You walk into a store or business and are presented a compelling offer.  The restaurant wants you to order appetizers and will sell those at half price if you buy one today.   You get a good deal and the restaurant gets you exposed to more of its menu.  Loss-leaders are not a new concept in retail but location-based services are extending and enriching this tactic considerably.  

Apps like Foursquare and Gowalla run over iPhone and leverage location, making it easy to present these offers to you instead of someone having to approach you, which can be kind of awkward.  But there’s a lot more to it.  Making the loss leader (aka, the offer) a digital activity is now advantageous because they can be linked to social networks.  Your digital activity has more legs to it because the word can easily be spread to people you know, and this deserves a premium.  The gaming dynamic is a separate lever in the mix too.  Even if you had no word of mouth capability, merchants are finding it valuable to provide incentive around the frequency of your engagement with them.  You need only show-up a lot (aka check-in) to earn benefits like prizes and discounts.  That’s different than actually buying stuff, but pretty similar conceptually to the idea of Loyalty Card (get this card stamped 10 times and your next sandwich is free).  

Finally, there’s the actual intent you have when visiting a store or taking advantage of a certain discounted item.  CPG companies know this landscape well – they’ve been pumping custom coupons at the grocery store cash registers using analytical firms like Catalina Marketing for years.  You like organic milk and all-natural cake mix, so no coupons for Doritos and Oreos will appear on your receipt.  Then there’s brand new territory like throwing an event for you and people like you – affinity groups.  Maybe this is a spin on the retail concept of catering, except more ad-hoc and less structured.   

Foursquare CEO, Dennis Crowley, hinted at examples of this at the Where 2.0 event last week (restaurants pushing offers to Foursquare users to gather at specific times or user self-organizing).  This could be extended considerably down the line – all the people who have certain status, ranking or badges get to experience something special and unique at a certain time at the venue.  Influencers will gather to be specially treated and then happily spread the word (mashing-up the event and loss-leader).

Yes, social media is throwing a tizzy into stale concepts with Foursquare, Gowalla and Loopt leading the way.  The potential to re-architect existing retail consumer engagement is already happening and the new possibilities are just as inviting.  Get ready to be consumerized in new and interesting ways. 

Tell me what you want to hear about next.  Tweet @atifatif and vote for one (or more of the following):

1. Will offers and incentives vary depending on the strength or size of your social network?

2. What’s the best way to determine mayorship?

3. Will we be gamed to consumer oblivion?

4. Is there value in the Foursquare / Gowalla VISA card?

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Filed under: Events, Web Apps, Social Media, Local

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Tags: foursquare, gowalla, retail, coupons, local businesses, incentives, check ins,