Inc Well | Small Business Advice for Chicago Entrepreneurs
A how-to blog for Chicago business

The Case for Foursquare over Groupon

View Comments (
)
|
Email
|
Print
The Case for Foursquare over Groupon

Most business owners have thought about Groupon and whether they should take advantage of this marketing medium. What they may not have considered is Foursquare as an alternative, or frankly, even know what Foursquare is. This should get you up to speed.

The Basics

Groupon: Users get daily deals. Your business offers a discount on services or products (typically 30 to 50 percent). Groupon keeps half of the difference; you get 50 percent less credit-card processing fees (usually four percent).

Foursquare: A mobile geo-location service where users “check-in” at locations to earn badges, access specials, and socialize.

The first major difference between the two services is profit sharing. Groupon charges the merchant over 50 percent, on the already discounted price, to gain access to their e-mail list of Groupon users. Foursquare’s “merchant specials” option is free to merchants.

There is also more flexibility with Foursquare as a marketing medium. You can provide a special to new customers, customers that check in more than a specific number of times, the mayor discount (most loyal client), and more.

What this means is the Foursquare user is motivated by loyalty, whereas the Groupon user is seeking savings. Businesses try to use Groupon to gain exposure to new customers, but the numbers don’t indicate that happens much.

One reason this happens is because of the economy. It also happens because we have been conditioned to take advantage of coupons from businesses we already support.

What I needed was a good case study of a local company that was using both Groupon and Foursquare…and then I found Dominique.

When I sat down with Dominique Bellamy, the bar and social-media manager from Porkchop on Randolph street in the West Loop, it was to compare results from the two services.

What’s great about Porkchop, other than the absolutely amazing ribs, is it runs identical ads on Groupon and Foursquare. But what service was producing a better result?

She explained both services produced new clients. With live music, a regular crowd and recent article in Chicago Bests Magazine, Porkchop’s seeing lots of new business. Bellamy isn’t excited about profit sharing with Groupon, but she can’t deny that it’s driving new clients. But one she noted Foursquare users were more likely to return sooner.

What This Means for Your Business Marketing

Foursquare users are in the game for check-ins for the social aspects. That they may get discounts is a secondary benefit to the check-in.

Groupon users are only in it for the deals. They hunt, watch, and search local deals for the best discount they can find. Add a 50+ percent revenue share with Groupon and you are now engaged in a system that takes half of an already discounted rate and provides you a client that is deal hungry.

Even though Porkchop is happy with they clients it gets from both Groupon and Foursquare, it’s easy to see why a business may choose to explore Foursquare over Groupon. You get to keep 100 percent of the discounted amount plus a better rate of return form your client.

You might get less clients this week from Foursquare, but the logic for a long term strategy seems to point to foursquare as a better alternative. Getting creative with loyalty programs on Foursquare (buy 10 get one free) and providing discounts to people that spread the word online about your business will build a stronger customer base and more revenue over the next year.

Groupon may be the big name is business deal making, but I would take 50 loyal clients over 200 deal seekers.

Jabez LeBret has authored three books and is a managing partner for Get Noticed Get Found. Over the last nine years he has delivered over 700 keynote addresses in five countries. His main area of expertise is managing Gen Y in the workplace, advanced Facebook strategies, LinkedIn strategies, Google+, SEO, local directory optimization, and online marketing. He recently relocated to Chicago.

Leave Comments