To understand the most effective ways location-based marketing can help promote a brand, it helps to first explain and understand the two basic advantages these services offer: implied social graph endorsement and loyalty.
When I use a location-based mobile app such as Foursquare, I am willing to tell my network about everything from the coffee I drink to the retailer I frequent. And I'll do that for a variety of reasons, one of the most notable being it helps me earn something of value. Not just social value, such as a badge, but real value in my wallet - a 10% discount on my purchase or earning something for free.
The pursuit of those savings and status levels then connect to my loyalty - my loyalty to a business, to the products it sells, and the brands I want to buy. The loyalty isn't fueled by a single visit, but by encouraging repeat business. When I buy a brand more frequently (and tell people about it), I save more money and get access to benefits others do not.
As Simon Salt, author of Social Location Marketing: Outshining Your Competitors on Foursquare, Gowalla, Yelp & Other Location Sharing Sites, points out, the future of location-based marketing will be less about gamification and more about the value we find when people we know tell us about their experiences. "We want to be enlightened about the brands we purchase," he says, "not based on points or badges, but based on what our friends purchase and consequently rate highly."
This provides a greater opportunity for brands and companies. Although location-based services provide reward-based incentives for a first visit or a 10th visit, it also allows brands to segment customers by key demographics and sociographics. New customers can receive one offer and one experience while loyal customers can get another. Both can be amplified across a consumer's social network to drive product purchase and brand loyalty.
So if you are a brand that exists as a physical brick-and-mortar entity, your barrier to entry is the lowest. When your customers use location-based marketing, they are rewarding your brand based on their mere presence in a store, car dealership, even a hotel. When you are a brand sold through another brand (as many are), your hurdle is more challenging, but not much different. Provide frequent buyers with rewards that can scale, but are different than what you provide a first-timer or brand-switcher. Work to reward loyalty.
Adam Keats is an SVP in the digital comms practice at Weber Shandwick.