To Foursquare and Beyond

             As someone who has never used location-based services and has never really understood the value behind them, I was pleased that this week’s readings cleared up how these platforms can become more useful for companies if they are expanded and implemented more efficiently.

             When I originally heard about location-based services (which was obviously in this class because I barely knew anything about social media before), my first question was: why would people ever want everyone to know exactly where they are and what they are doing while they are doing it? I didn’t see the benefit in it for anyone, until I realized that there was a gaming aspect such as becoming mayor of a certain location.  My next question was: how do the locations/places benefit when people “check-in” and broadcast that they are there? I didn’t understand how it was helpful at all, for example, for the Gap to see that someone “checked-in” on their phone at their Atrium Mall store.  Then I started to realize that businesses were incentivizing people to check in by offering discounts or rewards for doing so, thus attracting business and sales.  But I still wondered how it would remain beneficial over an extended, because I honestly felt that once more and more places started advertising deals for checking-in, people using the services would check in wherever they could just to get the discount or whatever the place was offering.  In other words, I didn’t think it would make people visit a location more often, because I figured the trend would spread, more locations would offer similar deals, and the service users would take whatever they could get whenever they could get it.  So what benefit would Chipotle gain from providing a discount for checking-in, if the same person who checked in there today would go to Bolocco tomorrow and check-in for their discount also?

                Based on these questions I had, I was most intrigued by Schneider’s assertion that these loyalty programs were limited between 2 axes: customers and spending.  The author basically summed up my thought process when he said that when businesses use these location-based services, they still lack the knowledge of the business that each customer is giving its competitors. Therefore, as I was suggesting with Chipotle and Bolocco, is it really smart business-wise for them to be offering deals and discounts without knowing whether or not they are actually incentivizing customers to choose their business over their competitors’? I think the author made a great point in all three of these readings suggesting that the location services and platforms should start collecting size and frequency of purchases across all locations and mining the data to build a true loyalty reward program. I agree that this would provide companies with a more holistic view of consumer behavior to help shape their business approach. They could provide rewards and services more relevant to the most loyal customers and make the experience better for all parties involved.

                I was also in complete agreement with Schneider’s claim that launching promotions to sell what customers already buy is a waste of money, because if they are willing to spend the money on it and pay full price anyway, the company would actually lose money.  Therefore, the promotions should seek to shift customer behaviors by offering discounts or deals to sell the things that customers don’t typically buy but may be convinced to buy based on the promotion. That way, the customers will try something new and spend a little bit of money on something they wouldn’t necessarily buy every day or for full price, but it will still result in profit for the company.  I think this is definitely the direction in which location-based services should move in, because to me, it just makes the whole process seem more worthwhile.  There definitely needs to be a shift toward incorporating more data about more than one of a customer’s purchases so that the analysis of such information can actually provide the company with insight into which promotions to run or services to change to drive sales and loyalty to that particular brand.  In this sense, it would prove more than just a silly game that I will never understand or use. =) However, there is still the concern over whether or not customers would agree to let this information be known--would it be worth it to you? If these programs do move in this direction, should it be opt-in or opt-out?