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Foursquare + Square = Killer Small Business Social CRM

Parker Smith wrote a piece that got me thinking. In Foursquare: Democratizing the Loyalty Program, he posits that Foursquare could be the loyalty program provider to small businesses. I think he’s right.

Then I noticed these identical product benefits touted by the companies themselves, Foursquare and Jack Dorsey’s Square:

For example, foursquare can tell you how many times a customer has been to your venue or the frequency of their visits. Many venues are now using this data to reward their most loyal customers with freebies or discounts.

Foursquare

If you frequent a place that accepts Square, we’ll let them know you’re a repeat customer. That 10th cappuccino may be on the house, no paper coffee card required.

Square

Would you look at that? Are these guys going to end up competing with one another?

A few years back, I was the personalized marketing product manager at Pay By Touch, which offered the ability to pay for items with biometrics (i.e. your finger). Once you could identify the customer and her spending, interesting loyalty program solutions became available.

Which brings me to what Foursquare and Square are doing. Square is still in beta mode, so it’s hard to predict fully its uptake in the market. But let’s assume Twitter co-founder Jack Dorsey and his backer, Khosla Ventures, are on top of this opportunity. And Foursquare is growing quickly.

Each provides pieces of what would be needed for a small business CRM. The companies are independent, but I can see new value created if they were to work together.

There is no CRM for offline small businesses

At least, not for businesses that operate in the physical world. Dry cleaners, restaurateurs, retailers and other small businesses. They may have loyalty punch cards, but generally don’t have any programmatic way to track and engage customers.

But they could use CRM as much as a large business does. I like this customer lifecycle framework by Gary Hawkins in Customer Intelligence:

It shows the stages of a business’s customers: new, existing, declining, lapsing. And the ability to tier active customers also is valuable. Each tier has its own dynamics. There is much more to CRM than a simple frequency loyalty program. It’s a deeper level understanding of the customer base. Understanding the statuses of customers from this point of view is powerful marketing information.

Modern CRM is more than the analytics and outbound campaigns. The social CRM movement is gaining strength, and it’s incorporating many social network principles into the customer engagement process.

And it’s not readily available for small businesses that operate primarily in the “offline” world. Unlike the digital platforms of e-commerce, offline transactions are not measured. At least not beyond the credit card transaction for consumer transactions.

This is an area of enormous opportunity. The company that solves the CRM issue for the 4.3 million small businesses in the U.S. has an enormous opportunity in front of it.

Complementary CRM strengths of  Foursquare and Square

The two services each bring unique strengths to a small business CRM solution. Take a look:

Start with the commonality Diagram. Foursquare and Square both provide:

  • Customer identity = who are your customers?
  • Visit frequency = Foursquare check-ins, or Square credit card swipes

When you see them both tout free products for repeat customers, this is how they’d do it. Identity + frequency = loyalty punch card.

But what about the services’ other features?

Foursquare provides the social fuel:

  • Social incentives: It’s fun to build up points relative to your friends, show off your Foursquare badges. And who doesn’t want to be Mayor of some local business?
  • Social interactions: People use Foursquare to to broadcast their location. This lets other meet up with them. Or in the case of crowded venues, find someone else there.
  • Game dynamics: This reporting in on your locations is an addictive game for many. It’s cool to get your first check-in daily bonus, to unlock a new location (hooray!) and oust someone as the Mayor of a place.
  • Social media word of mouth: By following people on Foursquare or Twitter, you can see where your network hangs out. This raise awareness for businesses, an incredibly important benefit.

Here’s an example on that last point. Socialtext CEO Eugene Lee often tweets this:

I’m at Coupa Cafe (538 Ramona St, at University Ave, Palo Alto). http://4sq.com/IITeJ

I don’t spend much time in Palo Alto, and I’d never heard of Coupa Cafe. But you know what? If I find myself in Palo Alto needing lunch or a coffee, guess which place I’d specifically look for?

