Mike Isaac

Recent Posts by Mike Isaac

With New Merchant Local Updates Tool, Foursquare Is Getting Serious About Its Business

Three years, 20 million users and nearly one million verified merchants later, Foursquare is stepping up its business game.

The company plans to revamp its dashboard tools for small-business customers this week, beginning with “local updates,” a messaging system that allows businesses to contact their customers directly.

Businesses can currently offer specials — essentially, deals that show up inside the venue information page when users check in (the most frequent example are loyalty specials, or what Foursquare calls “digital punchcards”). With the new tool, businesses can send out messages to their regulars, updating them on timely offers or deals. I think of it as a targeted sidewalk chalkboard, aimed at customers who have already expressed interest in the business.

“We’ve built this because merchants are seeing tons of visitors, but until now have had no way to interact with their customers directly,” product manager Noah Weiss told me in an interview. “For updates, we’re actually using our own algorithms to decide who their best customers are, based on a number of factors — check-in frequency, current location, how recently you’ve checked in — so you’re only showing updates to the people who care to see them.”

This is important for Foursquare’s maturation, as the company aims to go beyond the “gamified” check in. The company took the “users first, business model later” approach in its early days, using the popularity of a “gamification” model to bolster its user base. But games and badges don’t yield revenue (at least, not directly), and Foursquare has shifted tack in the past year to pitch itself as a discovery engine for local points of interest, focused intensely on businesses.

After paying attention to the user side by relaunching its app, complete with an overhauled UI, Foursquare is tackling the stickier problem of giving its merchant partners better tools to pitch the more than 20 million active Foursquare users.

Previously, merchants have had access to a dashboard with a relatively large amount of customer data: It includes granular information such as male-versus-female breakdown, the most frequent customers, which regulars haven’t checked in for some time and the like. But even though businesses have had this wealth of customer insight, there hasn’t been a way to act on it effectively, outside of blanket specials.

Updates are Foursquare’s first step in giving verified businesses the ability to act on that data from the company’s own dashboard, without requiring those businesses to end up going the third-party social marketing route. (Hearsay Social is one prominent example of this type of company.)

What’s more, it’s a scalable solution. Large corporations or chain stores like Starbucks or H&M can give administrator privileges to individuals at the store and regional levels, as well as push out updates to customers at the national level. So, for example, a J.C. Penney district manager in Seattle can push an umbrella sale to its damp customer base, while another manager in Texas can update her patrons on that day’s deal on short-shorts. It’s contextual, and on a national level, context is king.

Like the company notes in a blog post, expect more of this to come in the future. It’s possible that this is another step toward a fuller, more robust suite of tools for merchants that Foursquare could actually charge for, providing a potentially lucrative revenue stream for the company.

As an aside, it’ll be interesting to watch Foursquare’s next series of moves, given that the problems of social, mobile and local are some of the most relevant to today’s tech economy. Especially relevant is the Yahoo CEO appointment of Marissa Mayer, who formerly served as Google’s VP of local and location services. To say that Yahoo is weak in mobile is a vast understatement, and Mayer could score early industry points as CEO by making a large talent and tech buy in acquiring Foursquare.

For now, we’ll have to wait and see how Foursquare scales its business on its own, slowly trudging toward a viable, long-term monetization strategy.


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