Amid the overwhelming flow of information in our digital world, there are a few keepers. Chris Brogan is one of them. I don’t know him personally, don’t have any affiliate relationship with him, and am not trying to get him to follow me on Twitter. I just like to read his stuff.

Chris wrote about his approach to New Year’s resolutions in this post, instead choosing 3 words that would help him to focus on what’s most important for the year ahead. I like the idea and am still trying to reduce my personal list of keywords to single digits. Meanwhile, I found it easier to create a 3 word list for Loyalty Marketing in 2012 and wanted to share it for your consumption and discussion.

Let me know what your 3 words would be for this year and why you chose them. I’ve started a discussion on our Customer Strategy Network Facebook page and in a few LinkedIn groups where you can participate. If you prefer, just leave comments here on Loyalty Truth.

Data

Loyalty marketers have been collecting customer data since the dawn of the business. To a great extent, that data has been under-utilized and this shortcoming threatens the trusted relationships we have with our customers. Consumer 2.0 is well aware that the portfolio of transaction and personal data that defines self is highly valuable to corporate America. Though we’ve been talking about increased leveraging of data as one of the biggest opportunities in Loyalty Marketing, 2012 might be the year that it happens.

Selecting Data as one of my 3 words for 2012 puts me in pretty strong company as I recently listened to Rupert Duchesne, Chairman of Aimia, speak about Data being the “New Oil”. And, just last week, I read that Foursquare was making public its intent to put its data to work as a tool for growing its business in 2012.

Mobile

The mobile handset has been predicted by many to become the central platform for social shopping and payments. The Google Wallet was announced last year and payment/loyalty plays including Square, Dwolla, and LevelUP seek to change consumer behavior and set a new mold for how we shop and pay.

Banks are pledging to make better use of mobile applications to bring banking products closer to the customer, in the process redefining how we view the retail banking customer experience. Groupon has responded to criticism that it is impotent beyond stimulating customer acquisition and trial and has introduced Groupon Rewards as well as partnering with Foursquare to find synergy in location based marketing and the daily deal.

The convergence of loyalty, payments, and the mobile handset will continue at a faster pace during 2012.

Social

We invested significant time gathering information and creating position papers on Social Loyalty, Social CRM, and Social Shopping during 2011. Clients as well as conference delegates wanted to absorb as much as they could on these topics and the buzz made us question if everything involving “loyalty” and “social” might dissolve away as just the latest marketing fad.

It’s not going to happen. In fact, 2012 will be the year when many brands put their PowerPoint presentations on the shelf and move to implement more social channels into their customer strategies. Consumer 2.0 is making purchase decisions differently than before and will be delighted by elegant ways to locate and evaluate local shopping offers via their mobile device. The social aspect comes in the form of interactions via social shopping networks like Zavee.com or by engagement with game-fueled loyalty programs where referral and recommendations lead visibly to purchase.

Three words that will define Loyalty Marketing in 2012: Data, Mobile and Social. I’m sure you can make an argument for others.

Let’s hear it.

2011 began as a year with loads of promise for Loyalty Marketing. Top of mind for most program managers was the need to add value for members while keeping costs under control, and to better manage the financial liability associated with unredeemed points and miles.

Purchase behaviors exhibited by the Millennial generation were being adopted by broader segments of the population, and early in the year we estimated Consumer 2.0 to represent about half the US population, or 150 Million people.

With the old school orientation of most loyalty marketing strategists, cracking the code of Social Loyalty to engage, entertain and retain the business of Consumer 2.0 was one of the most intimidating challenges faced by the industry over the past 10 years.

So how did the industry fare in 2011 and what’s ahead for 2012?

On the liability management front, the year started out with more rumors floating about than during an American Idol contest. Solutions designed to unify consumer loyalty wallets and create uber currencies, some of which could be redeemed in real time point of sale transactions, as well as those promising unprecedented levels of consumer targeting via internet banking and credit card transactions, were receiving lots of attention. While we still wait to hear more from Free Monee and Swift Exchange, Cardlytics took a big step ahead by closing a $33 Million capital investment from Groupe Aeroplan.

