How Geo-Targeting is Affecting Customer Loyalty Programs

Originally posted at the CMB Research Blog

Recently I have been playing around with Foursquare, the geo-targeting based social media application that allows me to "check in" at certain locations, share my "check in" with friends via Twitter and Facebook, and earn "badges" based on how much I use it. I'll be honest, as a consumer I don't fully get it (yet). But as a marketer in 2010 I want to understand where things are going and be able to speak to them as they relate to our clients. And with this week's eMarketer report that 53% of mobile app users are willing to share their locations, there is no question that there is a huge opportunity for brands to utilize this technology.

Certainly geo-targeting is not for everyone, but some major brands are going beyond mobile ads and jumping in to help increase the impact of their loyalty programs and reward their best customers in real-time. And as many companies seek to evolve their loyalty programs in the "new economy," it's key to understand if your target customers are interested in being marketed to and rewarded in this way and where there is an opportunity to serve them.
Here are three examples of companies who have made significant steps to engage via mobile, geo-based applications and go beyond just geo-based ads.

1. Pepsi's Pepsi Loot program
PepsiCo is in the process of launching Pepsi Loot, an iPhone app that utilizes geo-targeting for consumers to find nearby restaurants that serve their beverages. The app and Pepsi Loot program is designed to engage customers at key partners like national chains including Taco Bell, Pizza Hut, Arby's and Panda Express as well as at individual restaurants with Pepsi contracts, Schelling says.

"It's all about how you engage with consumers, and it's all about how consumers are living their lives," Margery Schelling, chief marketing officer for PepsiCo Foodservice, told Marketing Daily. "I don't know any consumers who aren't traveling around with their phones." "It's a big equalizer," she says. "It's bringing a lot of awareness to some of our smaller partners." (Read more at MediaPost)

2. Starbucks discounts for Foursquare Mayors
Earlier this week Starbucks announced that they will be giving discounts to Foursquare "mayors" at their locations. (For the uninitiated, Every time you check-in to a location, foursquare keeps track of your activity if you are the most frequent visitor to a location, you will become the mayor of that location. As mayor, you may be entitled to a variety of freebies.)

While Starbucks was already giving away "badges" to their mayors, this new promotion takes the testing of foursquare as a marketing tool to another level with real rewards by identifying and rewarding their most loyal customers with a discount. In turn, it could spark increased visits by those seeking the discount and the "mayor" status. (Read more at Mashable.)

3. Tasti-Lite's TastiRewards
A few months ago, Tasti D-Lite, the frozen dessert chain popular in New York, took a huge step forward with its social media rewards program, TastiRewards. The program is pretty simple and incentivizes customers to associate their Twitter and Foursquare accounts with their Tasti D-Lite membership cards.

Customers could already use their TreatCards to earn rewards points based on their purchases, but those that opt in to the social media bonuses earn additional points automatically. And as a promotional vehicle, Tasti D-Lite updates the customers' Twitter and Foursquare accounts each time their card is swiped and points are earned or redeemed. (Read more at Mashable)

More than ever brands need to understand how to take advantage of social media, including but not limited to Facebook, Twitter, MySpace, customer forums, and newer geo-based options like Foursquare and Gowalla. The opportunities to enhance traditional marketing/customer engagement strategies are growing by the day but the landscape for each brand and segment is different. This requires constant learning and testing, but market research is a key component as well.

So while most "social media research" is focused on counting and sentiment analysis, conducting primary research about social media is also becoming a must. Whether it's the sole purpose of the project or you are just building modules about social media into future segmentation, brand, and customer experience research, you need to understand how your customers are engaging and to what extent they are willing to engage with you and what they want or expect in return.