Growing the Location-Based Pie

Last week, in the lead-up to SXSW Interactive, Foursquare released a new version of its mobile app.  The update’s new features include expanded specials and a new discovery engine.  The goal is to add more value to the users’ experience and keep them checking in with the service.


While Foursquare had over 7.5 million users as of last week,  that’s several orders of magnitude less than the number of users of services like Facebook (over 600 million) or Twitter (over 200 million).  Studies by Forrester and Pew each found that “only 4% of US online adults have ever used location-based social networks … on their mobile phones, with only 1% using them more than once a week.”


Do these numbers mean that location-based services are a dead-end (despite the bullish opinions of many in the industry?)  No, it just means that the industry must decide if it’s happy with a niche market, or if it’s going to grow the location-based pie.  To do the latter, services like Foursquare and Facebook Places will have to change their marketing strategies.  In addition to pleasing their early adopters with expanded services, they have to make it easy and attractive for new users to enter the market.


While the whole marketing campaign to effect such a change would be fairly complex, I think that a few key strategies can make up the backbone of such an effort:


Make It Valuable for the User


I was surprised to see Foursquare add an emphasis to leader boards, a really basic game element that is limited in its extensibility, in their latest update.  Points and badges have attracted much of the current demographic to the service; however, to target other segments, the company’s focus must be on real-world rewards.  In today’s cell phone-tethered world, a lot of people still clip coupons because they see the cash value in it.  Foursquare is moving in the right direction with their “new flavors” of specials.  Facebook has similarly gotten the message, as they moved quickly to integrate Facebook Deals into their Places offerings.


Make It Easy to Get Started


A desire to try out a location-based service is not actionable if a potential user can’t figure how to get started (or even get it onto his or her phone.)  Facebook makes it easy to start with Places, as it’s built into their main app and mobile site.  Foursquare has a bit of a disadvantage in that users must download a separate app, or at the very least go to their site and create an account before using another app that builds on their API.  If Foursquare is going to attract new users who aren’t subscribed to Mashable’s RSS feed, they have to take their recruitment to the storefront.


Foursquare has already done an admirable job of advertising its service in stores (either through the “Check In Here” signs or through promotions like the one with Hess and Pepsi.)  To increase user numbers, they should expand their point-of-purchase collateral to include user education.  This could be as simple as providing QR codes linking to the Apple and Android App Stores so users can download the app, or they could provide a step-by-step guide to downloading the app, setting up your account, and making your first check-in.  Once the new user sees the “Newbie” badge on their screen and the list of nearby specials, they’re off and running.


Make the User Comfortable


The biggest critique I hear of location-based services is when people ask why someone would want to broadcast their location across the internet.  Contrary to Mark Zuckerberg’s view, many social media and mobile users are still concerned about their privacy.  Someone who thinks that sharing is foolish or dangerous isn’t going to try a location-based check-in service.  Again, this is an opportunity for the services to educate potential users.  In his various conference appearances, Foursquare’s Dennis Crowley has made a convincing argument why to use a service like Foursquare to keep track of where your friends are or even as a diary of where you’ve been.  However, this message needs to reach further than the circle of conference attendees and people who read blogs like mine.  After all, we’re probably paying attention because we’re already regular users.


Be Where the Users Are


Both Facebook Places and Foursquare have been good about being where their users can access them.  As I mentioned before, Facebook Places is built into the already ubiquitous Facebook mobile application and its smart phone mobile site.  Foursquare, meanwhile, has expanded beyond its app presence through its API.  You can check into a location on Foursquare while adding foods on Foodspotting or even through the competing Gowalla app.


Just as check-ins must have real-world value, these services need to relate to our real-world activities.  Obviously, they must be available on our networks when we want to use them (without serving us a Twitter “Fail Whale” style error message.)  Furthermore, they need to embrace not just our physical position, but our motives for being there.  We should be as excited to log into Foursquare every Friday night as the attendees at SXSW were last week when they landed in Austin.


I’m excited about where location-based services are going, and I can’t wait to make it to the next conference or summit on the topic.  As a marketer, though, I feel that it’s critical that the people behind these services look beyond the technology.  Someone will become the iPhone of the LBS market, and I predict that that will be the one that considers users and the mass market in their strategy.


What do you think?  Will check-ins stay niche?  What would you add to my strategy?

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