Understanding Location-Based Social Networks

Article Written By: Wendy Yang

Location-based social networks such as Foursquare have become an inexpensive and effective way for small businesses to get their names out and keep customers coming back. A customer can "check-in" to a business and share that information with friends, basically telling friends where they're physically located using their smartphones.

These services have become popular with tech-savvy urbanites who want to share information about their favorite restaurants, bars, and other places with their friends. Gaming elements like points, badges, and honorary titles, such as "mayor," engage users and encourage repeat visits to a store.

Location-Based social networks can be an effective way for small businesses to promote themselves. A place with many check-ins has effectively earned a seal of approval, which provides "street cred" for the business. Unlike a Facebook "like" button where a business can only be "liked" by a user once, a loyal customer can check in to a business many times.

Businesses can reward loyal customers for repeatedly checking in to a place with a free gift. Many bars and restaurants give the "mayor" a freebie like a complimentary drink, and some businesses offer a gift after the fifth or tenth check-in. These promotions are similar to traditional loyalty programs and tend to reward repeat customers. Customers can also be asked to leave a digital tip for other users, such as "store hours vary, call to verify" to earn a reward.

Although special deals are why some users use location-based social networks, bragging rights such as badges and titles are the big prize. Users compete to collect "badges," winning, for example, the "Gym Rat" badge for gym check-ins. Some badges are sponsored.

Some of the popular location-based services are Foursquare (which has 4 million users), Gowalla, Whrrl, and Brightkite. Local review site Yelp added a check-in feature this year, although businesses have been able to set up special offers for free for the past couple of years.

Facebook recently launched its own location check-in service called Places. This service lets mobile users check in to any place in Facebook's Places database, and these check-ins are then posted back to users' walls and their friends' feeds. Businesses can claim their places. What does this mean for your business? When customers check in to your place, these check-ins show up in Facebook News Feeds, letting potential new customers know about your business.

About the Author

Wendy Yang is a co-founder of HoursMap a local business hours directory where you can find store hours.

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