Integration of location based services into the social CRM strategy

Table of contents

List of abbreviations

List of figures of main body

1 Introduction to the research question

2 Research targets, design and methods used
2.1 Literature review
2.2 Field study
2.3 Pilot project
2.4 Depth interviews
2.5 Online survey

3 Topic related background information
3.1 An introduction to CRM
3.1.1 Definition of CRM
3.1.2 Customer relationship life-cycle
3.1.3. Social CRM
3.2 Game changing technological developments
3.3 Location based services
3.4 An introduction to Foursquare
3.4.1 Functions of Foursquare from the point of view of users
3.4.2 Functions of Foursquare from the point of view of businesses
3.5 Comparison of check-in services used in Germany
3.6 An introduction to Couponing
3.6.1 Process of couponing
3.6.2 Design possibilities of coupons
3.6.3 Couponing throughout the customer relationship life-cycle

4 How to best exploit the potential of Foursquare throughout the customer relationship life-cycle
4.1 The potential of Foursquare in Germany
4.2 Design possibilities of Foursquare specials
4.3 Foursquare specials throughout the customer relationship life-cycle
4.4 Foursquare campaign promotion
4.5 Foursquare targets and related KPIs

5 Limitations of Foursquare and conclusion

6 Outlook

Bibliography

Professional Interviews

Appendix

Index of appendices

List of figures of appendix

List of abbreviations

Abbildung in dieser Leseprobe nicht enthalten

List of figures of main body

Figure 1: Research process

Figure 2: Customer relationship life-cycle, figure created by author, modeled after Stauss, 2006, p

Figure 3: a) Check-in to gym, b) Friends’ check-ins, c) Timeline

Figure 4: a) Explore tab recommends things to do and allows explicit search, b) Map view of places nearby, c) Categories to browse through, d) Further filter of search results

Figure 5: a) A location’s Foursquare page displaying general information as well as b) Reviews and c) Pictures plus d) Specials available

Figure 6: a) Points earned for one check-in, b) Badge earned

Figure 7: Average rank of Foursquare functions (ranked by usefulness by respondents of online survey n=238)

Figure 8: Overview of Foursquare specials

Figure 9: Comparison of check-in services in Germany

Figure 10: Design possibilities of a coupon

Figure 11: Comparison of usage intention – regular check-in services vs. services that offer rewards

Figure 12: Awareness of several Foursquare sub-functions vs. their usage

Figure 13: Usage intensity of Foursquare sub-functions

Figure 14: Comparison of attitudes towards various Foursquare sub-functions

Figure 15: Design possibilities of a Foursquare special

Figure 16: Non-monetary rewards: a) poster with mayor’s picture at central Park, b) reserved parking space

Figure 17: Exemplary Foursquare campaign print material designed by the author to be distributed in store – gastronomy business: posters, bottle neck holders, beer coasters and table tents

Figure 18: Foursquare promotion on Facebook

Figure 19: Foursquare KPIs (continued)

1 Introduction to the research question

It is 6:45 am. My favorite song cheerfully reminds me that it is time to get up. As I reach out to my smart phone to turn off the alarm my thumb intuitively hits the Facebook icon. While Facebook is still loading my friend’s latest status updates I open my email account as well as the weather forecast. I quickly realize that not a lot has happened on Facebook since last time I have checked – which was right before I went to bed. Now I get up. I leave the house an hour later. On my way to the bus stop I open Foursquare to check in to my favorite bakery. Fortunately I am the mayor of that bakery, meaning that I get a free cup of coffee with every bagel I buy. Once I arrive at the bus stop the display announces a five minute delay. While waiting I notice the billboard inviting me to scan a QR code to receive a 5 € off coupon for the restaurant chain I frequently visit. Great! I quickly push the link to my Twitter followers before I hop on the bus to go to work. My work place is located at the harbor front and it is a beautiful morning. I quickly open Instagram to take a picture of the breathtaking scenery, check in on Foursquare via Instagram and cross post the check-in together with the picture on my Facebook timeline. Two more days until I will become mayor of my workplace! It is 08:30 and I am headed to my first meeting of the day. Smart phones are not allowed. I have to put it away.

The morning described above is only a fracture of the daily routine of a digital native. What becomes clear is that the Internet and its many applications, which have now found their way into our pockets, have changed people’s routines as well as their behavior. Smart phone users are connected to the Internet and particularly to their social networks anytime and anywhere. Companies and especially marketers have reacted to the changed consumer behavior. By now most decision-makers have understood that social networks are not a short term phenomenon anymore but rather a popular meeting point of their customers. To be able to fish where the fish are they hold meetings on how to attract fans and followers and how to generate clicks and likes on YouTube. However, what needs to be added to their agenda are discussions about how to reward their “mayor” and which special to launch to reward customers for checking in to their businesses.

What the author is talking about are check-in services, a sub form of location based services, which are frequently referred to as the hottest trend in social media. Check-in services enable smart phone users to check in to nearly anything: bars, cafés, outdoor places, schools and much more. Checking in is the new way of sharing ones current location. By pushing a button on a smartphone app users send a message saying “I am here” to their friends. The precise geo location data is attached to that message. The world’s most famous check-in service is called Foursquare. The mobile application adds another layer to the well-known status updates as it allows users to share their current location with friends and followers. Foursquare’s dizzying growth rates are backed by the increasing number of mobile devices in the pockets of consumers, as well as by validation of the location sharing space by similar product launches from big players such as Facebook and Google. Foursquare has existed for three years now and especially since its latest update in June 2012 no one can refer to Foursquare as a mere location sharing system anymore. From the user’s point of view it is a social network, a recommendation engine, a review platform, a coupon portal, a log book and a game – all combined in one app. From the point of view of local businesses Foursquare is an innovative means of creating awareness, of navigating prospects into their stores and of developing and intensifying customer relationships. From the business’ perspective, Foursquare is a combination of the Yellow Pages, Qype, Google Maps and a coupon portal such as Coupies. Other than that it is a simple monitoring tool tracking customer traffic. As businesses have the possibility to easily reward customer in a very modern way and to virtually interact with everyone who checks in, the author asserts that – if managed properly – it can be a very effective way of managing customer relationships.

This thesis aims at critically analyzing Foursquare from a customer relationship management (CRM) perspective. After elaborating on CRM and carefully scrutinizing the mobile application and its functions, the author aims at investigating how Foursquare can be used as a CRM tool throughout the customer relationship life-cycle. Since large companies managing renowned brands usually have more sophisticated tools to enforce their CRM strategy, this thesis is less concerned with those large enterprises, but rather focuses on small, local businesses that decide to enter the realm of customer relationship management.

2 Research targets, design and methods used

In order to fully answer the question of how Foursquare can be used as a CRM tool five different research methods were applied which are displayed in fig. 1. In a first step relevant literature was explored in order to become familiar with the area under investigation as well as with connected topics and to establish solid ground for further research. Secondly, the author had to become fully acquainted with Foursquare in order to evaluate its potential as a possible CRM tool. Conducting a field study and familiarizing oneself with the mobile application (app) is comparatively easy, as the app is for free and available in all app market places. However, all insights gained by heavily using the check-in service for four months are related to the user’s perspective. The more difficult task was to explore the functions Foursquare offers to business owners, since only certified venue owners have access to the back end of the check-in service. To explore the functions exclusive to business owners, the researcher collaborated with a local business and was authorized to administer their Foursquare presence and to experiment with it (pilot study). In order to develop a solid answer to the research question not only the author’s conclusions were of interest, but also the opinions and experiences of practitioners – those business owners who have already established a Foursquare presence and are actively using it. In order to get a qualitative impression of the experiences made, the author conducted depth interviews. Last but not least, it seemed essential to include the perspective of the target group of potential Foursquare related CRM activities – smart phone users below the age of 30. This last step was necessary to assess the potential of Foursquare in Germany. The following paragraphs will further elaborate on each of these five steps, their respective targets and methods used.

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Figure 1: Research process

2.1 Literature review

Firstly, all information regarding central elements of the topic – customer relationship management (CRM) and location based services (LBS) – were gathered to get an overview of the complexity of the topic, to identify further components that needed to be touched upon, to set research priorities and to establish solid ground for further research. During this initial phase exploratory research in the form of a sound literature review was conducted. An analysis of secondary data is often the core of exploratory research (Burns/Bush, 2012, p. 105). While exploring the topic of CRM, special attention was put on social CRM and frameworks of typical company-customer relationships. As CRM is an established area of research, the information integrated into this piece of research stem from renowned literature published by experts in their field as well as scientific articles. In order to gain insight into the sphere of LBS slightly different sources have been explored. An initial screening of the online sources available identified other areas connected to the realm of LBS that needed to be touched upon. Some of these components are technological developments, such as the mobile Internet, new hardware that enables people all over the world to access the Internet on the go and e.g. the integration of the Internet into our daily lives. After gaining insight into the topic of LBS, the technical preconditions to using those services and its potential user base, a special focus was put on check-in services, a sub-form of LBS that Foursquare belongs to. Especially due to the many updates of the app and the quickly evolving figures of e.g. its user base very up-to-date information was needed, thus the author gained insight into this topic by reading blogs, newspaper articles, recently published literature and scientific articles wherever possible. A detailed examination of Foursquare revealed that couponing is an essential part of the check-in service. Hence, this area of research was added to the literature review. Analogously to CRM, couponing is an established field of research, therefore standard literature and scientific articles could be referred to.

2.2 Field study

By browsing through blogs and other online sources the author’s attention was often drawn to single functions of Foursquare or promotional case studies of businesses using the check-in service published by Foursquare itself, but what was missing was a holistic unbiased picture of all functions, a typical user profile and information regarding the usage of the app outside of the USA. Hence, in order to explore all functions, to get an impression of the usefulness of different functions, to evaluate the ease of usage, to better understand the hype, to assess the current diffusion of Foursquare in Germany as well as its potential as a CRM tool and last but not least to observe other users’ check-in behavior, the author decided to conduct a field study by becoming a member of the community. The writer hesitates to call this methodical approach netnography, as not the behavior of the app’s users was the main area of interest, but rather the functions and possibilities of the app. (N)Ethnographic research however is defined as a detailed descriptive study of a group, its characteristics and behavior (Burns/Bush, 2012, p. 123). This further exploratory piece of research enabled the researcher to gain better understanding of the user perspective and constitutes the foundation of section 3.4.1, an introduction to Foursquare from the point of view of smart phone users.

