Location-Based Services: 5 Things You Need to Know

Foursquare, Facebook Places and other apps have changed the way customers and businesses interact. How to implement location-based services into your marketing plan.

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Check in, check out: Foursquare and other location-based services have become a great way for customers and businesses to interact.While establishing a presence on Facebook, Twitter and Yelp may have been enough to take your business to the next level even just a few months ago, location-based technology has upped the ante for small-business marketing yet again. Smartphones and the eruption of location-based apps like Foursquare, Facebook's new Places app, Gowalla and now the interactive rewards-based app SCVNGR have enabled customers and clients to interact, share, meet each other and recommend businesses based on their geographical coordinates. Location-based technology has married real-world connections with social media and can bring in more foot traffic and boost profits for companies in almost every industry.

Seth Priebatsch, founder and CEO of SCVNGR, a location-based game that capitalizes on the fun of a scavenger hunt, points out the untapped power of social media to solve big marketing problems for small-business owners. "When a consumer walks into a business, they 'consume' and then leave," he says. "It's the interaction that has sustained local businesses for years. But you're leaving a lot of value on the table. In today's world, you need to create a social traffic engine every time the person comes in the door, so they will come back and also tell their friends about it."

Think you're ready to engage and motivate your customers with location-based services? Here are five things you need to know.

Get to know the platforms.

Obviously, when first implementing location-based services into your business, you have to know which platforms are available and how they work. GPS locates customers with location-based apps and allows them to tell their friends where they are and which businesses they frequent. The most popular location-based services offer tips for friends interested in each business as well as social competitions -- the chance to unlock digital badges, stickers and other prizes, and to receive notifications of sales and deals from businesses. According to tech expert Shane Snow, founder of PrintingChoice.com, your first to-do item should be getting comfortable with the biggest platforms. He also notes that platform popularity varies significantly by geography, and that should factor into entrepreneurs' strategy. For example, Foursquare is extremely popular in New York but not necessarily so popular in other locations. No matter what, small-business owners need to be agile, because new services are always popping up as location-based technology advances.

Realize there will be a learning curve.

As an entrepreneur, you need to be patient when adding location-based services to your business. Priebatsch, who started SCVNGR when he was a freshman at Princeton, has noticed that as the platform expands, there is often a significant learning curve involved for both business owners and customers using the new social networking technology. He calls it the "education/integration/apprehension" problem. "SCVNGR and other location-based services are new, effective and high-tech, but they are new," he says. "Sometimes a person will unlock the reward, and the cashier will not know what's going on." Business owners need to invest time educating themselves and their staff about the platforms they use, so they (and their customers) can get the most out of each service. Most location-based technology companies have support available to businesses to help employees and business owners. But according to Priebatsch, all business owners need to teach staff to "celebrate" unlocking a reward, so the customer experiences a positive interaction and feels eager to play the game -- and come back to the establishment.

Drive traffic, increase engagement.

Snow believes one of the most exciting aspects of location-based services is that they allow "any business with a physical location to not only communicate with customers online, but actually get more of them to walk in the door." They also provide ample opportunities for very personal interactions between customers and businesses and in turn build buzz in the community.

However, according to Priebatsch, these social traffic engines and the fun games and challenges they present to users also point out the inherent failings in the standard business model. "In a restaurant, without the incentives provided by social traffic engines, customers will come in, eat and not tell anyone about it," he says. "They are not being structured in any way and become no more than silent advocates. Location-based platforms create challenges that are fun, quick and whimsical things to do, like snapping pictures. Content becomes viral, vocal and turns a silent advocate into a loud advocate." These are not just challenges, but real rewards for loyal customers. "The reward is optimized to get people to repeat actions until they unlock," Priebatsch adds. "People want to complete progress bars, so it motivates them to come back and complete the cycle and move up the value chain."

Partner with other local businesses.

"Proximity" seems like a simple concept, but can be a huge determining factor when potential customers choose a specific establishment over others. You can take proximity a step further by using technology to partner with other businesses near you. Over time, the network built by location-based services scales like a social network. Every business that jumps on board gets a network benefit, so it will be easy for you to convince others to go in on partner deals and other rewards to cross-pollinate. Non-competing businesses can advertise for each other easily and inexpensively. For example, a restaurant that does not serve dessert could direct traffic to a bakery across the street. Everyone wins.

Track your results.

To get the most out of marketing with location-based services, you need to track and measure which apps and deals work for you and which do not. Many services and networks offer analytics tools to help you track your stats, and these tools will be refined further as the platforms grow. Snow encourages businesses to study data carefully and regularly to determine which promotions really motivate your customers. The goal is not to necessarily measure your return on investment, but to work for brand exposure and increased awareness of your business.

Priebatsch also sees experimentation as critical to success with location-based technology. "Most of the stuff ranges from free to inexpensive," he says. "It's cheaper than conventional advertising and much more measurable and effective, because you get hard numbers." Aside from experimenting, he says, "You need to go deep with the platforms you use. Research and give them time to be fruitful. Push them to your customers. See how people are engaging and act on the data you collect. The more you build your social network, the better luck you'll have with new promotions."

Tags: 5 Things You Need to Know, Facebook Places, Foursquare, Gowalla, how to use Foursquare, location-based apps, location-based services, PrintingChoice.com, SCVNGR, Shane Snow, small-business marketing, social media

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