Adding Game Mechanics and Location To Loyalty Cards
Following on from my last blog Adding Location to Loyalty Cards, an area that I feel is really important is game mechanics. One of the problems with loyalty cards is that they are inherently boring and there are lots of them. We live in a world of constant distraction and we want instant gratification. However that gratification doesn’t have to be a free air ticket or turbo food processor with Ginzu knives. It can be as simple as points or recognition and applications today need to evolve as the public become more tech savvy on their mobiles.
What is game mechanics and how is it relevant? Playing games is part of who we human animals are. Games are a natural part of entertainment and education, whether it is a child doing its first jigsaw puzzle, or the All Blacks heading into a rugby match at that international world competition for a cup. Yes, ultimately no matter how passionate we are about success, Graham Henry and the NZRFU themselves said “It’s just a game.”
Games are immensely popular and computer and mobile offers massive revenue potential. Gartner predicts that the global video game industry on its own will generate revenues of over US$112 billion by 2015. That doesn’t even take into consideration mobile. Application developers have been all over Facebook, now on Google+ and on devices such as iPhone, iPad and Android and now developers of smart location based games and marketing applications are heading the same way.
Developers are looking to use our interest and passion for playing games to influence the behaviour of consumers and it is working. One obvious area is in the retail, travel, tourism, attraction, hospitality and entertainment industries. Of course as I have outlined in many recent blogs, loyalty is a key aspect that all of these industries are looking for, or in other words, profitable repeat business.
So what aspects should a loyalty application include. A major one is achievements. I’ve talked about reward and that rewards don’t have to be tangible items. A reward can be points such as the points used by Foursquare when you check into a location. They also have badges and mayorships which are either the reward itself or their may be special deals or offers made to those people who come in regularly. The new Tap City game allows you to earn virtual dollars for checking in. One of the great things about group loyalty operations is the ability to cross market, for example using a passport concept where the more locations you check in to, the more rewards you get.
The appointment dynamic is extremely powerful. This is where you want people to do something at either a predetermined time or an ad hoc time. For example a restaurant that is always quiet between 3PM and 5PM on a particular day of the week might offer incentives within the application to get more business at that time of day. The concept I like the most, is pushing deals when you have inventory you want to use in a hurry. An example might be the special of the day in a restaurant where you haven’t sold as much as you catered for. The classic story I often use of a jet boat that is going out in 20 minutes with 5 empty seats. This is a perfect opportunity to push a deal to people who are close by and have opted in to be offered deals. The cost differential between having 4 or 9 passengers is negligible but the fun and entertainment factor of 9 people screaming as the boat does a 360 degree spin is significantly greater for all, including the 4 who paid full price. There is also a potential dynamic of more people seeing them having fun and therefore wanting to have a go themselves. The same could apply to any attraction, like the luges in Auckland and Queenstown.
I can come up with a hundred concepts for different types of locations for cafe’s, restaurants, attractions, theatres, travel, accommodation, entertainment, retail, sport, tourism and so can you.
I will continue this blog next week with more thoughts on game mechanics or gamification that you might like to consider in your location based application. Remember, GeoSmart has all the data and tools you ned to make these ideas possible and whilst we don’t develop these sorts of applications ourselves, we have many partners who are keen to assist you if you want to take advantage of the opportunities now possible because of the large number of people using location aware mobiles. The question is how much extra business would you like?
Maybe you would like to join the discussion and leave a comment of your own to add to the mix?
Using Location in Loyalty Cards
Loyalty cards haven’t fundamentally changed the way they do business for many years. There are the fans and the people who actively look for deals, but most of the people we have spoken to recently have said that the time they realise there is an opportunity is when they are at the checkout and the cashier asks if they have their Fly Buys or whatever card. This obviously is not generating increased sales or revenue.
There are huge opportunities for loyalty cards to exploit location with the large number of people now using Smartphones fitted with GPS. Effectively a Smartphone application can therefore identify when a card holder is near a store or participating retailer and can potentially be offered a deal using push technology. We are hugely spoiled for choice these days as retailers flock near each other to try to win your business. For example, if you go to AA Maps and do a search for ‘Hardware Albany’ you will come up with 48 results! That’s a huge range of options in one area within around a 5km radius.