Two highly viable solutions which loyalty marketers should consider not only as liability burn solutions, but as means to to add a new wrinkle to the value proposition are KULA Causes and LoyaltyShares. KULA Causes, which launched in fall 2011, introduced a new concept of Cause Related Loyalty marketing. The “currency of giving” enables loyalty program members to convert miles and points into donations to any of over 2 Million charities around the world. This is a concept which triggers consumer emotions and allows brands to heighten their quotient of corporate social responsibility in a financially efficient manner. LoyaltyShares is equally innovative, allowing loyalty program members to convert miles or points into shares of stock in the sponsoring brand. Converting liabilities into assets is a magic trick that any financially savvy consumer should like.

PointTunes.com and The First Club each introduced solutions that change the way digital content can be obtained by consumers through a rewards program. Improved customer experience and lower costs for program operators are key advantages.

Social Shopping became a reality as Zavee.com and ThanksAgain expanded their respective footprints and delighted consumers in their chosen market segments. Zavee has grown to boast over 500 brick and mortar merchants in their network across South Florida, while Thanks Again penetrated the airport frontier seeking to become a loyalty currency that travelers will aspire to collect before they fly.

“Gamification” took a big step forward during 2011 as both Badgeville and Bunchball proved that “gamification is not a fad”. Watch for much more in this space as game theory moves from a solution designed stimulate consumer engagement to one that can change consumer behavior across a full value chain.

As consumer research consistently supported the desire for immediacy and transparency of rewards along with improved customer experience and proximity to the loyalty “experience”, some important brands proved they were listening.

Early in the year, American Express played the social card as it touted Membership Rewards as a “social currency” and tested location based promotions with Foursquare. More recently, Groupe Aeroplan rebranded as Aimia, signalling a new era of competition among industry leaders.

In a year when many industries slogged along in a mediocre economy, Loyalty Marketers could barely keep up with all the change.

What will 2012 hold in store? I’ll have a look at trends to watch in a future post as the New Year gets started.

Loyalty marketing is about much more than “marketing”. The essence of influencing consumer behavior has its nexus at the intersection of marketing, payments and technology. If Hanifin Loyalty had a business address that was indicative of focus rather than where we receive our mail, it would be at that interesting little corner of commerce.

As smartphone penetration increases across Consumer 2.0 (nearly half of the US population) and as new payment technologies continue to emerge as challenges to the legacy payments networks (principally Visa and MasterCard), the way consumers shop will change dramatically.

The famous tagline from American Express “don’t leave home without it” referred to their own portfolio of credit cards. The new moniker that will catch the attention of consumers might be something closer to “leave everything at home except your phone”. Lousy copy-writing, I agree, but at the least, the thing we can’t leave home without will be transformed from a plastic card to a mobile handset.

LevelUp is a reasonably new market entry that combines a network of local merchants with a smartphone enabled payment device that seeks to add speed and convenience to the consumer shopping experience while offering rewards to consumers who play the game. The first three markets opened up include Boston, New York, Philadelphia, and San Francisco.

Signing up for a LevelUp account gets the user a personalized QR code like the one shown in the graphic to the right. The QR code can be displayed at participating merchant locations to complete a purchase transaction.Merchants participating in the program offer rewards for first time visitors (for example $10 off purchase of $50 or more) and receive subsequent offers as they continue to shop within the network.

Users are required to register a credit card with their LevelUp account and payments made using the QR code are charged to the affiliated card. That points to a conundrum in this concept – the card is not eliminated, only pushed to the background and not physically required to be presented at the time of purchase. In other words, its not really an alternate payment system, unless we agree to redefine that term. On the plus side, LevelUp members can “double-dip” as they earn whatever rewards are offered by LevelUp merchants in addition to those from a rewards card linked to their account.

