November 5, 2009
Posted by Ryan Graves
Customer Development for Foursquare
In a recent project, I’ve been doing customer development here in Chicago to help out Foursquare. If you’re not familiar with customer development it’s gathering feedback from potential customer on what they’d like to see from your product in order for it to be of value to them. It’s been a fun experiment in biz dev and a wake up call to the difficulties of door to door sales pitches, but I’ve received a lot of great feedback. Below I’d like to share more of the findings of the experiment. Here’s post 1 and post 2.
Restaurants are scared of new
The overwhelming theme in speaking with restaurateurs is that ‘new‘ is scary. The reason why new is scary is because new costs them time. Time seemed to be their most valuable asset and learning takes time, changing takes time, adopting new takes time. In the tech world it may even be our business to know what the next trend will be, that doesn’t matter in restaurants.
Problem: I’ve found that only savvy business owners get the benefit of online. Forget iPhone apps and mobile social computing, they may not even have a web enable device in their restaurant at all. A few solutions to these problems rose to the surface in my discussions that I think will ease the adoption issue of a new technology.
Solution: Remove the need for opt-in participation. This at first might sound scary but hold on. This isn’t a “we’re going to force you to participate” play, it’s a “we’re going to help you whether you like it or not play”. If foursquare found existing deals that bars and restaurants were running to pull into the system they wouldn’t need to convince bars/restaurants to opt-in. If you know Thursday is $1 beer night at the local watering hole because of the drink specials app, post that deal within foursquare. Then when the user goes, they’ll say to the bar tender, “I found this deal on foursquare, this is awesome”. The user becomes the sales rep, and the bar becomes intimately aware of the value foursquare provides.
Cost of current coupon system
As a part of this round of feedback, I spoke with a marketing professional who sells to restaurants often. I wanted to know what his challenges were and how he overcame them. As always, if you’re doing something tough you might as well get smart experienced folks to give you advice. Why bang your head against the same door they did?
In this conversation I learned some techniques to make my pitch ‘sexy’ to bar and restaurant owners.
Showing them their costs. By figuring out what they were already spending on coupons, deals, and existing promotions it was very easy to show them the value of foursquare. Many restaurants spend $500/month or more on ‘Money Mailer’ and other coupon systems, and they have metrics on the amount of people that actually take advantage of the deals. Well guess what, with foursquare the cost of distribution (virality) is significantly lower, thus inserting foursquare as your promotion system returns a much higher ROI. It’s simple, bar shares a deal with foursquare, foursquare share the deals with users, users come to your bar. 1, 2, 3. Cash money.
Limiting the downside of excess coupons
One thing I found when talking to bar/restaurant owners is a fear of the downside. I think maybe they’re pessimists by nature, not sure. Either way, a common concern they had with the foursquare model is, “what if too many people come in for the deal, how can I control it?” They were worried that the Mayor would change everyday and they’d be stuck giving out tons of freebies. A feature that was requested more than once is the ability to record the # of times a person takes advantage of the deal giving them the ability limit abuse. Whether by limiting point incentives or other “in-game” techniques, I don’t see this as being a long term problem.
I’m sure I’ll have more in a couple weeks…
image via flickr
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