2.3 Pilot project

Downloading and using the app revealed great insight into e.g. the different functions of Foursquare but only from the point of view of smart phone users. What was missing in order to gain a holistic picture was the viewpoint of businesses and a solid understanding of the functions they have access to, which was not sufficiently covered by existing literature. Only business owners who officially claim their business on Foursquare and who are verified business owners have access to the back end of Foursquare. As the author does not own a business herself, she applied with a Foursquare concept proposal as Foursquare manager at selected local gastronomy businesses in Hamburg (cf. digital app. 4). Gastronomy businesses have been selected, because the writer believed that it would be easiest to implement a Foursquare campaign in a restaurant, a bar or a café as, firstly, the menu offers a great repertoire of potential incentives to work with, and secondly because many of these businesses are familiar with offering specials and deals, often in the form of a “happy hour”. The researcher was then held responsible for managing the Foursquare presence of Central Park, a Hamburg based beach club. A profile of the outdoor bar can be found in app. 1. Due to the position as Foursquare manager, the author had access to the back end of the app and was able to familiarize herself with all functions and possibilities it offers businesses. Next to getting to know the business-functions, the author was able to test a promising CRM concept which she developed based on the literature review and to experiment with certain variables of that concept. When conducting an experiment a researcher manipulates an independent variable (e.g. the attractiveness of the reward offered for checking in) and observes how it affects a dependent variable (e.g. the number of check-ins). Throughout the observation period (CW 18 - 28) certain variables, such as the specials offered at Central Park, the conditions related to unlocking the specials or the value of the reward, were modified and users’ reactions were observed. Visitors’ reactions could be observed by monitoring Foursquare’s back end. Foursquare’s back end provides a business’ check-in statistics at any given point in time. Information visible to the venue owner are e.g. the total number of check-ins generated, the number of unique visitors who have checked in to the store and the age and gender distribution of all customers who checked in within a defined period of time. Please refer to app. 2 to see a Foursquare-dashboard example, i.e. the visualized check-in statistics. Central Park ’s check-in data was retrieved on a weekly basis and compared to check-in data of five nearby substitutes. Although this research approach shares many characteristics of quasi-experiments, the researcher hesitates to name this approach a field experiment. What is of utmost importance when conducting an experiment is that the researcher controls the effects of extraneous variables. Extraneous variables have an effect on a dependent variable, but are yet no independent variables (e.g. the weather or the Euro soccer cup). Research designs that cannot fully control extraneous variables are known as quasi-experiments, which compensate the lack of control of extraneous variables by the existence of a control group (Burns/Bush, 2012, p. 104 - 110). To compensate the lack of control the researcher also observed a control group. Only other beach clubs or outdoor bars that have a Foursquare presence could have been selected as a control group. Unfortunately many of the beach clubs did not have a Foursquare presence at the beginning of the experiment. Only half way through the observation period, when the weather started to play a predominant role and when most of the beach clubs had established a Foursquare presence, the control group composed of five other beach clubs was added to the observation. As causal relationships between the independent and dependent variables could not be identified accurately, this part of research is considered to be an additional piece of exploratory research that uses the method of observation. Key findings will be integrated into the introduction to Foursquare’s business-functions (cf. 3.4.2) as well as into the guide of how to best exploit the potential of Foursquare (cf. 4). Further information regarding this observation, the competitors selected and the method of selection, the Foursquare campaign launched at Central Park as well as a detailed description and analysis of the results can be found in app. 3. Next to the literature review and the depth interview this pilot project and the experiences made throughout the observation period built the basis for the development of Foursquare related KPIs. The Foursquare related KPIs will be presented in section 4.5 and were of course used to evaluate the results of this pilot project presented in app. 3.

2.4 Depth interviews

In order to understand the motivation of business owners to use Foursquare, to talk about first experiences with the service and metrics used to evaluate their performance, another piece of exploratory research has been conducted. The method chosen was depth interviews. In total it was planned to conduct three semi-structured in-depth interviews. As until now only a handful of businesses actively uses Foursquare (i.e. offers a Foursquare special), convincing three business owners to share first experiences is harder than it sounds. However, the researcher was able to motivate three interviewees to contribute to this master thesis. Two interviewees are managers of local businesses; the other interviewee manages the nationwide Foursquare presence of a large cinema chain. Although brands are not the focus of this master thesis, the author decided to interview the director of new media of the movie theatres as she presumed a more structured and professional approach in dealing with Foursquare and its check-in statistics. The intention of the interviews was to discuss the businesses’ first experiences with the app as well as related key learnings, goals of using Foursquare, success factors of Foursquare campaigns, key performance indicators (KPIs) as well the app’s potential on the German market. After having spoken to the director of new media of the cinema chain which is very active in the field of social media, the writer had to note that not even this major brand approaches the topic of Foursquare in a structured way. In order to be as efficient as possible the researcher then conducted quick pre-interviews with the other interviewees and soon noticed that they were not able to provide any further insight as both business managers chose a very unstructured and unplanned approach that is neither connected to goals, metrics, expectations nor to an ROI. Therefore the interviews were cancelled and more effort was put on the attempt to motivate the two other German brands which are active on Foursquare, Vapiano and Telekom, to answer a few questions regarding their experiences with Foursquare. Unfortunately none of the managers responsible agreed to provide insight into the first experiences gathered, hence the interview conducted with the director of new media, overseeing all social media activities of a national cinema brand remains the only source of insight into early adopter’s experiences with Foursquare. Insights will be interwoven in section 4 and a transcription of the interview as well as the interview guideline can be found in app. 4.

2.5 Online survey

In order to determine how Foursquare can be used as a CRM tool it also seemed necessary to evaluate the potential of Foursquare in Germany. Assuming research indicated that it is an excellent tool to e.g. attract new customers, it would only catch the interest of practitioners if the app was widely used or if the attitude of Germans towards check-in services were at least positive. Existing reports and statistics about people’s attitude towards Foursquare, users’ behavior and users’ characteristics are mostly related to US Americans. Due to various factors, e.g. a different mindset regarding data protection, the conclusions of US American reports cannot simply be transferred and applied to the German population. To investigate Germans’ attitudes towards Foursquare and the potential of the app within the German market, a descriptive cross-sectional study in the form of an online survey was conducted. The one trade off commonly associated with online surveys is the fact that respondents need access to the Internet (cf. Burns/Bush, 2012, p. 167). As digital natives will most likely be the target of future CRM related Foursquare campaigns and as the topic addressed in the questionnaire (apps and the user’s usage intensity) can most accurately be answered by digital natives, the people belonging to this group were targeted. The term digital natives was formed by Marc Prensky in 2001 and basically describes those people who grew up with the Internet and are thus “native speakers” of the digital language (cf. Prensky, 2001, p. 1). Although the term as well as the age cohort related to it is not without controversy, people who were born after 1980 are commonly considered as true native speakers of the digital language (cf. Palfery/Gasser, 2008, p.1) hence today everybody within the statistical age group of 14-29 is referred to as a digital native. According to the ARD/ZDF online analysis among this age group 99% have access to the Internet, hence the precondition of having access to the web was not seen as an obstacle (cf. van Eimeren/Frees, 2011, p. 336). An online survey was chosen due to its many advantages compared to e.g. a paper and pencil survey and because the method used and the topic under investigation built a perfect fit. The advantages of an online survey most relevant to the researcher were its speed, the exclusion of interviewer bias and the possibility to integrate pictures (screenshots) of the issue under investigation (cf. Burns/Bush, 2012, p. 152). After three waves of pre-testing the questionnaire among a total sample of nine respondents, all potential problems were eliminated and the survey went live. Appendix 5 contains all details related to the online survey: the original questionnaire (cf. app. 5.1), the question flow chart of the questionnaire (cf. app. 5.2) and – most importantly – the theoretically grounded questionnaire (cf. app. 5.3). Depending on the respondent’s answers to the questions, he was confronted with a maximum of 43 questions of which 42 are fixed-response alternative questions. This question type requires the respondents to select an answer from a predetermined set of answers and therefore simplifies the administration of the questionnaire. Due to the many questions it was essential to keep the administration as easy as possible to minimize the drop-out rate. The link to the online survey was distributed via Facebook and emails among family and friends. The recipients were asked to share or forward the link to their respective networks. Within a period of twelve days (June 11th – June 22th 2012) in total 445 respondents participated in the survey. Roughly 11% (47) of the questionnaires were not completed and therefore deleted from the data set. Other than that further 8% (36) of the respondents did not belong to the age group of digital natives and hence their responses were not considered in the analysis either. Finally, the answers of 362 digital natives who properly administered the questionnaires were analyzed. Among these respondents, 75% (270) indicated that they have a smart phone. Having a smart phone and hence being familiar with apps was thought to be a precondition for answering the subsequent questions. Consequently, respondents who do not have a smart phone were exited at the beginning of the questionnaire (see app. 5.2 for flowchart of questionnaire). Survey results will be interwoven in section 4.1 and detailed survey results are displayed in app. 5.4.

The underlying assumption of the questionnaire is that many smart phone users have a positive attitude towards sub-functions of Foursquare, such as nearby searches and coupon portals and already use related apps. As the awareness of Foursquare is very low German smart phone users are unaware that Foursquare combines many functions – which they are already using – in one app. The author asserts that if the digital natives knew about the array of Foursquare’s functions, many of them would use it as the majority has a positive attitude towards sub-functions. The designed questionnaire is supposed to test this construct of hypothesis.

3 Topic related background information

Before going into detail with how to best use Foursquare as a CRM tool the author finds it necessary to present various pieces of background information that are thought to simplify understanding of the following chapter 4. This chapter will start with an introduction to CRM, including social CRM and a description of the customer relationship life-cycle. Afterwards game changing technological developments that paved the ground for LBS will be touched upon. After generally elaborating on LBS, the mobile application Foursquare will be introduced. Subsequently other check-in services that are being used in Germany will be portrayed. After having read about Foursquare and other check-in services it becomes apparent that couponing is a central element of these applications. Due to its importance the topic of couponing will be addressed in detail. Next to a general introduction to the matter, design possibilities of coupons as well as their application throughout the customer relationship life-cycle will be presented, in order to establish a connection to CRM.