LevelUp is something that Foursquare could have built as an enhancement but has not done to date. I’ve read recently that the future of pure location based check-in systems like Foursquare is dim. All I can say is that they may have missed a huge opportunity if this is true. Foursquare was there first but never gave merchants the tools needed to really turn the system into a marketing channel nor added payment or other features.

Dwolla is another location based system that offers an alternative payment method, but in their case they truly offer an alternative to credit cards. I’ve done a comparison of several social shopping methods and will have a report for you next week or so. Meanwhile, give thought to whether the future of social shopping lies in registered card models, smartphone enabled payment methods, or channels using ACH that are low cost but still hard to understand for some people.

One aspect of social loyalty that seems clear is that the value proposition will certainly go beyond points. In fact points may be the third or fourth element of the value proposition behind mobility, payment methods and offers which are instantly redeemable. Throw in the increasing importance of recognition and status within online communities and we might see “Whuffie” become an alternate online currency.

The only thing we know about this changing loyalty market is that it is sure to continue to change.

I’ve long been a fan of Amazon and as proof carry an Amazon.com-branded Visa Rewards Card in my wallet. Sure, the interest rate is a few points higher than my primary credit card, but I’m a sucker for the points. I earn one for every dollar I spend and a whopping 3 points for every dollar spent on the Amazon site.

Over the past several years, the Amazon program worked like most others: you waited for your points to add up to a certain threshold, continually checking your balance online or on your monthly bill, and then ordered your reward. While there were a number of options, I always went for the $25 Amazon certificate available at 25,000 points.

But last month, something changed: while checking out, I noticed a small prompt about using my current point balance toward the payment of my order. Sure enough, I had earned 1693 points since my last cert was issued—and was able to apply a $16.93 credit to my purchase, right on the spot.

I mean, how convenient was that! No checking my points balance to see if I had reached the 25,000 point threshold, no ordering a certificate, no waiting 3-4 weeks for the cert to appear in the mail. I was able to get instant savings and in turn, instant gratification.

Now I can imagine this scares the bejesus out of some loyalty marketers because, having worked in hardcore points-based loyalty for several years, I know the philosophy. By forcing people to reach elevated point thresholds, you keep them as customers—because they have to stick around and make additional purchases to reach these thresholds, and are less likely to abandon their points for a competitor.

But you know what—the times in the loyalty marketing game are changing, with a mix of established and newer companies leading the charge. For example, check out the following recent developments:

• Marriott announced Marriott Rewards® Instant Redemption which enables members to redeem points on the spot at participating US hotels—for “dinner, cocktails, massage, golf…even a room upgrade…with no certificates, no waiting.”
• Location-based marketer Foursquare inked a deal with American Express to enable its 10 million cardholders to redeem location-based deals by swiping their AmEx card—giving them access to instant membership rewards.
• Online retailer Soap.com (as reported by Internet Retailer) rolled out “a customer loyalty program with a new twist. Instead of launching a traditional customer loyalty program that lets shoppers gather points…they reward customers with instant product discounts.”

I say it’s only a matter of time before all the traditional points-based loyalty marketers, including the airline programs, jump on the instant rewards bandwagon—or find themselves left behind by the competition. Sure, there may be a place for the hard-earned mega-point reward, but you better give your customers the option of quick and instant rewards and recognition.

What do you think?

Loyalty is Social and American Express knows it.

The credit card issuer launched its “Social Currency” campaign back in March and I have to admit that upon first review, I thought it was more show than go. Since that time, the multiple campaigns launched in market with partners including Foursquare, SCVNGR, and Facebook validate their commitment to incorporate digital tools and redefine cardholder perception of card based rewards programs.

The original ads that proclaimed Membership Rewards Points to be a Social Currency inspired my imagination of what they might offer. Would they enable points to be used with a check-in, at point-of-sale to complete a transaction, or to facilitate P2P payments between card-holding friends? The first offers weren’t quite this imaginative, being limited to cardholders being able to shout out their favorite use of points on the company’s Facebook page and offering its version of “deal of the day” with special offers on redemption items.