Square provides the transaction processing power:

  • Dollar spend: Incredibly valuable information to track. Does someone come in a couple times a week, but spend heavily on food? Or do they frequent the cafe more often, but only buy coffee? Dollars spent is an important complement to simple visit frequency.
  • In-the-flow process: Square captures it’s information in-the-flow. That is, you don’t have to do anything extra. You’re have to pay, it’s part of the normal process. Foursquare requires a check-in, which is outside-the-flow of regular small business-customer interactions.
  • Transaction handling: By owning the transaction handling, Square can implement low-maintenance marketing programs. Businesses can create promotions tied to specific accounts, and execute them at the point-of-sale via Square.
  • Merchant account process: The process of getting businesses signed up for these programs isn”t trivial. It is standardized, but there’s a lot to tackle to provide good service. Some early reports indicate that Square has a superior merchant account set-up process, which may be its best innovation.

The in-the-flow nature of Square should not be underestimated. Getting adoption for any service is tough, and removing whatever friction to participation that exists is a critical element. This commenter on a post about Foursquare makes a good point:

The sort of people who will stop and record their restaurant visits and who have friends who also stop and record their restaurant visits and then write reviews of same. And while that’s a prime demographic, I’m thinking it’s not nearly as large as you’d hope. Most people just don’t have the time or inclination to “play” FourSquare.

This is why putting the process of playing Foursquare in-the-flow would be valuable.

Making it happen

The challenge is in connecting a credit card transaction to a person’s Foursquare account. Then I realized Square’s intentions are much bigger than a simple transaction swipe. The company lets people set up their personal accounts on Square. I assume you will enter your credit card number online, and when that number comes through in a transaction, it’s associated to your Square account. Thus Square can manage loyalty punch card programs.

Well, why not associate your Foursquare account to your Square account? When you swipe your credit card at the local business, Square processes the transaction the way it normally does. But it also does something else. It prompts an update to your Foursquare account.

I’m not talking a Blippy-style broadcast of your credit card purchase amount. Rather, your location status is updated automatically on Foursquare. Just as if you’d updated from your iPhone.

The small business then gets the social part of the CRM program.

What do you think? Two great tastes that taste great together? Small business could use the combined elements of Foursquare and Square.

I’m @bhc3 on Twitter

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Data Privacy, Data Ownership and Who You Trust

facebook-google-safeway-chase

In the recent imbroglio over what exactly Facebook was saying in its (now-reversed) updated Terms of Service (TOS), I found myself on the opposite side of a lot of smart people in terms of what it meant. There was a lot of concern that Facebook was essentially claiming the right to commercialize any content its members uploaded to the social network. As I said in a couple posts, it didn’t strike me that way.

In other words, I didn’t think the terms or the intent matched the hyperbole I was seeing.

So I ask why was I so sanguine while others were so worried? Jeremiah Owyang asked readers whether they had deleted their Facebook accounts. The most common response seems to be that they removed their photos, although I don’t expect that reaction to be the norm. Personally, I’ll keep uploading photos without concern.

Why? It’s not about the terms. It’s about trust. I trust Facebook.

We All Trust Companies of Some Type

In order to live in society, we have to trust companies. If you didn’t, you’d never buy anything, or you’d spend a lot of time carefully inspecting everything you purchase. We don’t do that of course.

Quickly, here’s why I trust Facebook, no matter the interpretation of their TOS:

  • Established company with an imperfect, but acceptable rack record
  • Companies that want to be profitable and go public don’t trash their relationship with 175 million members
  • In the event Facebook ever started unilaterally using and selling its members’ content, the backlash would be 1,000,000 times greater than the Motrin Moms episode

I have no reason to distrust Facebook. Others apparently do. I sort of understand that, although no one who expressed their suspicions of Facebook could give an actual example of how the social network has done them harm. I think for a lot of people, this Facebook TOS story was a vehicle to vent their general concerns about social networks and the tension of making our personal info public. People like to participate in social media, but there’s always this dark side of concern in the back of their minds of what people will do with that info. Or it’s front of mind for a vocal minority.

In a previous job at biometric company Pay By Touch, I remember these concerns well. There was an understandable concern about some private company holding your biometric, personal and financial information. And yet plenty of people did participate.

Clearly, Facebook does have some work to continue building out people’s trust in the site. But as people watch Facebook, I thought it’d be instructive to look at the the terms of service for some other popular products and services that people use.

