FOURSQUARE: From a Restaurant Marketing Perspective

The Foursquare Phenomenon

It’s here already and many predict that it has the potential to turn restaurant marketing on its head. In the words of Thisisgoingtobebig.com, the cell phone app and social networking tool Foursquare is “able to connect web advertising, recommendations and social media buzz to an actual person walking into your store, [which] has long been the holy grail of the advertising world.” But, since it is relatively new, it is still uncertain whether its effect will be large or small. It all depends on the number of users and their degree of involvement.   After two months of using and researching Foursquare, we believe it’s time that restaurant owners and managers know the opportunities and problems this new technology presents. With this at your disposal, we hope you will better able to separate the hype about Foursquare from the truth.

The Basics

Foursquare was designed to help users find ‘stuff to do’. It takes advantage of sophisticated  phones with GPS technology such as the iPhone and those with the Android operating system. It does this by informing users of locations of interest in their proximity (restaurants, cafes, bars,  theatres, etc.).That’s not all.  Users of Foursquare “check –in” every time they visit a location. Along with users collecting information through Foursquare, it updates the user’s friends to where they are and provides incentives to keep users checking-in to venues. The incentives work two ways. Simon Jary of Techworld.com notes that Foursquare, in much like game, has a “system of rewards that serves as an incentive for adding activities and venues.” There are badges and titles for almost anything imaginable. Secondly, some venders give out specials (which include deals/discounts/freebies), often based on how frequently a customer visits their location.  For example, some establishments reward the person who visits the location the most, or ‘the mayor’. If anything, Foursquare motivates users to be more socially active, which frequently means dining out.

What Restaurants Get For Free

There are surefire ways in which Foursquare encourages restaurant growth. It helps a potential customer find a location who would not otherwise know about it. Additionally, Foursquare enables the users to find out exactly what’s exceptional about your restaurant (like suggestions on what to eat). Yet, a restaurant does not to do anything for these benefits.

Special Risks

Here comes the tricky part. A restaurant takes on some risk when, as Jeff Weisbein of Besttechie.net writes, “places [start] to team up with Foursquare and offer free food and drinks to people who show that they are using it.” One risk is fraud and cheating, which will be discussed later. Another more threatening risk is that Foursquare users will come for the special and never return to your restaurant again. And this may have nothing to do with the quality of a restaurant’s food or service. Many may not even be interested in becoming a regular customer as they are driven there because of specials. Certainly, specials through Foursquare may serve as a short-term solution for restaurants. And many of the specials that Foursquare promotes bring customers in, but, if continued, it also leads customers to fixate on the specials and only return when the specials are available. The special becomes expected, and the product devalued. This isn’t smart business. Specials are supposed to be the ice-breaker so that businesses and customers can establish longer relationships. Also, other than those people who are chasing after being the ‘mayor’, the onslaught of specials from different restaurants undermines a customer’s loyalty. Foursquare is about finding new places, not about tasting everything on a restaurant’s menu or having a ‘place’. Therefore, habitual and indiscriminate use of specials is not worth the expense.

To Lure Restaurants In

How To Unlock Your World With Foursquare on Howcast

Foursquare wants restaurants to provide their users with specials. These specials might attract first-time customers and boost volume. Those may be good reasons to participate. Foursquare, however, uses other tactics to persuade restaurants into participating. In exchange for rewarding Foursquare users with specials, restaurant owners can gain information and statistics from Foursquare about the users who check-in at their restaurant. The data that Foursquare shares includes most recent visitor, most frequent visitor, time of day, new visitors, and a gender breakdown. Allison Mooney of Advertising Age claims that “Foursquare can provide an incredibly compelling data set for anyone interested in consumer behavior.” But this information, though nifty, doesn’t tell the whole story. The customer-tracking data is not exceptionally revealing because it only follows the behavior of Foursquare users (a restricted and still small demographic) and much of the information can be figured out, without incurring risk, by following receipts or by simple observation. It just isn’t enough. If it doesn’t fit in the restaurant’s business strategy to either increase volume or draw in first-time customers, then it would better to stay on the sidelines.

Foursquare’s Reach

As mentioned above, Foursquare works only with smart phones, and so it only reaches a specific clientele, which are normally tech-savvy, outgoing and young. It misses other demographics that are more privacy-conscious and not as tech-savvy. Lauren Goode of the WSJ.com writes that “the idea of broadcasting my location always unnerved me”. Suddenly, those who live in the city will not be so anonymous. With that in mind, we are doubtful that it will spread to older customers even as they upgrade their phones.

No Access and No Control

Various other problems with Foursquare work against restaurants. . Most notably, Foursquare does not give a restaurant/location access to customers who do “check-in” even if they supply specials. Restaurants have no way of contacting these customers, leaving many to miss important announcements and promotions. This prevents targeted marketing to likely customers. Likewise, this blocks attempts by restaurants to establish customer loyalty. Unfortunately, restaurants have no control over the content that appears on Foursquare whether it be negative or just plain wrong. Neither customers nor management can respond to a poor review. Also, Foursquare does not reward increased volume.

Holes in the System

Foursquare has other flaws that often go unnoticed by most tech reviewers. Foursquare is not completely safe from cheating and fraud. This is particularly problematic when restaurants offer special deals for repeat customers. The GPS component is far from perfect; in fact, one can “check-in” to locations from another zip code, according to Dan Grillopoulous of Techradar.com. We observed after looking over the mapping data Foursquare provided that more than half of the people who “checked-in” weren’t in the restaurant. Indeed, some checked-ins must have been happened just before a customer’s arrival and some after leaving but that with such a high proportion that certainly leaves many unaccounted for.  With specials based on this inexact way of tracking users, it may make a business owner hesitate at relying on an arrangement based on the honor system.

Making Foursquare Work For Your Restaurant

The question for every restaurant owner and manager is how they should react to Foursquare, especially since it’s likely to grow.  Based on our own experience, we can confirm that it is addictive but it may not lead to an addiction to your restaurant. So one is left with the decision whether to monitor the situation or to participate. As mentioned above, there are certain risks involved with participation. Participation, by offering specials, may result in increased volume but long-term customer loyalty is in no way guaranteed. Offering specials solely for the statistical information Foursquare makes available isn’t worth it. The costs are too high. Still, if you feel inclined to offer discounts/deals/freebies to entice Foursquare users, keep it simple. Reward first-time customers and those who come back repeatedly (like 10 times) but be wary of those that are the ‘mayor’ as that position is the most likely for abuse and isn’t accessible to every customer. Just as you entrust us with managing your online reputation, we will surely keep you informed if Foursquare becomes more restaurant-friendly or if increased involvement makes Foursquare a required marketing tool.