Nothing wrong with either of these, but I was hoping that the concept of “Social Currency” would evolve and fulfill the idea in earnest, rather than becoming another “Blue Card”, i.e. a smart (chip) card with more sizzle than substance.

My suspicion and skepticism has been gradually swept aside as Amex announced its merchant based test with Foursquare at SXSW and later took the check-in deals nationwide.

More recently, Amex teamed up with SCVNGR and Levi’s to create the first paperless daily deal redemption system. Using Amex’s Smart Offer Engine, the same one used to support the Foursquare promotions, cardholders can sync their SCVNGR LevelUp account with their Amex account and use daily deal coupons in real-time without having to print a coupon. That by itself should drive consumer engagement based on curiosity over an innovative and easy to use rewards delivery system.

To top it off, Amex now lets cardholders cash in their Membership Rewards Points to buy advertising on Facebook. Incorporated as a benefit in its Open Network, real business value is offered to small to medium businesses. Reports disclose that $6,750 equivalent of points buys a $50 Facebook ad, meaning a conversion rate valuing points around 70 basis points. Regardless of how you feel about the exchange rate, the new option allows business people to get something useful for their business for free and differentiates Amex from other card issuers.

Amex used the tagline “We live in a world of possibilities. Isn’t it time we had a social currency to match?” to introduce the concept of Social Currency.  What they unlocked at the same time was the consumer’s imagination as to the many new ways points can be used to gain rewards.

American Express may have also changed the way we look at credit cards. Millions of people desired an iPhone, not to make calls, but for the available apps and the cool things they would do for you.

Today, many people “don’t want another credit card”.  Through the multiple campaigns and partnerships introduced by Amex this spring, consumers they might want an Amex card for the “many cool things” that Membership Rewards will do for them.

Loyalty Truth has been giving a lot of thought towards the shaping of loyalty and rewards programs to engage the interest of Millennials and the broader digital consumer group we are calling Consumer 2.0.

With many merchandise offerings lacking imagination as well as value, and airline miles tough to redeem given capacity restraints on available reward seating, cash back has earned renewed popularity as a quick-to-earn and easy to understand reward.

The problem is, rational can be boring. And easy to understand sometimes means too easy to label. With Groupon offering a 50% off “deal of the day”, a 1% deferred cash reward seems to be teetering on irrelevancy.

A 2010 paper written by an esteemed group of professors from Harvard University, University of Virginia, and University of British Columbia, pointed out that, in most cases, people enjoy experiences over things. While an item purchased can bring temporary pleasure, it is an experience that leaves a lasting impression.

Music is experiential and has been described as a “time machine” by some people. Most of us can attest to the impact of hearing a favorite song on the radio. The opening notes can transport us back in time and bring us vivid memories of first dates, world events, or just plain old good times.

If you don’t believe that music is important to human beings, is pervasive in our culture today and can be used to shape purchase behavior, then at least factor in these statistics:

• MP3 players — Just under half of American adults (47%) own an MP3 player such as an iPod — a nearly five-fold increase from the 11% who owned this type of device in early 2005  – Aaron Smith, Research Specialist, Pew Internet & American Life Project October 14, 2010

• 16 percent of Americans age 13 or older are using devices other than their home computers to download software applications (apps), music, video, and other entertainment content from the Web – NPD Group, May 2010

• 75 percent of iPhone and iPod Touch users are connecting to the Web to download entertainment content and apps – NPD Group, May 2010

Rewards and Music have been linked in an interesting way so far. Several digital content providers, including iTunes, have made forays into the loyalty industry. Reward administrators were asked to pre-purchase exclusively download codes to offer music as a reward, and the redemption process was often cumbersome as it required consumers to leave the brand sponsor’s web environment to collect their music.

To my knowledge, there hasn’t been a fully integrated platform to deliver music and other digital content as a reward until PointTunes™ was announced last year. The platform makes it possible for a loyalty program participant to redeem points or miles directly for music, eBooks, software and games with a patent pending transaction process named PointRobot™.