3.1 An introduction to CRM

Throughout the past CRM has gained great relevance for many companies operating in competitive markets (cf. Stauss, 2011, p. 320; Homburg/Kuester/ Krohmer, 2009, p. 296; Thomas/Reinarzt/Kumar, 2007, p. 28). There are various reasons – market, customer and technology related – why (some) companies shifted away from a product-centric to a customer-centric strategy. One of the most important reasons is the saturation of markets. Due to the saturation of markets or, from the point of consumers the multiplicity of interchangeable offers to choose from, it has become necessary to not only invest in and focus on customer acquisition, but also to pay close attention to retaining existing customers and to exhaust their share of wallet (cf. Stauss, 2006, p.421). Moreover, it has become challenging for many companies to differentiate themselves from the competition based on their product portfolio. Products are becoming more and more interchangeable and a high quality combined with a decent service and a reasonable price is increasingly becoming a hygiene factor, meaning an aspect customers take for granted. What really makes the difference are motivational factors like (mass) customized products, pre- and after-sales services and unobtrusive personal communication (cf. Breitschuh, 2007, p. 5 f.). While market and customer related developments increased the importance of a customer-centric strategy, technological developments enabled such a strategy. As organizing and analyzing the piles of data collected is a very complex process, managing customer information and therefore also customer relationships is extremely challenging without a CRM software behind it.

3.1.1 Definition of CRM

Due to the importance of electronic data collection and therefore the inalienability of modern technology, CRM is sometimes defined as a software package or a database (cf. Hippner, 2006, p. 17). Other definitions focus more on CRM tools and define CRM as loyalty programs or advanced direct marketing, which is not correct either. In the author’s eyes these are only tools that assist companies in learning more about their customers to be able to design interactions accordingly. After scrutinizing various different definitions of CRM the writer has combined the most relevant elements and came up with a new definition. This paper will understand CRM as a customer oriented business strategy aimed at systematically establishing, developing and intensifying profitable, mutually beneficial, long-term learning relationships between companies and their prospects/customers typically supported by modern software solutions that simplify the gathering, consolidation and analysis of customer data (cf. Stauss, 2011, p. 320f.; Peppers/ Roger, 2011, p. 6, pp. 13-17; Hippner, 2006, p. 18; Reinarzt/Krafft/ Hoyer, 2004, p. 294). The first crucial element of the definition is the systematic approach. A precondition for systematically establishing, developing and intensifying relationships is knowledge of typical characteristics of a company-customer relationship (cf. Stauss, 2011, p. 320).

3.1.2 Customer relationship life-cycle

The development of this relationship over time is described by the customer relationship life-cycle. Due to the wide recognition of Stauss’ work, this thesis will use and slightly modify his model (cf. Stauss, 2011, p. 331). As displayed in fig. 2 the customer relationship life-cycle is characterized by an initially rising and later declining relationship intensity. The relationship intensity is at best indicated by the customer value. The customer value is the most accurate determinant of the intensity of a relationship as it includes company specific variables. Other models choose e.g. the sum of single customer’s revenues or the number of transactions, which is a simpler form and might be a fair indication of the relationship-intensity too, but is not as accurate as the customer value (cf. Stauss/Gouthier/Seidel, 2006, p. 207).

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Figure 2: Customer relationship life-cycle, figure created by author, modeled after Stauss, 2006, p. 421

Typically a customer-company relationship runs through distinct subsequent phases. Firms should interact and manage relationships differently at each stage of the relationship life-cycle. The relationship life-cycle can be split in three top-level phases: the establishment of a relationship, its development and intensification and last but not least – possibly – the revitalization of less motivated and lost customers (cf. Stauss, 2011, p. 331; Reinartz/Krafft/Hoyer, 2004, p. 294). It has to be stressed that this is an exemplary development of a relationship. As the dotted lines in fig. 2 suggest, not every customer necessarily terminates the relationship with a company after the peak of its intensity while others might end it before the relationship has even reached the stage of maturity. The three top level phases can be further broken down in seven more specific stages: initialization, familiarization, growth, maturity, termination, abstinence and reactivation (cf. Stauss, 2011, p. 331; Ploss/Berger, 2003, p. 81f.; Schusser, 2003, p. 312). Stauss’ original model additionally featured phases of endangerment that appeared throughout the stages of familiarization until termination. These phases are characterized by powerful competitive activities, such as aggressive communication or pricing measures that might weaken the current relationship intensity or even pursue existing customers to terminate the relationship and engage in a new one with that competitor (cf. Kreutzer, 2003, p. 13). The author asserts that these phases are not only a threat to the relationship with existing customers, but also to the establishment of a relationship with prospects and to the reactivation of lost customers. The writer is of the opinion that competitive activities represent a constant threat but that customers in different relationship stages are unequally receptive for those. The orange dots in fig. 2 symbolize the receptiveness of prospects, customers and lost customers towards competitive marketing activities.

Historically the central element of CRM was customer acquisition. A company’s key to success was thought to be the number of customers. Following the equation that more customers equal more profit customer acquisition played a dominant role. To a certain extent this is of course still relevant today, however, marketers have recognized that acquiring customers is more expensive and less sustainable than retaining existing profitable ones (cf. Peppers/Rogers, 2011, p. 31). Therefore, retaining customers as well as reactivating lost customers has gained in importance. The following section will touch upon each of the three top-level phases of the customer relationship life-cycle and elaborate on their respective management approaches, goals and tactics.

The establishment phase is the stage in which the customer-company relationship is initialized. Prospect management aims at identifying potential customers that are worth establishing a relationship with. Marketing activities need to drive awareness to the offer of the company and trigger a first trial. It is crucial to be aware of the fact that a customer can terminate the relationship at any time. Therefore no company can forgo prospect management (cf. Reinartz/Krafft/Ho-yer, 2004, p. 294).

With the first purchase the prospect becomes a customer and enters the development phase of the customer relationship life-cycle. The respective management approach of the development phase – customer retention management – aims at developing and intensifying the relationship between the customer and the company. The most effective way of intensifying a relationship is by making it meaningful and beneficial for the customer, e.g. by offering customized solutions. Customized solutions can be offered to customers based on an analysis of their (psychographic, behavioral etc.) data. Modern technology and specific software solutions enable the identification of e.g. preferences and purchase patterns based on which customized offers can be created. The data, on which the analysis is based, often stem from loyalty cards. These cards are typically part of a bonus program that rewards customers for their purchases and is thought to incentivize revisits. The data gathered should also be used for segmentation purposes. Segmentation is important as it allows to treat different (groups of) customers differently. Treating customers differently is crucial as not every customer is worth the same degree of attention (Rogers/Peppers, 2011, p. 69). At this point the “mutually beneficial” component of the CRM definitions has to be remembered. Relationships should not only be beneficial for the customer, but also for the business. “No customer orientation at any costs” should be the guiding mantra of marketing managers. Therefore, it is imperative to constantly weigh the costs of maintaining the relationship versus its benefits. To put it all in a nutshell, the overall goal of this phase is to increase the customer value of promising customers. As mentioned above, this can be achieved by using customer data as intensively as possible to be able to offer relevant solutions.

The revitalization phase is the stage in which the intensity of the customer-company relationship is decreasing. Some customers reduce the frequency or the value of purchases others entirely terminate the relationship. Churn management aims at recognizing derivations from the customer’s normal behavior, i.e. spotting weak signals that hint at a potential termination of the relationship such as a reduced frequency of visits or orders, to prevent the customer from entirely ending the relationship. Once abnormal customer behavior is identified, efforts will be directed towards regaining. Also here the costs of reactivation need to be weighed against related benefits. Further goals and tactics related to each of the three top level phases are listed in app. 6.

3.1.3. Social CRM

The underlying principle of customer-company relationships is similar to private relationships. They slowly develop and their intensity varies over time. The key of a functioning relationship is to get to know the partner to be able to interact in a meaningful way. In order to get to know a customer as much data about him, his purchasing behavior as well as information regarding his preferences has to be collected and analyzed. The sources of this information can be very diverse, based on the infrastructure of the respective company. One source of information is a company’s loyalty program that tracks members’ purchase data with every swipe of the loyalty card. Other sources of information can be call center-agents who handle customers’ complaints or the waitress who serves her guests. A relatively new source of information and also a new touch point are social media and particularly social networks such as Facebook. Social media contain conversations. Entering social media is comparable to entering a crowded café. People talk about anything, some conversations are very serious, others very cheerful, some are angry, some are loud, some are short others long and intense. Social media monitoring, i.e. monitoring the conversations that evolve around a company, product or brand, filtering the tonality of these conversations and analyzing them has become an established means of generating customer insights. If companies not only act as passive listeners but actively participate in the conversations and deliver information to converse about, social media are a valuable tool to engage customers and prospects, i.e. to cultivate relationships. As the development and intensification of profitable, mutually beneficial, long-term learning relationships between companies and their prospects/customers is also the goal of CRM, attempts to pursue these goals via social media are often referred to as social CRM (SCRM). Social CRM does not replace traditional CRM efforts, it is simply a new communication channel and therefore also a new touch point that delivers further information and augments traditional systems. One further step that goes beyond listening, analyzing and engaging customers and prospects in social media is to connect this new source of information and hence new customer data generated to existing customer profiles. The challenge is to generate a unified view of the multi-dimensional customer, meaning to create a big picture of the customer by uniting all information collected by different sources at different touch points.

Social CRM is especially valuable, because the users voluntarily decide to be entertained and updated by the company. Traditional CRM activities, such as direct mailing campaigns are usually designed to sell, or to gather customer data, but not to engage customers. These activities help managing customer relationships and increase customer value, but they often fail in building mutual trust, a key component of customer relationships (Peppers/Roger, 2011, p.70). A Facebook fan page or a presence in any other social network is often also a good hunting ground for acquiring socio-demographic data, such as age, relationship status or even addresses to be able to, on the one hand enrich existing customer profiles but also to include Facebook fans in traditional CRM activities. As the number of people who move within the realm of social media is steadily increasing, social CRM will also gain in importance. The following section will point out the extent to which social media and in particular social networks have become an integral part of our daily lives.