The idea here is to ask whether you are skeptical of Facebook but using other services that seem to have as much potential for violating data privacy and data ownership. If you’re not questioning these other services, why not?

Google’s TOS

Let me start with this comparison of Google’s TOS and Facebook’s TOS (initial updated version from The Consumerist):

google-facebook-tos-comparison

Notice the similarities in those clauses. Facebook’s TOS looks like it used Google’s TOS  as a starter. The Facebook TOS story started on the news that the site had dropped two lines saying they no longer had such a license when you quit Facebook. By dropping those lines, it appeared they were claiming a license to your IP forever.

Yet the controversy I saw was less on that issue, and more on concerns that Facebook intended to grab all users’ content and start commercializing it. Let me put it another way. It wasn’t like bloggers said, “As long as you’re a member of Facebook, you’re fine letting them commercialize your content without your permission. Only consider that an issue when you quit Facebook.” No, it became an intellectual property issue, regardless of whether you are a current member or have quit.

Google has similar terms. Yet Google doesn’t face the same issue for having essentially the same terms as Facebook. Why?

Safeway Club Card

You may have a loyalty card with your local grocer. I do – the Safeway Club Card. If you don’t use a Club Card, you pay a higher shelf price for many products. Gotta get that discount!

So Safeway is collecting name, address info and purchase history for its shoppers – via the Club Card and online. Let’s see what Safeway’s privacy terms look like:

safeway-terms-of-svc

Really, not too bad, eh? Sure, your private information may end up in the hands of third parties, but it doesn’t appear to be to commercialize it. But check out that second-to-last paragraph. Safeway will hang on to your private information for as long as it deems necessary. Sort of like Facebook.

Safeway also reserves the right to update its privacy policy at any time, without informing you. Which is one of those fears people have about Facebook.

If you wanted to stir it up with Safeway, you’d blog something like: “What’s to stop Safeway from sharing your purchase history with insurance companies? Buy too many fatty snack foods? We’re raising your insurance rates!”

Yet we continue to shop at Safeway, and no one raises its TOS as an issue. Why?

Chase Credit Card

I love my Chase credit card. I get 5% back on groceries and gas. Great program. And most people have at least one credit card.

You ever look at the terms of service there? Here is Chase’s privacy policy:

chase-credit-card-privacy-policy

Chase will share information about you with outside companies. In other words, you do not have complete control over your own transaction information. Even if you indicate a preference for your information not to be shared, it still will be made available to others. Kudos to Chase for its notification policy though, if they “broaden their information sharing practices.”

Still, aren’t you worried about this? All those purchases you’ve made that maybe you don’t want to the world to know about? They could end up sold to the highest bidder! Well, no, that won’t happen.

But certainly Chase’s policy contains elements that should scare people the way Facebook’s TOS did. Yet we continue to use our credit cards. Why?

Who Are You Trusting Right Now?

I had an energetic discussion about this with several people in a FriendFeed thread. After that, I’ve come to this conclusion:

If you trust a company, it doesn’t matter what their terms of service are.

If you don’t trust a company, it doesn’t matter what their terms of service are.

So why the ongoing distrust of Facebook. That’s a topic worthy of exploration. I’ve seen two plausible explanations out there.

Alexander Van Elsas says that the lack of clarity about Facebook’s ultimate revenue model injects uncertainty into its relationship with its members. In other words, it’s hard to be certain the company won’t lurch into some egregious territory with members’ content. I think there’s some truth in that, particularly for those tracking the industry closely.

In her interview with Facebook’s Chief Privacy Officer, Sarah Lacy asks whether Facebook is bumping into issues caused by its being at the leading edge of social networking. I think there’s truth here too. Grocery loyalty cards that track your spending are not without some controversy. Credit cards are not immune either. I imagine when these programs were first introduced, there was a lot of concern about privacy and data ownership.

How about you? Who are you trusting today with your personal information?

*****

See this post on FriendFeed: http://friendfeed.com/search?required=q&q=%22Data+Privacy%22+%22Data+Ownership%22+%22Who+You+Trust%22

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