I had the opportunity to interview the founder of PointTunes™, Bill Cunningham, who shared that PointRobot™ can be used to create a customized digital rewards offering where program administrators have complete control over their digital rewards options.

He told me that PointTunes™ has its origins through his work as a Product Manager for one of the largest employee rewards companies in North America. “During that time I was never presented with a viable digital solution by our vendors” said Cunningham, and “myself and other rewards administrators were looking to add digital reward options to help control costs and find new clients.”

If you understand the shift taking place towards customer engagement, you understand how breakage, while a tempting element of a rewards financial model, can have negative impact on customer relationships. With pressure on reward costs, digital content is attractive to brands sponsoring loyalty programs.

Something had been missing from the previous method of including music as a reward in most loyalty programs and Mr. Cunningham “believes digital rewards is a perfect fit for the loyalty market both from an incentive (do this get that) and a loyalty (points, miles et al.) angle.”

Considering that Consumer 2.0 is perfectly at home with social networks and location based marketing (Gowalla, Foursquare, Facebook, Twitter et al.), using digital rewards that are as mobile as your customers makes sense. To meet the need, Cunningham said a mobile rewards platform is planned for launch in 2011, allowing consumers to redeem for music right from their mobile handset.

Loyalty is evolving to become more social and to meet the needs of the brands that sponsor the programs. PointTunes™ is a group to watch as the “Social Loyalty” continues to unfold during 2011.

There are two forms of brilliance in business – one displayed by people who invent things we haven’t thought about before (Facebook, Twitter, Foursquare) and those that find a way to incorporate these new communications channels into mainstream business to generate revenue.

In many aspects of social media, we are waiting for the dots to be connected and for business to understand how to put the tools to use to enhance existing business models, engage customers, and make money. Location based marketing has been a head-scratcher from this perspective. Foursquare launched at SXSW only two years ago in March 2009 and now has an estimated 5.7 Million registered users. Many of these users are interested in doing more than becoming the “mayor” of a location, yet merchants have been slow to take advantage of the platform to deliver targeted and inexpensive marketing. Many people think that 2011 will be the year that Location Based marketing takes off and the predictions here are indicative of the potential.

The launch of SNAP (Social Network Appreciation Platform) today was covered by Mashable in an article here and has my full attention as it represents the second form of brilliance and is a legitimate tool to make any loyalty program “social”. In the spirit of full disclosure, Hanifin Loyalty has been named an agency partner of SNAP and will be advocating SNAP to the market.

In the SNAP press release, capabilities are explained and it is clear that the application can connect any existing loyalty program membership base to local merchants to enable “passive check-in” using Foursquare, Facebook Places, and Twitter. Leaderboards and Badges are supported as are more sophisticated bonusing elements.

“Social Loyalty” using passive social network check-in was pioneered by Tasti D-Lite and Loyalty Truth applauded its launch about this time last year. The work done between Tasti D-Lite and PC America has evolved to become SNAP and can enable social loyalty on a standalone basis for smaller merchants and even work within a gift card platform. You can get the idea even better via this clever video.

To my knowledge, TopGuest is the only other application in market that converts check-ins to rewards points, but they approach the subject from a different angle. TopGuest is a mobile application that enables consumers to check-in and earn extra points with designated rewards programs, principally in the hospitality segment. The fact that TopGuest quickly affiliated with brands such as Virgin America, Hilton, and Intercontinental speaks to the high level of interest by business in bringing a social element to their staid rewards programs.

SNAP is an open platform that can be used by any business – small or large – to enable social check-in, reward word of mouth marketing, and generate referrals and recommendations across a trusted network of friends. It can be integrated to loyalty processing software packages and with POS systems in merchant locations.

I’ve only recently realized that the conversation isn’t about Millennials or Generation Y anymore. It’s about “Consumer 2.0″, those consumers who have grown up with technology and live in an “always on” environment, preferring to communicate with friends and brands through digital channels.