A large number of these retailers spend a lot of money on advertising in newspapers, magazines, letter box drops, eDm’s and much more. Many of them are involved in loyalty card programs which provide additional opportunities for targeted marketing. These are all very expensive media and the approach uses often sophisticated targetting using demographics tools, such as GeoSmart’s BIonaMap discussed in a number of our blogs such as this one using demographics for a lawn mowing franchise. By understanding what your target market is, you can identify the best place to locate your store and which areas are best for letter box marketing. Of course success requires that your target market is open to buy and looking for your product.
If a consumer is looking for a lawn mower and your mailer arrives in their letter box, there is the potential that they will visit your store, but how often do they buy lawn mowers and how often do they read your mail drop? The example illustrated here shows homes where the owner occupancy is 70% or greater, a perfect target for DIY sales using BIonaMAP from GeoSmart.
In coming blogs I will post examples of how a loyalty card smartphone application using GPS location could integrate with retail Point of Sale systems, inventory management and really understand what a customer is looking for, sending meaningful offers to consumers when they are looking for product and are in proximity. If you make things easy for customers and have a meaningful relationship with you, they will buy your products over your competitors products, but to effectively do that, you (your technology systems) really do need to understand who your customers are and what their needs and interests are. They want to give you their money and it isn’t necessarily about special pricing.
Where should you start? Probably by asking what your loyalty card company is doing about proximity based marketing and check ins (which we have discussed frequently on this blog). GeoSmart is keen to support local loyalty card companies and application developers and we are convinced that there are huge opportunities to really bring in serious retail profits and the opportunity to develop genuine loyalty relationships. Who wants an unfair advantage? If that’s you, why not contact us?
Feel free to ask questions here or to leave a comment. Bookmark this page for upcoming blogs on how a loyalty card company can use this technology to help their partners win more business.
Sead Latest in IT Seminar – Mobile Technology
A couple of weeks ago our Sales & Marketing Manager, Luigi Cappel had the privilege of presenting to a group of ICT professionals at the Mercure Hotel hosted by Sead I.T. People. The presentation in the series of Sead Latest in IT Seminar was on Mobile Marketing.
The audience came from a wide range of industries and were encouraged to remember the passion that encouraged them to join the industry as innovators in their companies, showing them how to use technology to grow their companies, solving business problems, improving efficiencies and increasing productivity and profit.
Covering topics including the latest Gartner Hype Cycle predictions, Location and Proximity Based Marketing, Check In Marketing, Mobile Computing, QR Codes, Business Intelligence using maps and the hot topic of the use of personal devices in a corporate market, there was something in it for everyone. Case studies illustrated not only practical use of technology, but professional processes to ensure that projects were well designed for success.
The presentation outlined the ongoing chasm between people in the ICT profession and their colleagues when it came to understanding and use of new technologies, particularly mobile and location based. Luigi encouraged the audience ranging from consultants to CIO’s to consider how they can educate and encourage their companies to understand the new technologies and how they fit into their business frameworks. There are great opportunities for IT people to be welcomed back into the boardroom by working closely with the management team to show them how to implement and benefit from new technologies, safely and securely.
Consumers are Checking In to Retail Stores
In my previous blog I pointed out that that retailers were not adopting strategies for check in location based marketing. In the blog prior to that I quoted Comstat research that shows that in the first 3 months of this year 16.7 million people check into locations using Foursquare and similar applications, representing 7.1% of the total mobile population. I don’t know what the statistics are for New Zealand, but I suspect the numbers are somewhere between 5 and 7% of the NZ mobile user population.
Comstat also came up with some interesting statistics about the demographics of those users.
Firstly a lot of people think this is technology for men, that they are the geeks, but of course women love to shop, they are social shoppers and as the graph shows, there are in fact more women than men checking in!