3.2 Game changing technological developments

This section addresses some of the game changing technological developments of the past years and their dimensions. In particular the current diffusion of the Internet, as well as the popularity of social networks and mobile devices will be addressed along with the innovative services that are being enabled by these.

In total a little less than ¾ of Germans older than 14 years (approx.53 millions) are online (cf. Initiative D21, 2011, p. 10; van Eimeren/Frees, 2011, p. 335). Very roughly it can be said that younger people are more likely to have access to the Internet than the older generation and that they spend more time on the web as well. Especially digital natives have completely integrated the Internet into their daily lives. The comparison of the following data underlines their intensive usage of digital technologies. Among the German digital natives (age 14-29), 99% have access to the Internet and spend approx. 168 min. a day surfing the web. Among the so called “silver surfers” (age 50+) 47% have access to the World Wide Web and spend approx. 103 min. a day on it (cf. van Eimeren/Frees, 2011, p. 335 - 336, p. 346). Next to age also gender has an influence on the intensity of usage of the web. It is not only proven that more men regularly access the Internet but they are also more active surfers (cf. Initiative D21, 2011, p. 10; AGOF, 2011, p. 14). Only when it comes to social networking women are slightly more active than men (cf. van Eimeren/Frees, 2011, p. 346).

Social networking has become an integral part of each Internet session. Around ¼ of the total time spent on the web is spent in social networks. Approx. ¾ of German Internet users are member of at least one social network and among the digital natives even 96% are active members (cf. Bitkom, 2011a, p. 1). More than half (59%) of German networkers visit their favorite community on a daily basis (cf. Bitkom, 2011b, p.10). The survey conducted by the researcher supports these figures. Among the digital natives surveyed 98% indicated that they access their preferred social network at least daily. Eighty percent even state that they check the happenings on Facebook & co. several times a day. One of the reasons for the constant connection to the virtual world around them is the accessibility of social networks on the go. Social networks as well as the Internet in general can of course not only be accessed via stationary but also via mobile devices.

Popular mobile devices are smart phones and tablet PCs. According to Bitkom, the „Bundesverband Informationswirtschaft, Telekommunikation und neue Medien e.V.“ every third German owns a smart phone (cf. Bitkom, 2012, p. 1). This figure is similar to figures published by Statista, indicating that, in 2011, 20 million Germans owned a smart phone (cf. Statista, 2012). Within the group of digital natives every second owns such a mobile device (cf. Bitkom, 2012, p.1). Among the 362 digital natives questioned in the course of the online survey conducted even 75% own a smart phone. According to Accenture, a global management consulting firm, 28% of German onliners access the web via mobile devices (cf. Accenture, 2011, p. 7). The “Arbeitsgemeinschaft Online Forschung” and Tomorrow Focus Media even speak of 32% and 33% (cf. AGOF, 2011, p. 10; Tomorrow Focus Media, 2011, p. 10). What all studies have in common is that the figures doubled compared to the year before. Among the 362 digital natives surveyed 66% access the web via their mobile device. It is crucial to understand that accessing the Internet via one of these devices does not necessarily mean that it is used on the go, i.e. out of home. Among the digital natives surveyed however this seems to be the case. The results of the online survey show that 64% of all digital natives (n=362, =96% of those n=239 who access the web with their smart phones) use it on the go.

Since the modern cell phones enable consumers to quickly, easily and also cheaply (9,95 € for unlimited Internet access, pre-paid, Fonic, 2012) access all kinds of information the devices have the power to influence buying decisions on the spot, as they are usually carried everywhere. Therefore, the mobile channel has caught the attention of the marketing industry. Two years ago already 60% of German decision makers in marketing departments and advertising agencies surveyed claimed that they have directed or been part of a team working on a mobile campaign (cf. Coupies, 2010, p. 3). Today, marketers have recognized mobile as a powerful channel to influence behavior, build loyalty and drive purchase (cf. TNS global, 2012, p.5).

3.3 Location based services

As the number of people accessing the web on the go is increasing, so called location based services (LBS) are gaining consideration. What used to be marketing phantasies ten years ago is now reality, mostly due to the technological progress and the fact that smart phones have become mainstream. According to Gartner, a US firm claiming to be the world's leading information technology research and advisory company, and its annually published hype cycle which evaluates the maturity of technologies, LBS will hit mainstream in one to two years (cf. Gartner, 2011). Location aware services provide information to its users based on their current geographical position. The users’ position is mostly located via GPS, hence LBS can be used from every device that is equipped with a GPS receiver. Nowadays GPS receivers belong to the standard equipment of notebooks, the new generation of cell phones and tablet PCs, hence all smart phone owners carry a GPS receiver in their pockets. Location based services are programs that are presented to users mostly in the form of mobile applications. Apps can be especially useful when being accessed out of home. When accessing a LBS app from a mobile device specific, filtered, real-time information about the surroundings are being displayed to the smart phone user. These services provide added value as they often allow their users to safe time or money and to base their decisions on up-to-date information (cf. Schiller/Voisard, 2004, p. 10; Küpper, 2005, p. 10; Kaplan, 2011, 3:34). The type of information smart phone users receive depends on the kind of service, i.e. app they are using. Typical examples are restaurant finders, friend trackers, navigation services and weather alerts (cf. AGOF, 2011, p. 20).

A sub-category of LBS that combines many of the functions mentioned above is composed of check-in apps. Checking in has become a synonym of virtually telling friends, “I am here” while indicating the location they are currently at (cf. Strout/Schneider, 2011, p. 10). Check-in services are a platform where two different parties come together: businesses and smart phone users. The basic principle is that via the app customers check into a venue, e.g. a restaurant, cinema, hairdresser, or a park as soon as they are there. They then spread the word among their virtual friends. Typically, check-ins are being rewarded by the service provider – mostly with virtual points and badges. Usually the venue owner also has the possibility to incentivize check-ins. Especially certain deals connected to the check-in, such as a 10% discount, make checking in attractive. The most popular check-in services in Germany are Foursquare, Friendticker and Qype which are shortly presented and contrasted in chapter 3.5. Facebook, the world’s largest and most important social network also has a check-in function, which is why it is included in the comparison.

3.4 An introduction to Foursquare

Foursquare is a location based check-in service founded in the US in March 2009. Worldwide more than 20 million people belong to the community who has checked in more than 2 billion times already – among others into the 750,000 participating businesses (cf. Foursquare, 2012). Considering the world wide user data, the growth of Foursquare is nearly an exponential one and faster than the growth of Twitter at its early stages (cf. Strout/Schneider, 2011, p. 26). Since early 2011 Foursquare offers its services in Japanese, Italian, French, Spanish and German. Despite its rapid growth, the awareness of Foursquare in particular and check-in services in general is still very low among Germans. The survey conducted among digital natives who have a smartphone, the group that should be most prone to knowing and using check-in services, revealed that only 29% of the informants have heard of Foursquare before and that only 4% (10 respondents) are using it. Overall, Germany’s Foursquare user base counts approx. 400,000 members which is still a fairly small number compared to the 4.3 million US Americans who check-in on a regular basis (AppAppeal, 2012).

The very basic idea of Foursquare is to share one’s current location with friends by checking in. Users can check in to nearly anything: restaurants, cafés, nightclubs, shops, cultural institutions and outdoor places such as parks, beaches or zoos (cf. fig. 3a). When a user checks in to a venue, a check-in notification is by default sent to their Foursquare contacts. If a user’s current location does not appear on the list of places nearby, he can simply add it to the list to be able to check in. But there are many more functions than just checking in. Foursquare’s vision is to make cities easier to use and with the launch of version 5.0 in June 2012 and its related changes to the website, the former location sharing system has completed its transformation from a mere check-in game to a sophisticated recommendation engine. In the following all functions and benefits of Foursquare will be presented – firstly from the point of view of smart phone users, later from the standpoint of business owners.

3.4.1 Functions of Foursquare from the point of view of users

From the point of view of smart phone users, Foursquare is a social network with a “buddy tracking” function, a log book, a city guide, a review portal, a coupon market place and a game. When creating a Foursquare account, it is immediately linked to a user’s Facebook and/or Twitter profile. These are being scanned and friends of those existing networks who are already using Foursquare are instantly suggested as Foursquare friends. Once a user has added friends he can choose to receive notifications about when and where his friends have recently checked in, hence it is a way of tracking the location of friends. The most recent check-ins of friends can also be viewed on a map, so the user knows exactly who is nearby and who is not. It has to be noted that users are not constantly being tracked, thus no one can follow their movement. But if a friend checked in to a lunch place five minutes ago, chances are that he is still there (cf. fig. 3b). These location based status information combined with a basic messaging function enable to connect with nearby friends, e.g. to fix a lunch date. Foursquare also has a log book function because all check-ins are stored and organized in a timeline (cf. fig. 3c). This is especially helpful if a user remembers being at a neat place maybe even in a foreign city, but does not remember the name or exact location of it. The places you have checked in to as well as the pictures taken at the respective venues can also be viewed on a map.

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Figure 3: a) Check-in to gym, b) Friends’ check-ins, c) Timeline

Based on a user’s location, the time of the day and the places a user as well as his friends have checked in to before, Foursquare makes personalized recommendations of places to visit. These personalized recommendations, i.e. the explore function, helps users to explore the city and to discover places they have never been to. Hence, Foursquare can be seen as a recommendation engine serving as a personal city guide. Serendipity, i.e. accidental discovery, is one of the driving forces behind the popularity of LBS (cf. Strout/Schneider, 2011, p. 22). If users open the app, they can browse through different categories, such as coffee, food or outdoors (fig. 4c). If they click on coffee all cafés in their immediate surroundings will be displayed on a map.