The significance of this realization is that Consumer 2.0 probably numbers about 150 Million, or half of the US population. The figure includes all the Millennials (so you’re not forgotten) and accounts for those of us (Boomer, Gen X, and other groups) influenced by the Millennials we know and the increasing importance of digital marketing.

SNAP opens up many doors to allow brands to connect with their customers and adds a critical component to any loyalty program if it is to stay relevant with Consumer 2.0.

After spending two days documenting my recent experiences with location based service Foursquare, I thought it was time for another type of check-in – this time with the threat of data theft in our world and the many ways we are exposed to this important risk.

I’m a JP Morgan Chase customer and suffered through last week’s online banking outage as mystified as everyone else. For me, the banking app was out of service for almost 7 days. At the outset, the bank did not acknowledge it had a problem, posting a message that the site was down for “maintenance”.  After a few days it revealed more, but not all of the circumstances, of the problem only after being pushed by heavy consumer outcry in social media channels.

During the summer, Citi revealed that it found a security flaw in one of its key online banking apps for iPhone. Attesting that no customer information was improperly accessed, the bank noted they had released an update which prevented customer information from being saved to hidden files on the iPhone.

A recent report on CNN attempted to strike the chord of consumer fear, telling us that digital loyalty cards are not secure. The story behind that headline made clear that it was not the digital apps or the loyalty programs that are the problem. It’s the WIFI networks that people use in cafes and other public places that invite risk. Whether you are checking in on Foursquare or checking your online banking account, you are in peril due to the thin security layer of most public WIFI networks.

In August, ConsumersUnion.org reported that consumers could be at risk of losing money through the proliferating number of mobile payment applications hitting the market when mistakes are made by merchants and processors or as a result of fraud.

All of this could be written off as a series of interesting but unrelated events and opinions, except when we recall that TJ Maxx suffered a massive breach of debit and credit card information. In our “what’s important today” world, the 2007 incident is nearly forgotten, except by TJ Maxx shareholders who saw earnings take a $.25/share hit in just one quarter from the $118 Million charge needed to rectify the problem.

Database marketing is by definition enabled by collecting transactional data from consumers. Loyalty programs thrive on pairing this behavioral data with attitudinal data to create value propositions and drive incremental profits. Location based marketing mandates that consumers give up a certain level of personal information, including their exact whereabouts, over vulnerable public networks.

The incidents I’ve mentioned provide only a hint of the potential for calamity from a massive data intrusion or theft by cunning hackers and organized criminals. If you think it will never happen, then you probably thought tech stocks would never cool off or a housing bubble was impossible.

The problem is not completely out of our control. Wise brands will ensure that information collected for marketing purposes will be properly encrypted and that usable account numbers will always be masked by ‘reward account numbers”. Loyalty program sponsors will ensure that their providers are PCI compliant and will place equal emphasis on security as with other bells and whistles of the software being sold.

A big wildcard is how consumers will react if a big data theft does occur. Our responsibility is to ensure that we protect the consumer data we collect and that we take extra steps to communicate what we are doing to bring value to customers while mitigating risks.

If you want to build holistic or enterprise loyalty, you’ve got a big job on your hands. Enlisting the cooperation of colleagues from marketing, IT, and data security in your company when planning your next marketing campaign should ensure that the job doesn’t get unnecessarily bigger.

A day in the life with Foursquare has been changing, imperceptibly at times, but lately its reached the Malcolm Gladwell point, I mean the Tipping Point.

The difference I’m talking about has less to do with users and is all about merchants. That’s good news and also a partial answer to the one big question hovering over Foursquare: why merchants have been so slow to capitalize on the opportunity.

Although Foursquare outlines multiple forms of promotions on its page for business, only mayors got all the goodies until recently. Things are changing however. Over a recent 24 hour trek to New York, I encountered a Radio Shack $5 off purchase offer, a drink special from a midtown Thai restaurant – one that I wouldn’t have known existed in the bustling city, and of course the commonly found Starbucks “special nearby”.

Landing back in Fort Lauderdale, my check-in prompted a tip from a local attorney offering help if I got into trouble during my stay (maybe the Chamber of Commerce should shout out that we’re not all about crime down here).

