There is no doubt that people love loyalty programs and retailers love the fact that you come back time and time again spending hundreds to earn a free item or small value perk. However when was the last time you actually wanted to take the time to dig through your wallet for your loyalty card? How many of those little tags can one person actually carry on their keys? Basically the loyalty program was getting stale. Sure there were iPhone apps that stored your card and let you present it virtually but that doesn’t do much to advance these loyalty programs in a way that made them work for the new ‘connected’ and ‘social’ customer. So I was impressed earlier this month when Mashable reported on a story where Tasti D-Lite (a frozen yogurt chain) announced that they were rolling out a new program (called TastiRewards if you care) that incentivised customers that linked both Twitter and Foursquare to the store’s loyalty program. It’s an incredibly simple concept when you think about it and the idea of loyalty combined with location services and social networking has a ton of potential if Foursquare (or others) help build out the business and make it simple for retailers to get on board. It’s this last point about integrating and showing value (versus simply signing them up to get numbers) to retailers that I think Foursquare will need to concentrate its efforts in order to make loyalty programs a decent size revenue stream.

Foursquare Loyalty Requires Metrics & Analytics

To keep it simple I will use the Tasti D-Lite as my example throughout. Like most loyalty programs, Tasti D-Lite has a traditional card program where customers can use their TreatCards to earn points for purchases, however those that opt-in to the new social media part of the program will automatically earn additional points for their ‘check-ins’ which are shared on both Foursquare and Twitter. It’s brilliantly simple, customers register their cards on the MyTasti website and then enable their Twitter and Foursqure accounts to automatically send tweets and check the customer in (with a ‘shout’) on Foursquare. From the consumer perspective you’re pretty damn happy as you earn points just for showing up in the store and then get a bonus (on top of the regular rewards) for each dollar you spend.  Tasti D-Lite is also thrilled with this arrangement because they instantly get the best advertising possible, word-of-mouth and they get to tap into your social network without having to take the time to advertise or court any of them. It’s actually the epitome of a situation working for all involved.

Everyone loves a scoop

Foursquare = Tasty Rewards?

So this seems to just work and kudos to both Foursquare and Tasti D-Lite for the innovation. However, I do believe that for this to be a sustainable revenue stream for Foursquare they will have to offer more value to the retailers than simply linking up with their existing loyalty programs. In order for Foursquare to be able to make some real money off this they will need to actively partner with someone to create a  back-end loyalty CRM system that retailers can log into and actually get some useful data from and will further have to help retailers utilize these loyalty programs. Let me explain…

If I am a retailer I intrinsically believe that it is great that my customers will now be telling each other of the rewards they earned and will help promote the business via tweets and check-ins, but if there are no metrics available it will be impossible for me to really attribute increased revenue with the loyalty program and to further know what pieces of the social media loyalty program are working (including at which locations) etc.  It will be tough for Foursquare to ever fully monetize because neither they nor the retailer will be able to objectively determine the value of non-tracked tweets and check-ins. Further without a good system for actively tracking metrics and actively monitoring (+ reporting on) the tweets (e.g. think CoTweet with some Salesforce built in) there is a risk that the program will become nothing more than an afterthought for retailers and nobody pays for an afterthought. Finally, by having a metrics and analytics system that allows for some decent reporting Foursquare would be able to aggregate information from all the loyalty programs and create a professional services/consulting arm with best practices etc.

Following this idea of professional services or at least some consulting, I also think that Foursquare will have to come up with a standard loyalty program for retailers with no current program and loyalty program ‘connector’ so that they can easily integrate those major retailers who have already invested time and dollars into their own loyalty program. I say this because while someone at Tasti D-Lite was obviously quite savvy and was able to work with Foursquare to implement this program it is apparent that the critical mass of retailers will not be approaching Foursquare, rather Foursquare will have to approach them (or at the very least have a sales person who is trying to sign them up) and explain why the program will work for them, how they get started and perhaps even hand-hold (e.g. create templates for emails to be sent to existing loyalty members or get tons of Moo Cards printed to hand out with a street team) through the launch process.

I don’t know exactly how Foursquare is planning on monetizing their business but loyalty programs seem to be an obvious source of at least some recurring revenue. You’d be surprised at how much money, time and even more money traditional retailers pour into loyalty programs. While they will be tempted to try out Foursquare, if it does not connect into their traditional program and/or Foursquare cannot offer its own metrics and analytics I just don’t believe there will be enough of a business case for retailers to see it as anything other than a gimmick.

In the Mashable article they raise a very similar point and they go on to point out that with a little effort Tasti D-Lite (or in my mind Foursquare in conjunction with any retailer) can use the data it receives from check-ins to  ”collect, analyze and apply to budget discussions around allocating resources to social media efforts.” However I think the analytics need to be a bit deeper than simply being able to get accurate accounts on the quantity of tweets/check-ins with card swipes – Loyalty programs are not new and those who do them well (e.g. Air Miles) know that there is a wealth of information to be gleaned from consumers through these programs. While Foursquare is definitely on the right track with this cool initiative it will be interesting to watch whether they really go after loyalty programs as a real revenue stream or just one that has netted some positive publicity.


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