Is Foursquare the Future of Loyalty Marketing?

Foursquare Co-Founder Dennis Crowley says his location based social network has more than 5 million active users checking into places on their mobile devices.  Social media pundits call Foursquare, which just released a new API last week, the next big thing. But Crowley, who also says he’s logging 5 thousand new registrations each day, calls Foursquare the future of loyalty marketing.

The concept of rewarding customers for coming back is nothing new. But providing rewards in online public spaces brings a public relations component to a marketing tactic that up until now has always been one-to-one. Offering rewards on a service like Foursquare brings a one-to-many component to relationship marketing, because by providing incentives online, marketers can motivate entire communities.

Global research suggests people in mature markets are more concerned about protecting their personal privacy than people in emerging and developing markets. But in the US, privacy concerns appear to be waning in nearly all age brackets, according to Pew Internet.  Crowley didn’t offer a breakdown of Foursquare users by country, by he did report the majority of check-ins being made from outside the US.

There are rumors that Facebook is working on a Facebook phone, which if true, could pose a very serious challenge to Foursquare.  But concerning Foursquare’s strategy for competing with Facebook Places, Crowley says his service is different because it focuses on the use of game mechanics, social dynamics and inspiring adventure. The first differentiator is fair.  Foursquare is more like game than Facebook Places, but when it comes to social dynamics, Facebook’s certainly a much bigger party.

So the question is, are game mechanics enough of a differentiator to sustain Foursquare’s momentum?  Time will tell, but until then, the location-based social networking leader is sure to continue mapping the new models for executing loyalty marketing programs online.

The source material for this blog post was an interview with Dennis Crowley on Dec. 8, 2010 by Loic LeMeur at Le Web 2010 in Paris.