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Figure 4: a) Explore tab recommends things to do and allows explicit search, b) Map view of places nearby, c) Categories to browse through, d) Further filter of search results

Another function is that users can create to-do lists for other users to access. These lists feature all places a user finds worth recommending and are usually theme related, such as “Best views on Hamburg” or “Best Italian places in town”. This can be especially relevant when travelling to an unknown city. Tourists as well as locals can access these lists and work off the venues and locations listed. If users click on any venue, they will find more information, such as the exact address (cf. fig. 5a), tips other people left behind (cf. fig. 5b), pictures (cf. fig. 5c) and the information if any of their friends are currently there or have been to the location before. The tips and photos featured tell the story of the venue. In case of gastronomy businesses the tips usually evolve around the topic of what and what not to eat and the pictures are often snapshots of the restaurant itself or the plates served. Hence, Foursquare can be seen as a review platform as it gives users a good idea of what to expect. Customers and especially prospects value this kind of information. Reviews from existing customers are often evaluated as more credible than the company’s publications as they have the necessary expertise and have no self interest in promoting the venue (Zhang/Mao, 2009, p. 118). A new feature that has been integrated with the launch of the most recent version of Foursquare in June is the “like” function. The “like” function enables customers to like or dislike a venue, as well as to like or dislike tips from other users. It is of course not as precise as Qype ’s five star rating system, but the number of likes gives prospects a first impression of the place. When browsing through the categories mentioned above and looking at the businesses nearby on the map, it becomes apparent that some of these venue’s locations are marked with a blue, others with an orange icon (cf. fig. 4b). An orange frame indicates the availability of a so called special. A special is nothing else than a coupon which users can unlock under certain defined conditions. A typical special is: “Get a free cup coffee when you check in for the first time”. This special is linked to the user’s first visit, i.e. his first check-in. Once the Foursquare user checked in to the venue he has to show his smart phone screen displaying the unlock message to the staff before he can enjoy his free cup of coffee.

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Figure 5: a) A location’s Foursquare page displaying general information as well as b) Reviews and c) Pictures plus d) Specials available

Last but not least Foursquare is also a game. Users earn points for their check-ins. The amount of points gained per check-in depends on many factors, such as whether the user himself or any of his friends have been to the place before, how often a user has previously checked in to the same category of locations (e.g. train stations) and so on. As the amount of points received depends on numerous factors it is mostly unpredictable, but fact is that the more often users check in, the more points they earn (cf. fig. 6a). These points are distributed by Foursquare and are just points, meaning that they are nothing like bonus points known from loyalty programs that can be exchanged for material goods once a certain score is reached. On a scorecard that is reset each week the points earned by a user and his friends are being displayed. This function is designed to foster constant competition between members of the Foursquare community. Next to the points community members can earn badges. Badges are virtual medals. Some badges are easy to unlock, others involve significant effort. The more (sophisticated) badges a user has, the more recognized he is within the Foursquare community (cf. fig. 6b). One simple example is the explorer badge, which users earn once they have checked in to 25 different venues. A more recognized badge is e.g. the jetsetter badge, which users can unlock once they have checked in to five different airports. The most admired reward however is the mayorship. The user who has checked in to a specific location the most during the past 30 days becomes the mayor of the respective location. Sometimes users are being rewarded with certain incentives, so called mayor specials, but often businesses have no clue about who of their customers has checked in the most lately, as they have no idea about the existence of Foursquare and its functionalities.

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Figure 6: a) Points earned for one check-in, b) Badge earned

In the course of the survey conducted by the researcher, most Foursquare functionalities were presented to the respondents and they were then asked to rank order the functions. The function the respondent believes to be most beneficial should be ranked first, the least helpful function should be ranked last (rank 8). Fig. 7 displays the average ranks of the items presented. The respondents’ favorite function is the explore function, i.e. the city guide aspect of Foursquare which searches the environment for nearby things to do, followed by the accessibility of general information about locations and their photos and tips. The function considered least useful from the point of view of the smart phone users is the log book function, i.e. the timeline.

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Figure 7: Average rank of Foursquare functions (ranked by usefulness by respondents of online survey n=238)

What is imperative to understand is that users can create a venue profile without the permission of the venue owner. As mentioned above, if a place a user would like to check in to does not appear on the list of places nearby that are being suggested, he can simply add that place and a short description to the list. As Foursquare is still in its infancy in Germany, many businesses are not aware that e.g. 400 unique visitors frequently check in to their venue, as the Foursquare presence has been created by someone other than themselves. Nevertheless, if actively managed Foursquare offers great potential for business owners.

3.4.2 Functions of Foursquare from the point of view of businesses

From the business’ point of view Foursquare is another Yellow Pages entry, a means of creating awareness and navigating prospects even into remote areas apart from the main streets. Other than that the check-in service is a tool to rejuvenate a venue’s image, a way of distributing coupons and of developing customer relationships, as well as it is a simple monitoring tool.

The basic information provided on a venue’s Foursquare page are similar to those on e.g. a Google Places or Yellow Pages entry. Hence, Foursquare is another platform to communicate e.g. opening hours, contact channels or the menu. As mentioned above and as visible in fig. 5 next to a place’s general information also photos and reviews posted on the location’s profile by other customers help to get a first impression. Foursquare can also be used as a tool to create awareness as until today there is not too much competition on Foursquare. Compared to the real life density of places nearby only a small selection of e.g. cafés are presented to the searcher as not all cafés are tagged on Foursquare yet. If a café offers a special, the orange icon on the map (cf. fig 4b) will clearly drive awareness to the venue. Furthermore, once a venue offers a special, it appears at the top of the search results when conducting a nearby search. Foursquare’s search result rank algorithm is unknown as well, but the author observed that the number of total check-ins the proximity of the location and previous check-in behavior of the user who searches as well as the check-in behavior of his friends impact the order of search results being displayed. However, businesses within the respective category being browsed through (e.g. coffee, nightlife or food) that offer specials, are always listed at the top of the search results. Hence, offering any special is a good means of being found, i.e. creating awareness and thereby increasing the probability of attracting new (Foursquare) customers. Furthermore, to draw nearby Foursquare users’ attention to a special offered within a certain radius, push notifications are being sent out to those smart phone users who have opened the app. Other than that, awareness is created because check-ins have to be shared among a user’s Foursquare friends, as otherwise no points will be allocated to his account. Furthermore, all check-ins can be cross posted to Facebook and/or Twitter. If venue owners encourage cross postings, noise is generated quickly. Due to the map displaying a user’s current location as well as all venues in the immediate surroundings, Foursquare can easily navigate prospects away from the main streets to the hidden beauties of a district. Next to these benefits the author asserts that having a Foursquare account is a way of rejuvenating a business’ image or to underline its innovative reputation. A good indication of whether or not a company is actively managing its Foursquare account is the availability of specials. Specials, which can only be created by authorized venue owners, are a very important – if not the most important – function of Foursquare from the standpoint of businesses. In total there are seven different specials each with a slightly different function. Basically specials reward Foursquare users for checking a defined number of times, with a defined number of friends or e.g. within an outlined timeframe. Figure 8 displays the seven specials available, the conditions connected to unlocking them and gives one example each.

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Figure 8: Overview of Foursquare specials

The precise definition of the conditions to unlock the special as well as the selection of the reward is up to the venue owner. In the author’s opinion the underlying intention of these seven specials can be positioned on a continuum from customer acquisition to customer retention as some specials are more suitable for attracting new clients and others aim at rewarding existing ones. The specials offering immediate reward are categorized as acquisition oriented deals. Those specials involving slightly more effort, i.e. are linked to multiple check-ins and are therefore harder to unlock are positioned more towards the customer retention side of the continuum. Due to the fact that these specials have a coupon character, Foursquare can be regarded as a channel to distribute coupons. As – of course depending on the coupon design – customers are rewarded for coming back or for spending a minimum amount of money, it can also be seen as a tool to intensify customer relationships. Last but not least Foursquare can be used as a simple monitoring tool as it allows gaining insight into the customers’ opinions towards the venue. By monitoring the tips and pictures customers left on the venue’s Foursquare page, business owners are able to check upon their perceived service level. Analogously to a business’ Facebook page or a Qype profile, the Foursquare page function as the business card of the venue and generates a first impression. Apart from that Foursquare provides dashboards via which customer traffic can be monitored and analyzed. These dashboards, as displayed in app. 2, graphically visualize the number of check-ins, unique users and new visitors, as well as an age, gender and time breakdown of the customers who checked in. Next to the venue’s statistics, information regarding active campaigns, i.e. specials, as well as further information regarding the visitors are being showcased. That the users’ data collected cannot only be used for customer traffic analysis but that Foursquare can actually be integrated into existing CRM programs is impressively demonstrated by Tasti-D-lite. Tasti-D-Lite, a US American frozen yoghurt chain evolved its basic punch card program into a highly digital loyalty program involvingFoursquare and other social networks. Customers can register their Tasti loyalty card online and opt-in to automatically check in to the store with every use of the loyalty card. The customer can also opt-in to enable automatic status updates posted by Tasti on the customers’ Facebook and Twitter profiles and earns points for every social network connection (Tasti-D-lite, 2012). Last year already 20% of their loyalty card members had connected one of their social networks to the company’s CRM program (Miles, 2011). Tasti-D-lite is even planning further refinement to the program to provide added value for those people linking their loyalty card to a social network and hence promoting the frozen yoghurt chain: The pushed status updates will soon include coupons that are made available to friends and followers with every swipe of the loyalty card (Foursquare, 2012).

3.5 Comparison of check-in services used in Germany

Next to Foursquare there are few other check-in services that are being used in Germany. Worldwide, Foursquare is the most popular check-in service with the most sophisticated functions, especially from a business’ point of view, which is why it has been selected as the lead LBS for this thesis. Nevertheless, other German check-in services shall be shortly touched upon in the following. The only “real” competitor of Foursquare in Germany is Friendticker, an app developed in Germany. The other apps included in the following paragraph – Qype and Facebook – both have a check-in function, but are no check-in services in its original sense.

Just like Foursquare, Friendticker awards points to users checking in. But other than at Foursquare these points can be exchanged for material goods of participating partners, such as Zalando and L’Oréal. From the point of view of local business owners rewarding customers who frequently check-in to their stores is not as easy as with Foursquare. The local business, e.g. a café, could become a partner of Friendticker and offer a free coffee for anyone who has accumulated 30 points. However, the people rewarded are Friendticker users in gereral (who have collected 30 points) and not necessarily customers of the café, i.e. users who have amassed 30 points by checking in to that café.