Later, stopping into local eatery Sicilian Oven, I saw several nearby specials including free chips and salsa at Chili’s and a discount on tanning at Costa Del Sol.

Big brands Pepsi Co and Macy’s have been active with location based marketing trials as well as McDonalds, Starbucks, Bravo and MTV. In the restaurant space, Tasti-D-Lite has become the poster-child for integrating location based marketing with a loyalty program. Even local banks have gotten into the act, with North Shore in Wisconsin the most notable.

Now is the time for local merchants to embrace location based tools to promote themselves and compete head to head with their national-chain neighbors. I’ve written about how to build retail loyalty in 10 easy K’s, and that construct remains sound. Just add location based offers as a delivery channel and the plan results accelerate.

Foursquare, Gowalla and other location based applications offer a more immediate and visible channel to deliver offers and attract customers that otherwise would not have visited. Combine location based offers with a social shopping network like Zavee, and you have a winning combination.

The tools exist for local merchants to step up their marketing at low cost. Maybe the burden is on marketers (myself and others) to make available an understandable go-to-market plan that puts these tools to work for the smaller merchant.

I don’t like feeling guilty, so I’ve created just that. If you’re interested, let me know.

While I have been robotically checking in all over the place for the past year or so, I’ve asked myself about the game mechanics at Foursquare and why there are 18 locations listed for the Fort Lauderdale airport making it confusing to know just where to check in.

In short, when things get confusing, the fun goes out of the balloon. There are some issues to be called out but I also acknowledge a big untapped opportunity with location based services for business, both large and small.

The issues:

• The earliest stages of Foursquare usage had a competitive element among linked friends. It was fun to see who was checking in most often and where. Once people realized they could enter a venue for their office or master bedroom and check in umpteen times per day, keeping score on check-ins in your network lost its meaning.
• In the beginning there were Mayors and the Mayors got all the goodies. Because the number of visits needed to win mayorship is not transparent, becoming mayor of some places is not at all motivating, especially when more times than not there are four geeks ahead of you who call the local Panera Bread home.
• User generated environments encourage creativity, but databases and creativity don’t get along very well. My example at the airport is simple: multiple instances exist and are differentiated only by the level of data entered by the user the first time around – many time incorrect data to boot. It’s hard to know which “airport” is the one you’ve been checking in to for the past year, and I don’t need a part time job dissecting competing venues just to have a little “fun”.

Standardizing the venue database and refining rules of the game are issues that I am sure Foursqaure is addressing. I expect we will see big progress in both areas soon.

The big question that remains is why merchants have been so slow to capitalize on the Foursquare opportunity.

Foursquare is doing its part, publishing links on its home page to help businesses “connect with your customers”. On that page, they sketch out a four-pack of ready-made promotions that can be used by small (or large) businesses. I’ve listed them here (they should be familiar) along with some loyalty perspective for each one:

• Mayor Specials: Reward your single most loyal customer
  • What about rewarding customer value, not just frequency?
• Check-in Specials: Variable specials that are awarded upon check-in
  • Training front line staff is key to making this work – I’ve had several staffers give me a weird look but no goodies when I show them I’ve checked in
• Frequency-based Specials: Something given free or at a discounted price every “X” check-ins
  • This one makes my loyalty spider-sense tingle. At least we’re rewarding all customers who exhibit some incremental behavior, not just the mayor
• Wildcard Specials: These are Surprise & Delight “instant” offers that will have people looking for your location
  • Why not use Foursquare to “shout out” to anyone checking in nearby or just grazing through nearby merchant venues? It’s better than hiring the sandwich board guy

Merchants are catching on and seem to increasingly understand that creating awareness can lead to incremental visits and help them find new customers – all at a much lower price than old school methods, Yellow Pages included.

Tomorrow, I’ll share a day in the life of Foursquare to illustrate how quickly merchants are realizing the opportunity. We’ve only scratched the surface and the fun has just begun.