Simon Says: Foursquare is the Best Platform for Small Businesses

If you own a physical location for your business there’s a large number of options available to you to drum up new business; Groupon and Foursquare are two that spring to everybody’s mind. But I don’t think anyone should be recommending daily deals.

In my eyes Groupon shows that local deals work. But that’s all it does. They are experimenting with Groupon Local which will aid local businesses in generating new customers at low points of the day, but at the moment Groupon but it is still based on the daily deals model, with none of the “social” elements.

These deals are generic and unspecific to the target audience. People are emailed offers for what Groupon can get them in their local area, not necessarily what they want.

I would like to see Groupon evolve into a site which allows groups of people to come together to say “we want this TV and if 200 of us buy it, we want a 40% discount” or something similar. This puts the power in the hands of the consumers even more than the existing model, but cuts down the sales teams.

The biggest issue for Groupon is that new customers are not acquired through the deals. A massive 61% of people let deals expire and never use them. That’s a lot of wasted sales and potentially annoyed customers who have now spent money with a company and have nothing to show for it.

Foursquare on the other hand makes people check into a location. Their data is valuable to the business owner (things like gender, act, time of check in etc) which allows business owners to create deals that will attract the customers back into the store.

Foursquare users get to play a game to become the brand ambassador for that business in exchange for discounts on products / services. This loyalty is much more valuable to a small, growing business than a one-hit daily deal which ultimately might not bring in a single customer.

One of the main tricks I think daily deal sites like Groupon are missing out on is the social element to the interaction. With Foursquare, business owners can see which customers are the repeat consumers and also see where else they are going. They can gain a competitive edge by offering a deal that helps entice people back into the store more often. Groupon doesn’t offer this level of data, so the deals are as open and generic as possible…the old saying “throw enough shit at the wall and some of it will stick” comes to mind.

My main issue with Groupon is how much of the deal they take to fund their massive sales teams. At present Foursquare doesn’t charge businesses for using their platform. They can create custom deals and offer as much or as little discount as they like, for free.

I firmly believe the future for local deals rests in the hands of “check-in” sites like Foursquare. And I would place money on it of all the sites Foursquare will be around the longest. It already has a massive growing user base with a great list of features.

The iPhone app is easy to use and the “Explore” tab is everything Google Places should be. For someone like me who likes to travel, being able to go to a new city and discover things based on where my friends have been or where local deals are (in my language) is invaluable.

In short I believe daily deals to be nothing more than shot-in-the-dark promotions that will be around for a long time to come, for better or worse. But check-in tools support local businesses and will always be the best option for them to market deals. I just hope more of them get onboard with the idea of vouchers-for-check-ins in my local area soon.

Photo (cc) yodspica


And Groupon Lowers Rankings

Another interesting take Simon, I agree about Groupon at least in its current guise. Apparently so do the customers, as according to Yelp, using Groupon lowers a merchant's rating.

Of course, Yelp have their own deal service, so whether there's a pinch, or bag, of salf to be taken with this story, who knows?!