Growth Of Location-Based Apps Cause Retailers To Check In On The Potential To Extend Rewards

While some in the retail industry are still skeptical about the potential of location-based apps, it is getting harder to ignore the growth and buzz on companies like Foursquare, Gowalla, Shopkick and Loopt. Retailers are increasingly realizing the potential to attract new customers, maintain loyal clientele and establish a solid social network by leveraging geo-location technology in smart phones.

Foursquare kicked off the check-in trend, launching its app in March of 2009, and quickly surpasseed the 1 million-user-mark after only a year on the web. As of August, it reached 3 million users and now processes more than one million check-ins per day. Along with the promise of specials from retailers and restaurants, Foursquare creates urgency for users to check-in, promising “badges” and social titles like becoming “the Mayor” of a location.

Over 15,000 venues currently utilize Foursquare to reward users with specials and coupons in return for check-ins, including Tasty D-Lite, Starbucks, Coach, EXPRESS, Whole Foods, and Juicy Couture. Retailers can use a dashboard to access check-in and demographics.


Created in 2007, Gowalla’s 500,000 users transform their smart phones into passports. The more users check into a location, the more stamps they collect. To increase the importance of status, a user can become a venue “founder” if they have the most check-ins at that location.

Picture_19Retailers in New York, San Francisco or Austin can also purchase a Passport Stamp specifically for their location, adding their company to Gowalla’s company listing.

The most important concept for companies to revisit while developing a location app marketing plan is the importance of incentive. The more tangible and intangible rewards offered to users, the more likely they will check in. Although a study from Forrester Research found that people more actively respond to offers via SMS or mobile search, results also claim that location app users are more likely to do mobile research about businesses through mobile phone with 33% for app users and 10% for non-app users. A drastic 27% of app users are also more likely to read product and service ratings and reviews, compared to 4% of regular mobile users.

Pia Arthur, Communications Manager at Gowalla, predicted location-based apps will evolve to become a core part of a retailer’s marketing campaign.

“Location is transitioning from ‘feature’ status into a core pillar of the web — especially the mobile web. In as few as 18 months, it will be difficult to imagine services that are at least not in some way augmented by location,” Arthur said. “You will definitely see more and more companies as well as individuals use location-based services for daily use.”

Integrating Location with Loyalty

Partnering up with Facebook and Twitter, Engauge enables users to post on multiple platforms at the same time, quickly extending the dispersing of information. To cash in on this escalating trend, retailers are adopting location-based apps to create buzz on upcoming specials. The more a shopper checks in to a store, the more offers, sales and coupons they receive.

“When someone checks in they are doing a virtual hand raise, and retailers and marketers need to acknowledge that critical and new aspect of consumer behavior,” said Raghu Kakarala, VP of Strategy at Engauge. “Widespread adoption of checking in will hinge on social networking aspects and increasingly tangible rewards such as unlocking of deals or exclusives, endemic to the location or product they are checking into.”

New solutions are now merging the concept of checking in together with reward programs. Although competitors Shopkick and Loopt are partners with a limited number of retailers, they both follow the gaming-community format, meshed with the social interaction of users posting check-in history and allowing access to friends and family.

Shopkick is utilized by Best Buy, American Eagle, Macy’s, Sports Authority and Simon Malls to reward check-ins with points and coupons for walk-ins. But the company takes the gaming aspect to the next level, challenging users to take pictures of store merchandise in exchange for Shopkick points. Points can be redeemed for prizes and participating store gift cards.

Since its development in 2006, Loopt has been thriving on 3 million registered users. With the Looptstar, Looptpulse and Looptmix branches, the mobile social-mapping service recently partnered with Facebook Places, allowing users to update their locations on multiple platforms at the same time.

“For the user, it’s a win-win scenario. They get to tell their friends where they are, their friends are on Facebook and they get to engage in an app that either has a gaming aspect or a reward system. When this kind of integration isn’t possible, the user has to make a decision,” said Jeff Hilimire, Chief Digital Officer at Engauge. “For the retailer, it’s a win-win as well. They get the audience reach of Facebook and the flexibility of an app like Loopt.”

Kakarala shares the sentiment, acknowledging the cross-platform network’s ability to create a more simple, yet effective marketing approach. “By integrating check-ins between platforms or across platforms, marketers can reduce complexity and focus on the check-in experience. Loopt’s integration is a great first step that not only helps Loopt leverage Facebook, but marketers leverage check-ins,” he said.

Looptstar has integrated with Sports Authority, Burger King, Paul Frank, Rugby from Ralph Lauren, and Steve Madden to create check-in-based rewards programs. Sports Authority leverages Looptstar to reward users with $10 gift cards if they check in at any area pro-sports stadiums.

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