipping charges. We tend not to plan well-ahead, needing what we need EXACTLY WHEN we need it, overnight is still too late. And people want one-stop stores, everything in one-fell swoop, cheaper, still might mean going to 10 other online stores. A trip to Costco, replaces hours and hours of online searching and endless payment-system fiddling.

  19. Jeremiah,

    Thanks for the response – glad you’ve come in other times and enjoyed the atmosphere and red wine. I hope to meet you too – missed you at the #140tc event a few months back. Conference participants were raving about you!

    Cheers,
    Brent

  20. Since FourSquare has significantly improved their application, I’ve found myself using it more and more. I actually passed this link on to two PR firms I work with regularly as I have no doubt their clients will benefit. I think a great deal of what local businesses see on the “social media” front is relegated to domains wanting them to buy ads. Apps like FourSquare and Yelp really empower the users to not only discover new places in their own backyard but feel as if they have an active role in a destination’s success. Great tools for cultivating brand evangelists in your community.

  21. Mobile social network apps like Yelp and 4Square have the potential to be huge as long as they are able to penetrate medium to smaller markets.

    They do offer participating businesses the opportunity to target “ready to buy” customers along with turning those same customers into promoters of their business. So it is essentially a win-win situation for both business and customer.

    But again, it all comes down to the ability to expand. While they may enjoy some success in the major cities, the one service who is able to expand will enjoy a bigger slice of the mobile social media pie.

  22. I think I search for keywords + zipcode more often in Google than just general words. We’ve heard localization promises and convergence with mobile devices for years, but I’ve not yet seen it deliver on its promises. My opinion is we’re hamstrung by crummy overloaded mobile data networks.

  23. The potential for local businesses to hyper-target customers that are in their neighborhoods is huge. The initial opportunity for these businesses could verge on the dark side of social networking through poaching customers checking in or considering their nearby competition. Geo-Location services offer businesses that get involved early a competitive advantage that could yield early returns in this ecosystem.

  24. Companies will need to respond by: making product pricing more competitive, or offering other deals such as bundling, speed, time, or other value-based offerings.

  25. Pingback: Local Businesses

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