How to Make Money on Foursquare

It's a game. It's a mobile social network. It's an urban exploration app. And it can be a tremendous new way to lure in new customers while encouraging loyalty.

We're talking about Foursquare, the smartphone-friendly app that has, in less than a year, seen its user base surpass 300,000. The mobile application is the brainchild of Dennis Crowley, a gaming expert who previously founded Dodgeball, the friend-location-tracking application bought (and since mothballed) by Google.

Since that project was tabled, Crowley has been developing Foursquare, which allows users to "check in" at stores, bars, and other establishments when they physically arrive, and to find recommendations for what to do there, and nearby. Erika might check in at a florist on one block, and learn that Alex checked in at a café a few blocks—or a few states—away.

The business concept here is that users are publicly sharing recommendations of the businesses they frequent. Tips made by a user's friends appear most prominently when they log on, and Fourquare also knows enough to recommend local businesses based on targeted geolocation. Companies can link a discount to a check-in listing, and reward users with points – and titles such as "mayor" and "deputy mayor" – for checking in repeatedly.

Should it continue to grow in popularity, Foursquare has the potential to draw customers to local businesses, and to create a new system by which entrepreneurs can reward repeat visitors with bragging rights. Booming New Yorkbakery Butter Lane offers a free cupcake to the first ten people to check in on Foursquare every day. Now, that's more than $20 of sales given away – but is opening up the potential for sales to all those latecomers, and building up a potentially priceless presence on Foursquare as its full marketing potential develops.

Veronica Belmont, a Foursqare user and avid gamer who lives in San Francisco, says she likes the app for the competitive aspect of it - she likes to rack up points and check the leader board. But she's also become a repeat customer of businesses due only to the special deals involved.

"I was the mayor of a frozen yogurt place for a while, and they had an offer to get a free topping if you could show them your mayor status," she says. "I probably ate more yogurt than I'd ever need to just to keep my mayorship."

Many features are rumored to be under development – including an analytics dashboard that will allow businesses to track users who come in, and new tools to create fee structures that reward users for posting coupons or for sending clicks to a business's website. A separate advertising element is also possible, but the company seems to be viewing that with skepticism in order not to offend users.

"We've been hesitant to just shoot ad copy through our system," Tristan Walker, Foursquare's head of business development, told AdAge. "Once we start to put in generic specials, we're just another channel to distribute promotions."

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Making Money on Foursquare: Love your Mayor and Encourage Loyalty

If your business has a storefront, you might have a new mayor. Who knew? If you've listed your establishment on Foursquare.com and more than a handful of Foursquare users have checked in, chances are the "mayor" is a regular customer and early adopter whose loyalty you'll want to keep.

You can see who that individual is (or at least their picture, if they have one, and username) on the Foursquare site – or, if someone mentions it while buying, cordially ask if you can view their account on their screen. Plenty of businesses are offering VIP perks to their mayor – anything from a 15 percent retail discount to a free beer. Others tack up signs or promote mayoral specials. Anything goes, really, so if you're going to show your mayor they matter to you, do so in a way that reflects your business' personality – creativity might just earn you an extra shout-out on  Twitter, which plenty of users sync with their Foursquare account. 

One company that's going a step further than mayor recognition is Tasti D-Lite frozen desserts. The chain offers a point system for checking in – and when the check-in is published on the user's Twitter, they earn a point toward a free cone. For the user, it's the element of friendly competition – combined with possible perks – that will keep them coming back.

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Making Money on Foursquare: Attract New Customers

For businesses and venues that have a presence on Foursquare, it is (for now) free to post "specials nearby," which can include coupons, giveaways, or simply a one-time offer. When a user checks in at a nearby establishment, they'll be alerted to your special offer, too. And if your happy hour two-for-one martini special is a sweeter deal than your neighbor's, well, you might just find your bar a bit more crowded. Tasti D-Lite has already seen strong results from offering "specials nearby." The 50-store chain's director of information and technology has said that data shows it is already driving in foot traffic.

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Making Money on Foursquare: Market your Brand in a Fresh Way
For non-retail or service-industry companies, Foursquare is not out of reach, even though Foursquare does not accept advertising. Take Pepsi for example. In December, the cola company partnered with Foursquare to promote its "Refresh Everything" community-giving campaign. The premise: Every time a user in New York City earned a point on Foursquare, Pepsi donated four cents to an inner-city youth camp. The result: almost $10,000 donated in one week.

"From a broad strategy point of view, there's a huge potential with the ability to connect people to promotional experiences," Bonin Bough, PepsiCo's global director of digital and social media, told AdAge.

Watch out, though, if your business has a staid clientele. Foursquare's design is distinctly edgy. When users earn points for checking into several establishments on one evening, they can earn a badge called "crunked." For several late nights out, they might earn a badge called the "bender." Or, if they check into places other users have labeled as uncool—say, a ritzy department store—they could earn the label "douchebag."

Crowley has said he has no plans to tidy up the language, so if those words turn you off, Foursquare might be a marketing mismatch.

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