Mobile Check-ins and Why Direct Marketers Will Love Them

This may have been the shopping holiday of the check-in, at least from a growth perspective. Data from Foursquare indicates that of the top 10 retail brands using the platform to get mobile users to check in and check out deals, eight saw growth in their check-in numbers during the week before to just after Christmas.

Some of those, Macy’s and Best Buy, saw substantial Foursquare traffic increases—25% for Macy’s, and 19% for Best Buy. Wal-Mart, Barnes & Noble, Target, Apple and Costco also saw week-over-week increases in Foursquare use at the time. Only Starbucks and McDonald’s posted declines in their Foursquare check-ins compared to the previous week.

Obviously these growth percentages are only part of the story—just as Foursquare is only part of the location-based mobile services ecosystem, with 5 million users. After all, both Forrester Research and the Pew Internet & American Life Project have produced research suggesting how few Americans actually check in over Foursquare, Gowalla, Whrrl, CheckPoints, Loopt, Shopkick or any of the other platforms now available. The Pew Internet data, published last November, suggested that as few as 4% of Americans online have used location-based services.

But a report by marketing research firm eMarketer predicts that location-based services (LBS) won’t stay small for long. In a new report, analyst Noah Elkin says that the growing use of mobile devices, and particularly of social networks over mobile devices, will make location an increasingly important piece of information when targeting customers. Location information provides insight into both where they are and what they’re thinking about, he says. Knowing those things about a customer entering a brick-and-mortar store will be just too useful for marketers to disregard when they’re looking for offers to make those shoppers convert.

“Checking in to take advantage of an offer will be the direct-response end point of a larger user location-based campaign,” Elkin say in the report, “Beyond the Check-in: Best Practices for Location-Based Marketing”. “Proximity data will help guide marketer messaging at each stage of the purchase funnel, starting with building awareness about the location of a store or product and becoming progressively more specific to include promotions or offers as a consumer gets physically closer. Success will come from the combined power of reach, relevancy and the ability to drive offer redemption.”

In other words, the point is not just to get customers to check in but to see that action as the midway point in a deeper interaction with that user. “It may be the last action you or I take as consumers, but marketers should bookend the check-in on either side by generating awareness before and then loyalty after,” Elkin says. “The check-in itself doesn’t create loyalty and is not necessarily indicative of loyalty, but it provides a mechanism for the brand and the consumer to engage in a conversation that helps build loyalty.”

That means having a strategy for continuing the relationship with customers after they’ve checked in. It also means making sure that any deals offered through location-based services are easily redeemable and don’t overburden sales staff.

In campaign design, marketers interested in getting the widest audience for a product sampling or prospecting offer can tie a reward to the simple check-in. But those looking for more user engagement will do best to incorporate game elements into their location-based promotions, offering a prize or reward that users have to compete for.

And although check-in games made their name offering “mayorships” for the most visits, more effective location-based programs offer a real-world reward for virtual behavior. Elkin points to a campaign run last April in which Foursquare players in London could win a $600 pair of Jimmy Choo trainers by tracking online clues and showing up at locations before the brand did. The monthlong campaign engaged 4,000 online and mobile participants, earned free media from 250 blogs and mainstream outlets such as Reuters and The Evening Standard, and led a 33% sales increase during and immediately after the promotion.

Not that check-in rewards always need to be monetary. Environmental law organization Earthjustice ran a campaign on Foursquare last May that linked check-ins to money allocating for green causes. A billboard campaign in San Francisco transit stations promised that “Every time you check in, an Earthjustice donor will donate $10 to protect endangered species.

The location-based promotion gave Earthjustice insight into which out-of-home ad locations worked best for their message. And since many users have linked their Foursquare and other location-based memberships to Facebook and Twitter, the organization also got the benefit of being injected into players’ social graphs.

Metrics can still cause problems in gauging the value of location-based marketing. In his report, Elkin points to a “Foursquare Day” it ran on April 16 2010, offering gift cards to 100 random customers who checked into a McDonald’s unit. The chain originally claimed that the promotion increased foot traffic to its stores by 33% on that day—but later admitted that what it had measured were the check-ins themselves, not the actual store attendance.

When it comes to the question of who will rule mobile geolocation platforms, Elkin says the real struggle to watch will be between Facebook and Google. Facebook introduced the Deals feature on its smartphone app last November, letting users check in at their locations and find marketers offering rebates or freebies in their area. Early brand adopters included a number who offered to make charitable donations for check-ins—including Southwest Airlines, Starbucks and The North Face— and several retailers (Macy’s, JC Penney and H&M) using rebates and discounts as rewards. On the first day Facebook Deals went live, The Gap launched a promotion that offered free jeans to the first 10,000 customers who checked in over their mobile phones.

Facebook has a big advantage in location-based mobile services, namely its dominance of the social networking ecosystem and a growing number of users accessing over mobile. “Most people have their social capital concentrated in Facebook,” Elkin says.

But Facebook is not monetizing Deals yet, preferring to open it up to marketers in a pilot phase while it watches how members want to use the program. By contrast, Google is already earning money from mobile, or at least from mobile ads; and it is reported to be working on its own version of a social network code-named Google + 1.

If that Google network comes to pass later this year as rumored, it may incorporate the location-based assets Google has recently rolled out including Hotpot local ratings and Google Buzz for geo-tagging messages. “The challenge is that they’re not now tied together in a neat platform,” Elkin says.

Even if Google is able to link these features together into a coherent location-based social platform, it’s not a given that Facebook will lose out in the fight for mobile check-ins. A socialized version of Google will face a perceptual challenge among users.

“Search engines in general and Google in particular grew to prominence because of the speed by which they got you off their engines and onto other content, which was your ultimate destination on the Web,” Elkin says. “Facebook’s approach has been exactly the opposite. Facebook draws you into this massive walled garden and wants you to stay there for as long as you possibly can. I’m not sure users think of Google as something other than a disparate collection of tools—some of them sticky, like Gmail and Google Maps, but many not.”