The predominant age group should be no surprise, we would expect 18-44 year olds to be the most tech savvy and of course having disposable income for Smartphones which are the predominant mobile used for check ins. Again from Comstat for the first 3 months of this year in the USA Android pipped Apple at 36.6% to 33.7$ of devices used for checking in.
The largest group of users were in full time employment 46.6% and the second largest at 23.3% were full time students.
Just as a footnote to my blog on Group Deals and Bricks and Mortar Business there was an interesting story in eMarketer a couple of days ago. The story contained statistics that from research by Cooper Murphy Copywriters in July this year, 82% of Groupon users expressed dissatisfaction with the level of repeat business they generated from their campaigns and 49% would not use them again. This is interesting when many companies use daily deal type promotions to introduce new customers to their stores.
Of course you know where I am going with this series and that is that Location or Proximity Based Marketing offers far more compelling tools for retailers and other destination businesses to entice people into their premises. Obviously a fundamental component of that is not just how to get them to come to you, but how to get them there when you want them and to have them purchase or consume products or services that achieve your goals. For a retailer that might be those same products you were quitting on a daily deal, but like the Auckland superette owner who has been selling milk at 10 cents below cost as a loss leader, part of the strategy behind that is the opportunity to merchandise other products those same people will buy with a healthy profit margin. If you have an aged stock problem, location based marketing can get people into your store and while they enjoy the low price of your distressed inventory, put something at eye level in from of them that increases the profit of your sale. Cherry pickers do not make you profit.
Likewise if you have a cafe or restaurant, don’t just offer a free coffee with $5 worth of food. Offer it only at times when your business is empty and not to the people who were coming in anyway, they are dealt with using your normal loyalty program. Of course loyalty marketing is also very important and fits into location, but you’re going to have to come back to a future blog for that.
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Retailers are not flocking to take advantage of free check in marketing services
I did some research looking for New Zealand business success stories with check in marketing. I really struggled to find any. I went and visited a number of businesses in retail and hospitality and most of them didn’t know what foursquare was. One gentleman in a cafe told me he knew about it, but was too busy to learn how to do it. I pointed out that it was really easy, but he said he really didn’t have time and then sat down to have a coffee with one of his customers. I understand on further research that this is how he keeps a loyal clientele which is great, but he could always find a student or someone else to do it for him.
I spoke to a number of people in retail that gave me a similar story. It seems, as is often the case that most managers are too busy working on their business to work in it. This is a trap in my humble opinion. It’s common knowledge that businesses like cafe’s and restaurants to name a couple, change hands about every 18 months, a classic bell curve that starts with ambitions and energy, hard work, great service and develops cash flow. Then they get into a pattern or flow of how they do business, stop innovating, perhaps stop having fun and start telling themselves how hard business is. When they started fresh, people enjoyed the new business, new products and faces and the passion flowing from the owner and staff.
The thing is, we have an amazing opportunity to capitalise on location here. Remember the old rule of successful retail “Location, Location, Location”? Well it isn’t enough to stay fresh these days. As consumers we are spoiled for choices and sometimes we need a push to either stay loyal, or to try something new. Location Based Marketing is as simple as going to foursquare and claiming your business. To be honest, claiming your business can be a little difficult in New Zealand from a validation perspective if you are in a non residential street (where NZ Post do not deliver mail) and I have tried to contact them about this, but you should persist.
The great thing with foursquare for now is that they provide you with lots of very easy ways to set up promotion. You really don’t even have to be marketing savvy, it’s all laid out for you. Go and have a look and check out the Manager Tools. It is so easy. If you need more help, follow this blog and we will explain how to do it.
People are checking into your store and stores near you all the time, why not give them a reason to come into yours, unless you have more customers than you can deal with. The numbers of people using check in services is growing greatly.
Have a look at the bell curve above and imagine this is your business. How long have you been in business? Have a look at your financials, now see if you can plot them on the curve. Is business growing? Are you on the rise? Have you peaked, would you like to keep the rise going? If you are reading this, maybe you have made some time to work on your business, which is great. Know someone in business who could use a little help? Tell them about this blog. There is more information coming on how to do these things.
