By Erika Stevens

Last week’s blog post highlighted two social media announcements pertaining to location-based marketing.  Since that post, Facebook and Foursquare have been all over the news as the general public is discovering the joys of using these applications to tell friends where you are and get special deals.  As businesses are jumping into location-based social media many might decide to use it as a replacement for a traditional loyalty program, but there are some challenges to consider. 

1) Relying on location-based marketing for customer loyalty can unintentionally isolate customers. Most of these applications are used on smart phones and only 15%-19% of the US population has a smart phone.   There is the option to check-in using text but I can’t imagine someone taking the time to text. 

2) The analytics available from location-based marketing are generally the total number of check-ins and what time of day people check-in the most.  While this information is helpful it is not as in depth as loyalty program analytics can be.  The most important factor in knowing your best customers is knowing how much they purchase.  Armed with this data, your targeted marketing efforts are more effective.   Best Buy is integrating Shopkick with their Reward Zone program and is a great example of how to utilize both marketing strategies.  

 
3) As Eric mentioned in his post about Shopkick, walking in or even checking in does not necessarily tell you if these customers are loyal to your business.  Shopkick is using technology to award points once you have entered the store but Facebook Places and the other applications do not have a way to ensure that you are at the location you check-in at.

Using social media to market your customer loyalty program to new customers is one example of integrating both strategies.  Integrating the social media component with loyalty purchase data provides a powerful tool for targeting your customers with smart phones.  Social media is constantly evolving as is our society and we will no doubt see many enhancements made to respond to the needs of businesses and customers in the coming months.  My recommendation is to start with a simple loyalty program to reward your best customers then add the location-based marketing to draw in new customers and interact with your smart phone customers.  What ways are you seeing social media and location-based marketing used as a way to promote customer loyalty?