Qype, which is originally a review platform, has recently launched a check-in function. Next to the check-in function Qype has a couponing function as well. However, the coupons are accessible for everyone and not related to check-ins. Checking-in on Qype only serves the purpose of sharing ones current location and collecting points and medals to win the run for president of a certain location.

Facebook Places, the former check-in component of Facebook, has been discontinued. Users can now check-in by adding their current location to their status update. Facebook neither has an explore function nor rewards users for tagging their location and has only been added to this comparison due to its dominant role in social media. Because if Facebook decided to add a gamified check-in component to their portfolio or to re-launch Facebook Deals, a check-in service that was tested in the USA but never rolled out internationally, this check-in service immediately counted 500 million mobile users and would by far outnumber the largest check-in service to date which is Fourquare with 20 million active users (Facebook, 2012).

The number of members checking in with Friendticker is not accessible. As Friendticker is limited to the German market the number of members can be grasped when looking at the German members of Foursquare. Indialog total approx. 400,000 Germans check in to their favorite location with Foursquare. The number of Friendticker users is estimated to be much lower. A central element of Qype, the recommendations of things to do nearby, has been integrated into Foursquare as well. Friendticker does not have such a function. Although places near the user are listed the results are neither organized in categories such as food or outdoors nor can they be viewed on a map. Facebook does not have an explore function either. When evaluating the services presented according to their potential as a CRM tool, Facebook is clearly the first social network a manager would want to implement to attract and retain new customers. Not because of the check-in function but because of the many other functions and the reach of the network. Friendticker is certainly the last tool the manager of a local business would want to invest resources in. The reason for this is that Friendticker has a very small user base throughout Germany and that, until now, it is nothing but a location sharing system without any added value for the users such as recommendations of things to do nearby. Deciding between Qype and Foursquare is not as easy. Qype is definitely the portal to browse through when looking for reviews and pictures of places users have never been to, hence it is essential for customer acquisition efforts. Other than that Qype reviews are prominently displayed among Google search results, hence the users’ attention is more or less automatically drwan to the recommendation portal. In the author’s opinion Foursquare however has better tools to retain customers and gives business owners more possibilities to reward their existing, but also first-time customers. In the end it comes down to the number of people that can be reached with the check-in service. As Foursquare is still in its infancy in Germany it might be a better idea to first create a presence on Qype before diving into the real check-in world.

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Figure 9: Comparison of check-in services in Germany

3.6 An introduction to Couponing

As (monetary) incentives are a central element of many check-in services, and especially of Foursquare, this section will touch upon the basic elements of couponing. Couponing is an activity where an issuer distributes vouchers to a certain group of people, mostly prospects or customers. These vouchers entitle the holder to a benefit if redeemed within a defined period of time at a particular point of acceptance (cf. Kreutzer, 2003, p. 6). In Germany couponing is a relatively new addition to the marketing mix as prior to 2001 its deployment as we know it today was prohibited by law.

3.6.1 Process of couponing

The process of establishing a couponing campaign involves numerous parties that fulfill different functions. The number of parties typically involved varies between three and five, which is why it is often spoken of an either three- or respectively five-components-model (cf. Kreutzer, 2003, p. 19 - 21; Lorenz, 2003, p. 212 - 215; Ploss/Bergner, 2003, p. 46). A five-components-model involves the following parties: an issuer who initiates the campaign, a distribution system, a recipient who cuts out, prints out or downloads the coupon and a point of acceptance where the coupons can be redeemed. In cases where the issuer (e.g. a manufacturer) differs from the point of acceptance (e.g. retailer) a fifth component needs to be integrated, namely a clearing house. A clearing house is an independent service provider that oversees the monetary transactions between the issuer and the point of acceptance. Foursquare specials can be classified as a three-components-model. The business which initiates the special (issuer) serves as the point of acceptance at the same time. The location sharing system itself functions as the distribution system and its users as the recipients.

3.6.2 Design possibilities of coupons

After scrutinizing relevant literature the writer detected that coupons can be differentiated based on eight different characteristics namely the time of coupon distribution, the type of reward, the degree of generosity of the reward, the degree of personalization, the degree of customization, the effort to redeem the coupon, the amount of data asked for and last but not least the timing of the reward. Figure 10 visualizes how each characteristic and its intensity can be adjusted depending on the goal of the couponing campaign. Due to the adjustability of each characteristic the many resulting combinations of designing a coupon are almost uncountable. In the following all eight characteristics shall be elaborated on.

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Figure 10: Design possibilities of a coupon

When deciding at what point in time a coupon should be distributed to the customer or prospect the decision field is limited. Coupons can either be distributed prior to the purchase (pre-sales coupon) or afterwards (after-sales coupons). After-sales coupons are especially valuable in the customer development phase of the customer relationship life-cycle as they offer an incentive to revisit (cf. Kreutzer, 2003, p. 13).

When defining the type of reward the issuer basically has four possibilities to choose from. He could distribute cash coupons, bundling coupons, reward the customer with loyalty coupons or with non-monetary incentives. Cash coupons, which are sometimes also named rebate coupons, modify the original price and can either feature an absolute value (-2 €) or a percentage (-25%). Other than cash coupons bundling coupons modify the product, not the price. Bundling coupons add something, e.g. a complimentary product to the originally purchased product. Famous examples are “buy one get one free” (BOGOF) or “two for one” (241) coupons (cf. Kreutzer, 2003, p. 11). Loyalty coupons are often integrated into loyalty or bonus programs. These coupons reward regular purchases and are not suitable for a one-time activation but rather aim at getting to know the customer (cf. Zipperer, 2003, p. 342; Homburg/Kuester/Krohmer, 2009, p. 306). Loyalty programs typically reward customers with a virtual currency, e.g. points or miles. The amount of points collected per purchase is usually connected to the amount of money spent. As soon as the customer’s account reaches a certain level, the virtual currency can be exchanged for material goods. Next to rewarding customers with discounts, complementary products or virtual points, the issuer could also choose to reward customers with non-monetary incentives. Non-monetary incentives can e.g. be complementary services, such as a style consultation at a hairdresser. Other forms of non-monetary incentives have event character and e.g. invite loyal customers to join a cooking session with the chef.

Once the type of reward has been determined, its value has to be decided on. Especially in connection with cash coupons, the value of a coupon is called face value. A high face value is of course attractive to the recipients. A coupon with a high face value is very likely to be redeemed as consumers perceive coupons as being cash (cf. Spiekermann/Rothensee/Klafft, 2011, p. 283; Ploss/Ber-ger, 2003, p. 87). In their minds not redeeming a coupon with a high face value equals giving away money (cf. Ploss/Berger, 2003, p. 29). On the other hand, high face values might attract the wrong prospects, i.e. smart shoppers and costs of the campaign can quickly explode (cf. Domogalla, 2003, p. 658). Conversely, a low face value, such as 5% off, is often ignored or even seen as ridiculous and non-beneficial by many customers (cf. Ploss/Berger, 2003, p. 198). Depending on the value of the original product and the effort to redeem the coupon the face value of a coupon should at best range from 15-25% (cf. Ploss/Berger, 2003, p. 199).

The degree of personalization ranges from non-personalized via semi personalized to fully personalized coupons that best exploit the dialog potential. The degree of customization refers to the degree to which the reward offered is tailored to the customers’ preferences and reaches from non-customized to individualized incentives. Whether or not a coupon can be customized depends on the amount of data collected about the recipient and the availability of software solutions that enable the creation of one-to-one or one-to-many coupons.

The effort to redeem the coupon is connected to the complexity of the conditions connected to redeeming the coupon as well as to the user’s proximity to the point of acceptance (cf. Spiekermann/Rothensee/Klafft, 2011, p. 283). Other than that the effort is often connected to the amount of data asked for. If customers have to collect uncountable points, cut them out of the packaging, send them in (deferred benefit coupons) and/or fill out a survey the effort to redeem the coupon is perceived as being high. This effort is always weighted against the benefit, i.e. the savings connected to the coupon. If the mental cost-benefit analysis concludes that the coupon is not worth the effort, it will not be redeemed. Consumers even perceive the benefit to be less valuable if its redemption requires significant effort (cf. Dickinger/Kleijnen, 2008, p. 26).

The next characteristic, the amount of data asked for, can be visualized on a continuum from high to low. Some coupons are pure monolog coupons that ask for no data at all, other coupons are designed to add on to the database and hence ask customers for their preferences or socio-demographic data in order to be able to tailor future couponing or other dialog-communication activities.

A further decision that has to be made when designing a coupon is the timing of the reward which has to be differentiated from the timing of the coupon distribution. Customers who redeem a coupon can be rewarded instantly, i.e. at the cash register or at a later point in time. A popular form of deferred benefit coupons are some kind of collectibles, e.g. on-pack points, of which a certain amount has to be accumulated and has to be sent in (mail-in coupons) to a clearing house in order to receive the promised reward. As a general guideline the receipt of the reward should not be too deferred from the original purchase, which is why the very right end of the continuum in fig. 8 should be avoided.

3.6.3 Couponing throughout the customer relationship life-cycle

The goals of a couponing campaign can be derived from the company’s marketing goals. Couponing goals can be sales-, competitor-, or customer oriented (cf. Ploss/Berger, 2003, p. 147; Baumann/Rohner, 2003, p. 69). As customer relationships are a central element of this thesis, only customer relationship oriented targets will be focused on in the following. To embed couponing in customer relationship management, the couponing strategy should take the customer relationship life-cycle into consideration (cf. Kreutzer, 2003, p.12). Each stage of the customer relationship life-cycle is connected to different targets. In the establishment phase first trial plays a pivotal role. Later on in the relationship data collection and analysis becomes more important as only that way offers can be customized and adapted to the preferences of the customer. Each stage of the customer relationship life cycle has a set of coupon types that are best used. The following section will focus on the kind of coupons, i.e. the composition of coupon elements presented in 3.6.2, that should be employed throughout the customer relationship life-cycle.