If you are already using check in services for your business, we would love you to leave a comment. If you are part of a chain or collaborative group and are not currently doing anything in this area, or and agency wanting ideas for your client, GeoSmart would love to help point you in the right direction. We don’t create loyalty applications, but we have business partners and clients who do. We also welcome questions.
I’ll leave you with a link to an article on BusinessDay News which suggests that Location Based Marketing could be worth US$6.2 Billion within a few years. Maybe there is something to it? Would you like a slice?
Check Ins
We were at the Auckland ICT meeting a couple of night’s ago and it was interesting to corroborate our experience in the field with associates that there is both a chasm between people in the ICT industry and even their own friends and family in retail and other bricks and mortar industry when it comes to use of social media and proximity based marketing.
A couple of us presented at the Mobile Marketing Forum last month and felt that we were preaching to the converted and disappointed that only 4 bricks and mortar companies attended the conference when they were potentially the ones with the most to gain from being there. Generally what we found was that businesses either didn’t have a clue what checking in means, or if they did, don’t make the time to understand and utilise what could be a much better tool for them than dumping stock on daily deal type sites.
So here is a tiny bit of Check In 101:
Fundamentally the concept of checking in is to use a mobile application on a smart phone that is location aware, such as Foursquare, to register that the user is at a particular location such as a landmark or a business / shop. The location is verified using GPS or GPS assisted technology in the mobile. There are gaming elements such as badges or points and often tangible rewards such as discounts. People that visit a particular location enough times gain the title of Mayor of that location.
What is interesting and most retail business operators aren’t aware of is that this takes place, whether or not they are personally involved, which means people are entering their businesses and creating marketing opportunities, but are not being engaged in this medium. Most applications allow people to leave comments or tips, make ‘friends’ who are also allowed to see their location and make recommendations which could be positive, but could also be very negative. This means that even if the proprietor can’t make time to use these tools to engage and attract business, they may be losing business without knowing it as well. A simple comment such as “The toilets are clean here:(” or “The line was so long, I went next door” could cost not only immediate business, but steer people away long into the future.
The applications typically have interfaces to social media applications such as Twitter and Facebook, so the comments, recommendations and otherwise are creating a digital footprint that can be difficult if not impossible to remove.
Recent statistics from Comscore this year suggest that around 16.7 million individual people in the USA checked in to locations using Foursquare and similar applications over the first 3 months. This represents around 7% of the total mobile population. Recent statistics in June 2011 suggest that the UK and Western Europe currently sits at around 5%. That is a lot of people. People just like them may be in the area and walking right past your business.
Group Deals and Bricks and Mortar Business
The number of one day deal sites in New Zealand grows every day. There are dozens of them and many of them now have a separate site for each region with deals for experiences, dining, accommodation, attractions and activities. This is great for bargain seekers, but doesn’t necessarily do a lot for bricks and mortar businesses.
There are scenarios where they have value, for example if a business has very large volumes of aged stock that they need to quit. It can also be useful for new businesses to make customers aware they exist. They also come at a price. The more powerful the site, the more they charge with fees being anything up to 40% of the sale of each item.
If you want to attract new customers to your bricks and mortar store, then obviously you want a coupon or something that needs to be taken to the store for redemption. Even if you are quitting aged stock, there may be advantages in getting people into your store in the hope that they will purchase other products while they are there. There are also benefits to both the customer and the retailer in not having the time, packaging and distribution costs in delivering product to the buyer. More on this in future blogs, looking at check in applications as opposed to group deals.
A study by Rice University found that 32% of businesses surveyed who used Groupon for promotions said they were unprofitable and 40% said they would not do it again. A major issue cited in the research was cannibalising existing business. Mashable quoted a statistic that less than 20% of people who purchased deals where they had to go to a store to redeem them, returned subsequently to buy full priced product.
So the question which I will come to in upcoming blogs is how to get people into your store at quiet times and more often. I believe the answer is in locations based services such as check ins and proximity based marketing. I welcome your experience or opinion on this.
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