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November 5, 2009
Posted by Ryan Graves

Customer Development for Foursquare

realfoursquare

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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Jason Gegere's Avatar
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Very good insights there. I thought I would share what we are doing to help bring awareness to the global foursquare efforts. Now you can get stickers, bar coasters, and even window clings that all help let your customers know you are online. Want some? www.HTMLgraphic.com/foursquare

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[...] now is a cash cow“, “Don’t be late to the party, get on Foursquare“, “Customer Development for Foursquare“, and others. Then I had 4 people email Foursquare’s founder, Dens, on the same day. I [...]

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[...] a while now I’ve been writing about Foursquare customer development, sales, and business development. I’ve written about my experience as a foursquare sales rep [...]

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Sounds good. Looking forward to it as well. Congrats on the wedding!

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Sweet. Let's chat in December over the phone...I look forward to the convo. (can't before that b/c I'm getting married)

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I'm finishing up at Princeton, and trying to figure out what I'm going to do after I graduate.

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Yea I know Andrew at Groupon, they have a very compelling model that foursquare could definitely thing about. great idea with the 'area specials' idea. Where are you located?

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Very interesting post. I feel like this is very relevant to what @jonsteinberg posted today about local online advertising. Local small business want calls or leads not clicks. In the case of bars / restaurants they want customers. There are a lot of companies out there trying to solve the local advertising problem, the great thing about foursquare is that because of its social nature local business owners will easily be able to see the value that foursquare is bringing to their business when the user tells the bartender "I found the deal on foursquare" etc. To me this is going to be incredibly more appealing to local business owners than other types of online local advertising. I really like your idea of foursquare removing the need for opt-in participation. The tip and to-do list, but I think they could take this one step further by developing a simple platform where business could post their own weekly/daily specials etc. This could even be maintained by the entire community Wikipedia style. Eventually there could be a "specials in my area" feature where users could find out all of the specials within a certain radius of the users location. Foursquare is such a great tool for local business because its simple and it would not be very time consuming to maintain an advertising campaign. Another cool company that I think is onto a great idea is Groupon (based by you). Foursquare offers a a lot of potential for companies to try to take advantage of this "group buying" idea.

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Sounds good. Looking forward to it as well. Congrats on the wedding!

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Sweet. Let's chat in December over the phone...I look forward to the convo. (can't before that b/c I'm getting married)

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I'm finishing up at Princeton, and trying to figure out what I'm going to do after I graduate.

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Yea I know Andrew at Groupon, they have a very compelling model that foursquare could definitely thing about. great idea with the 'area specials' idea. Where are you located?

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Very interesting post. I feel like this is very relevant to what @jonsteinberg posted today about local online advertising. Local small business want calls or leads not clicks. In the case of bars / restaurants they want customers. There are a lot of companies out there trying to solve the local advertising problem, the great thing about foursquare is that because of its social nature local business owners will easily be able to see the value that foursquare is bringing to their business when the user tells the bartender "I found the deal on foursquare" etc. To me this is going to be incredibly more appealing to local business owners than other types of online local advertising. I really like your idea of foursquare removing the need for opt-in participation. The tip and to-do list, but I think they could take this one step further by developing a simple platform where business could post their own weekly/daily specials etc. This could even be maintained by the entire community Wikipedia style. Eventually there could be a "specials in my area" feature where users could find out all of the specials within a certain radius of the users location. Foursquare is such a great tool for local business because its simple and it would not be very time consuming to maintain an advertising campaign. Another cool company that I think is onto a great idea is Groupon (based by you). Foursquare offers a a lot of potential for companies to try to take advantage of this "group buying" idea.

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Ryan, do you like to eat at Maggianos, Chilis or On the Border?

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  • Hi. I'm Ryan Graves and this is my personal blog. I'm an entrepreneur living in San Francisco, but I'm from San Diego. My wife blogs too, and I love my family.

    I'm the CEO of UberCab the radest startup on earth. Here's more about me, and more about my work.





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