In the establishment phase couponing can be an important tool to trigger first trial, as monetary incentives are known to reduce the perceived risk connected to the purchase (cf. Geppert, 2003, p. 569). As they reduce the perceived risk, monetary incentives are an effective tool to influence consumers’ behavior. A study conducted by the University of Manheim showed that 42% of the customers surveyed would – at least temporarily – switch to another brand because of a coupon, 45% indicated that they would change the store (cf. Bauer/Görtz/Dünnhaupt, 2002, p.24). Although this study was conducted ten years ago the author assumes that these figures are still relevant today, as loyalty, especially towards brands, has been decreasing even more within the past years. Hence, to create awareness, to attract new customers and to trigger a first trail, pre-sales cash coupons that instantly reward the customer should be used (cf. Kreutzer, 2003, p. 12, Ploss/Berger, 2003, p. 168). As no data is available yet, the degree of customization will be low. If a dialog coupon is used at this early stage the amount of data asked for should be minimized to keep the (mental) effort to redeem the coupon as low as possible.

During the development and intensification phase coupons are often used as they are a proven tool to incentivize more-, cross- and up-buying, or to increase e.g. the frequency of visits (cf. Geppert, 2003, p. 569). Bundling coupons with after sales characteristics seem most appropriately in this phase as they prolong the customer relationship (cf. Kreutzer, 2003, p. 13; Ploss/Berger, 2003, p. 168). Since knowledge about the customer is important to establish meaningful long-term relationships, data collection plays a pivotal role within this phase. At the beginning of a relationship the company aims at lifting promising customers out of their anonymity, but this should be done carefully (cf. Kreutzer, 2003, p. 14). Designing a coupon that asks for too many data might prevent customers from redeeming it as sharing private information is a sensitive topic in Germany. Nevertheless, compared to other communication activities, dialog coupons might be the best way to gather data, as customers are reimbursed for their efforts. To reimburse customers for sharing private data pre-sales cash coupons with a rather high face value are most suitable. Once the company has collected some customer information (not necessarily only by means of couponing) coupons can be personalized or even slightly customized to the customer’s preferences. Modern software solutions for example suggest complementary items to the products purchased by a customer and print a coupon directly on the receipt. If the timing of the possible redemption is defined as slightly deferred, the coupon can be a very attractive means of making customers revisit as the customization ensures high relevance to the customer (cf. Thomas/Reinarzt/Kumar, 2007, p. 28). If a company aims at transferring a regular customer into a loyal or at least a frequently returning customer, loyalty coupons or programs are most appropriate. The receipt of these coupons is mostly tied to a certain number of visits or a certain turnover the customer needs to generate before he is being rewarded. These loyalty programs are important for two reasons. Firstly they are often connected to loyalty cards which track customers’ purchase behavior. The valuable data gathered is later analyzed and used to gain insight into the shopping behavior of different groups of customers. Secondly these programs are known to build switching costs. However, as loyalty cards have been overused by retailers within the past decade their capability to create switching costs needs to be evaluated carefully, as most customers carry several loyalty cards of competitive companies at a time (cf. Rogers/Pep-pers, 2011, p. 65).

During the reactivation phase couponing activities resemble those in the establishment stage, but at best in this phase they are designed based on all data previously assembled (cf. Kreutzer, 2003, p. 14; Kirchner, 2003, p. 569). Pre-sales, personalized and somewhat customized cash coupons with a relatively high face value might incentivize customers to reenter the relationship with the company.

4 How to best exploit the potential of Foursquare throughout the customer relationship life-cycle

After having touched upon all necessary issues that relate to Foursquare or CRM, this chapter will put the previously presented pieces of information together to create a big picture in order to show that Foursquare can very well be used as a CRM tool. In order to assess whether it is worth including Foursquare in a business’ SCRM strategy the potential of Foursquare has been investigated by surveying the expected target group of Foursquare related CRM activities. Survey results will be presented in the first part of the chapter. As far as the creation of a Foursquare campaign is concerned, the author identified the specials to be the most powerful Foursquare-CRM tool from the point of view of businesses. Therefore, analogously to the couponing section (cf. 3.6), design possibilities of Foursquare specials and their application throughout the customer relationship life-cycle will be portrayed. Since survey results indicate that the check-in service is not very popular yet, every business that runs a campaign and launches specials should let their customers know that they are doing so; thus means and tools to promote such a campaign are being presented. The last part of the chapter introduces KPIs that should be employed to evaluate the success of a Foursquare campaign.

4.1 The potential of Foursquare in Germany

As mentioned before, Foursquare with its approx. 400,000 users is still in its infancy in Germany. In the following the potential of Foursquare as a serious add on to a company’s social media mix will be assessed based on the results of the online survey conducted among 362 digital natives. To assess the potential of Foursquare several existing sub functions, such as nearby searches, coupon platforms, review portals and the Facebook check-in function were presented to the respondents. They were then asked to share their opinion regarding the sub-functions’ usefulness and to indicate whether or not they have used it before. Key findings are presented in this following section. More detailed survey results are displayed in app. 5.4.

The awareness of check-in services in general and of Foursquare in particular among digital natives who own a smart phone lies at roughly 30%. Among the smart phone users who access the Internet with their mobile device 11% have used a check-in service before and only 4% are using Foursquare. However, 100% of the smart phone users surveyed indicated that they know the check-in function of Facebook, which is not officially declared as a check-in service but which serves more or less the same purpose and 66% of those respondents who have a Facebook profile have checked in with Facebook before. The author concludes that although respondents might not be aware of it most of them are familiar with the principle of checking in.

As the usage of “real” check-in services is not popular in Germany yet, the researcher investigated the respondents’ future usage intention. Firstly, they were asked if they can imagine using a simple location sharing system. Subsequently, they were asked whether they would use a check-in service that rewards their check-ins in the future. The results are displayed in fig. 11. Figure 11 spotlights the power of incentives and rewards. Initially 25% of the digital natives state that they are somewhat likely (top two boxes) to use a check-in service. However, if check-ins are being rewarded, 56% (+31 p.p.) of the informants indicate that they would use it in the future.

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Figure 11: Comparison of usage intention – regular check-in services vs. services that offer rewards

The figure becomes more promising, when only displaying the answers of those respondents who have used the Facebook check-in function before: 37% are somewhat likely to use a simple location sharing service in the future and 67% (+ 30 p.p) are somewhat likely to use a check-in service that rewards their effort. After having analyzed further data the researcher concludes that the perceived usefulness, previous usage and the frequency of usage of the Facebook check-in function positively influence the intention to use check-in services in the future. As Facebook’s check-in function as it is today has only been introduced shortly before the survey was conducted its usage is even expected to increase. The author asserts that an increasing number of social networkers will use this function in the future and that it will become normal to add location information to a status update which will spur the acceptance of check-in services among the German digital natives.

As Foursquare is much more than just a location sharing system that offers rewards the researcher also investigated the awareness, perceived usefulness, usage and usage intensity of several sub-functions of the app.

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Figure 12: Awareness of several Foursquare sub-functions vs. their usage

Figure 12 displays the level of awareness and previous usage of sub-functions and of Foursquare itself. The components under investigation are simple check-in services, couponing platforms, customer reviews and nearby searches. As it was expected that many respondents have not yet been in contact with coupon apps and check-in services, the researcher decided to also scrutinize the familiarity with related tools such as online coupon portals and Facebook’s check-in function. As visible in fig. 12 all sub-functions have an awareness above 70% and have been used before by the majority of the respondents. What is different is their usage intensity though (fig. 13).

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Figure 13: Usage intensity of Foursquare sub-functions

Radius searches as well as review portals are the two components used most intensively. As a general tendency it can be stated that respondents who often use at least one of the functions mentioned, are more likely to use Foursquare in the future than those informants who use the services less often. For example 71% of those digital natives who often connect their current location to their Facebook status updates are likely (top two boxes) to use Foursquare in the future. Likewise, 65% of the respondents who often browse through coupon portals and 58% of those smart phone users who frequently use nearby searches are likely to use Foursquare. To put these figures into perspective it needs to be stated that amongst the total sample (only) 39% indicated that they are likely to use the app in the future.

Figure 14 sheds light on the perceived usefulness of the respective components. Also here customer reviews and radius searches were rated as the functions with the highest perceived usefulness. As check-in services are still in its infancy in Germany it is not surprising that half the sample does not see the benefit in it. Personal experiences show that in Germany people who constantly broadcast their current location or activities on e.g. Facebook are often perceived as annoying and their status updates are regarded as spam to the newsfeed of others. What the researcher found surprising is that 43% of the digital natives do not see a benefit in coupon portals and that 54% find coupon apps less useful. It is especially surprising because Germans are often described as smart shoppers who are always on the look-out for a good bargain and coupon portals such as Groupon or Daily Deals offer unbeatable discounts. Both components combined with the growing popularity of Groupon would suggest a higher acceptance and perceived usefulness, but this is not the case.

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Figure 14: Comparison of attitudes towards various Foursquare sub-functions

The survey revealed what the author had anticipated. The app is scarcely used. The researcher assumes that the low adoption rate is caused by the low popularity of the app, not necessarily by a negative attitude towards check-in services. Because once Foursquare was presented to the digital natives half the sample found it useful and 39% are likely to use it in the future. As expected the familiarity with and the usage intensity of Foursquare sub-functions have a huge impact on the intention to use check-in services in the future.

Due to the low awareness (29%) and consequently the even lower adoption rate (4%) Foursquare has not yet reached critical mass in Germany. According to the innovation diffusion theory, critical mass of interactive media, such as Foursquare, occurs at the point at which enough Germans have adopted the new network so that the app’s further rate of adoption becomes self-sustaining. Critical mass is particularly important for the diffusion of interactive innovations, where each additional adopter increases the utility of the innovation for all adopters (Rogers, 1995, p. 313). The researcher experienced herself that Foursquare only becomes fun, when your friends use it too. To put the small number of users into perspective the author points out that out of her 300 German Facebook friends only ten have a Foursquare account and only three are actively using it, i.e. check-in more than once a week. To increase the utility of Foursquare not only smart phone users have to start using the service, but also businesses. The more businesses participate, the more specials will be available and the more meaningful check-ins will become. To put the very small number of currently active businesses into perspective as well, the researcher points out that amongst the thousands of businesses within all Foursquare categories – food, coffee, shopping etc. – in Hamburg only ten local businesses as well as three brands have an active Foursquare presence, i.e. offer specials.

What is important to understand is that Foursquare positions itself to be much more than just a location sharing service. As elaborated on in 3.4 it is also a social network, a nearby search tool, a review platform, a log book, a friend finder, a coupon portal and a game. Two of the functions – the social network and log book component – are well known since they are part of Facebook, the social network that has reached critical mass long ago and is used by 98% of the digital natives surveyed. The other functions belong to the category of LBS. According to Gartner, a US firm claiming to be the world's leading information technology research and advisory company, and its annually published hype cycle which evaluates the maturity of technologies LBS, will only hit mainstream in one to two years (Gartner, 2011). This means that not even all components of Foursquare, such as radius searches or buddy tracking functions have reached mainstream yet. Therefore it will probably take at least two more years before Foursquare will be adopted by the early majority.

What is also critical for the success of Foursquare – next to its awareness and reaching critical mass – is the diffusion of the hard- and software, such as smart phones and the mobile Internet enabling the use of location sharing systems. Survey results indicate that already 75% of the digital natives questioned have a smart phone. The circulation of smart phones is even predicted to increase and this year for the first time more smart phones than regular cell phones will be sold in Germany (cf. Bitkom, 2012, p. 1). As far as the mobile Internet is concerned, survey results show that 88% of the smart phone users access the Internet with their mobile devices and 96% of those even use the Internet on the go, i.e. out of home. Telecommunication companies react to the changed needs of the consumers and offer unlimited Internet access for as little as 9,95€ a month (cf. Fonic, 2012; Simyo, 2012; Congstar, 2012). Thus, as far as the preconditions for LBS-usage are concerned, the future looks promising.

Summing up, the author points out that the low adoption of Foursquare is mainly caused by the low awareness of check-in services. Even though location sharing systems are very controversial as data sharing is a sensitive topic in Germany, more than half of the digital natives surveyed have a positive attitude towards check-in services. Fifty-six percent even claim that they would use a check-in service in the future if their check-ins are being rewarded. Many sub-functions of Foursquare have already been integrated in daily routines of digital natives: They receive a daily newsletter from Groupon, read Qype reviews of the spa offering an 80% discount on Groupon, check the location of the spa on Google maps and tell their friends that they will be getting a massage for just 14,99 € on Facebook. The author asserts that once they understand that Foursquare combines all these functions in one app, it will quickly reach critical mass – like it has already in some major US cities. Although it will probably never be as popular as Facebook, Foursquare’s relevance might become comparable to Twitter ’s in a couple of years. As the effort of maintaining a Foursquare presence is relatively low and hardly involves any costs, the author asserts that the missing maturity of the service is an opportunity for business owners rather than a threat. By adopting the service now and by establishing a Foursquare presence to gather first experiences, businesses can establish an advance that following businesses can hardly catch up on.

4.2 Design possibilities of Foursquare specials

Businesses that aim at adopting the check-in service should at least create one special. As elaborated on in section 3.4.2, specials are the only means to differentiate one’s business from competing businesses on Foursquare. In fact, specials are nothing else than coupons that are “earned” by checking in. Therefore, analogously to the couponing section (cf. 3.6), design possibilities of Foursquare specials and their application throughout the customer relationship life-cycle will be portrayed in the two following sections.

Although from the users’ point of view the couponing function of Foursquare is not the most attractive one (cf. fig. 7) and although coupon apps are not yet perceived as being particularly useful, it is the most powerful function of Foursquare from the point of view of businesses. Offering a special and hence rewarding at least one customer for checking in demonstrates that a business is actively using Foursquare and that it cares about the check-ins of their customers. In total seven different specials can be created which are arranged on a continuum ranging from customer acquisition oriented to customer retention oriented; the check-in special being the most acquisition oriented and the mayor special being the most retention oriented special (cf. fig. 8). A maximum of two specials can be launched at a time. When designing one of them, a business manager needs to decide on the type of special, the type of reward as well as of the value of the reward. Furthermore the degree of personalization, of customization and the effort to unlock the special has to be determined. Figure 15 visualizes how each characteristic and its intensity can be adjusted depending on the goal of the Foursquare campaign.

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Figure 15: Design possibilities of a Foursquare special

The distribution of Foursquare coupons is not connected to a purchase, but to a check-in, hence these coupons can be classified as after-check-in coupons. Typically, users check into the business – and possibly unlock a special – prior to making a purchase as the reward for checking in often involves a discount on the following purchase thus the time of coupon distribution is always pre-sales. The type of reward can be selected by the business owner. Foursquare specials usually offer freebies, discounts or BOGOF deals and can therefore be categorized as cash and bundling coupons. Next to offering monetary incentives or product bundles the business owner could also decide to offer non-monetary incentives. Non-monetary incentives can be a strong tool to enforce customer loyalty. Analogously to publicly announcing the employee of the month, a business could reward his current mayor by openly displaying his picture in store or e.g. on Facebook and in newsletters sent to existing customers (cf. fig. 16a). Other forms of non-monetary incentives are e.g. a reserved parking spot exclusively for the mayor (cf. fig. 16b) or a fast-lane pass, allowing the most loyal customers to skip the waiting line.

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Figure 16: Non-monetary rewards: a) poster with mayor’s picture at central Park, b) reserved parking space

As far as the degree of generosity is concerned there are of course no limits. Foursquare specials should be attractive enough to reimburse users for checking in. It is difficult to define general guidelines as an acceptable reward depends on the industry of the issuing business and of course the value of the original product. What is extremely limited however is the degree of personalization as well as the degree of customization. Business owners hardly have any flexibility in personalizing the special, as all users receive the same message when unlocking the special. The only way of personalizing the salutation is by starting the message with e.g. “Dear loyal customer of this restaurant”. Customizing the incentive is only possible by offering a selection of rewards the user can choose from. In order to formulate a special as appealing as possible, a business owner could e.g. give away any desert or appetizer instead of specifically offering one slice of apple pie or bruschetta. Redeeming Foursquare specials involves very little effort, as all that needs to be done is show the smart phone screen with the unlock-message to the staff. However, the effort to unlock the reward might be higher, depending on the conditions connected to unlocking the special (cf. fig 8). The author suggests adjusting the degree of generosity based on the effort to unlock the special. Specials that are harder to unlock should be rewarded more generously than specials that are easily unlocked. The timing of the reward is always instantly as the unlock-message, i.e. the credential to be shown to the cashier, is only visible for three hours. Therefore the user has to redeem the special on the spot otherwise he will never be able to profit from the check-in.

4.3 Foursquare specials throughout the customer relationship life-cycle

The goals of a Foursquare campaign can be derived from the company’s marketing and CRM goals. The different designs of specials described above fulfill different goals. Analogously to regular coupons elaborated on in 3.6.2 each stage of the customer relationship life-cycle has a set of special-designs that are best used in the respective stages. The following section will focus on the way of designing specials throughout the customer relationship.

As established in 3.6.2 in the acquisition phase pre-sales cash coupons that instantly reward the customer and that are easily redeemed should be used to create awareness and to trigger first trial. In a Foursquare context that translates to a newbie or check-in special as these can be unlocked the easiest. The reward should be of monetary nature, offering either a discount or a freebie. The value of the coupon should be attractive enough to reimburse for the effort of trying a new place. Business managers should remember that any special offered serves the purpose of creating awareness as offering a special also improves the location’s visibility on Foursquare.

During the development and intensification phase of the customer relationship life-cycle business owners can pursue a variety of goals. Depending on their precise goals they have lots of opportunities to design Foursquare specials accordingly. Generally the type of reward could be anything, i.e. cash coupons, bundling coupons or rewards of non-monetary nature. The author suggests using bundling coupons to exploit cross-, up- and more-sell potential. To deepen the relationship with existing customers also non-monetary rewards are advisable as they can make the customer feel special and enable strong referrals. The value of the reward should again reimburse for the effort to unlock the special which should be higher than in the acquisition phase. After all, Foursquare is also a game and unlocking challenging specials and badges is more fun than unlocking specials with every check-in. As far as the type of special is concerned, the business owner has a broad selection to choose from. All specials have a slightly different function. The loyalty special is most suitable to encourage re-visits, the friends special is best used to incentivize referrals as users need to convince their friends to also check in at the location to unlock the reward and the swarm special is a good means to create memorable experiences, e.g. a flash-mob-like event. The flash special is used to manage capacity and to incentivize visits at low times and is basically a virtual happy hour. Just like the loyalty special, the mayor special incentivizes frequent check-ins. However, only one person at a time (the mayor) is being rewarded. The special, which was designed by the author, with the most positive feedback launched at Central Park was a loyalty special offering any free 0,3l soft or beer drink with every third check-in. The visitors found the effort to unlock the special just right and highly appreciated the generous reward.

During the reactivation phase couponing activities resemble those in the establishment phase. In a Foursquare context the newbie special which was used in the acquisition phase cannot be used to reactivate lost customers, as it only rewards users’ first time check-ins. Check-in specials and possibly also friends or flash specials that are easily unlocked can be a good means to reactivate silent users.

4.4 Foursquare campaign promotion

As mentioned in 4.1 the relatively low awareness of the app among the target group is a major impediment for the broad adoption of Foursquare. Hence, when creating a Foursquare presence and launching a special, a business owner should ensure to communicate his presence on Foursquare and the fact that customers are being rewarded for checking in. The author is convinced that the Foursquare presence is at best communicated on print material within the store, e.g. on table tents, beer coasters, posters in the washrooms or stickers at the entrance, that features a QR code leading smart phone users directly to the business’ Foursquare page or the respective app store (cf. fig 17).

In addition, to counter fight the low awareness, every business owner should encourage cross postings of users’ check-ins to Facebook and Twitter. With every check-in users have the possibility to inform their other networks about their current location. That way not only the business gains publicity, but also Foursquare itself.

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Figure 17: Exemplary Foursquare campaign print material designed by the author to be distributed in store – gastronomy business: posters, bottle neck holders, beer coasters and table tents

However, business owners should not exclusively rely on their customers spreading the word on Facebook, but become active as well. The places’ Foursquare specials as well as e.g. Foursquare contests should be advertised on the business’ fan page. Figure 18 shows two examples of Foursquare promotion on Facebook. The first picture shows a posting in which the loyalty special of Central Park is presented to the audience, the second one shows a contest rewarding the 1000th user who checks in.

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