In recent weeks, I’ve become fascinated with the location-based social network called Foursquare. While I’ve been using location-based apps on both my Blackberry and iPhone for a while (Google Maps is a good example), Foursquare is the first service that has made me stop and think about the potential of hyper-local marketing on mobile devices, not just down the line but right now.

Foursquare?

If you haven’t tried Foursquare yet (and most people haven’t), here’s the deal.
Foursquare describes itself as “50% friend-finder, 30% social cityguide, 20% nightlife game.” While in Beta, Foursquare was only available in a few cities, but in recent weeks has opened up for access in any city. Now, whenever you arrive at a new place you can “check in” to tell the service you’re there.

Each time you “check in” you earn points, which go towards a “leaderboard” of you and the people to whom you’ve chosen to connect. If you’ve visited a place more than anyone else in the last 60 days, you become the “mayor.” It’s largely meaningless, but cool to see people who regularly attend places (especially from a marketing potential perspective.) It can also link to your Twitter and Facebook feeds to broadcast to your friends where you are and the different badges you have obtained.

So far, Foursquare is nice and simple. I use it on my iPhone, but it is also available on Android, Blackberry, Windows Mobile, and a few other platform. But, right now, that’s where the service ends. That’s a problem, because the people signing-up for the service can get bored – quickly – if there’s nothing more.

Potential

Right now Foursquare seems to be focused on growing the number of cities it supports and the number of places listed. I currently live in Greensboro, NC, and find myself adding new places alot instead of being able to pull existing places. One would think that a a simple Google Maps API would be able to pull alot of existing data.

The team announced a campaign recently to allow a company to sponsor its homepage by donating to a charity, so they’re clearly open to ideas. So, let’s stop and think for a minute about Foursquare’s room for enhancements.

Friends

At present, when you check Foursquare, you can see where your friends have checked-in in the last three hours. That’s lovely, but if someone was somewhere three hours ago (unless it’s work or home) they’re probably not there any more. However, if you were to check into a hotel downtown, it would be great to know if your buddy Steve had recently checked-in somewhere nearby – you could give him a call and see what he’s up to. Maybe the app could pop up an SMS window or offer to dial his number. Simple, but effective – enabling real-world meetups would be huge for businesses.

Offers

As a new and up-and-coming Foursquare user, the company knows where I hang out. I spend my days at the my apartment/office/school; I go to the same places for dinner a fair bit; I shop for groceries at the same place, etc. That kind of real-world behavior offers an enormous opportunity for them to present me with offers. If I were to be offered $10 off a meal at a competing restaurant in an area in which I already hang out, I’d be highly likely to take advantage of the offer.
It’s a powerful concept, which can branch off in various directions:

• A straight customer acquisition play, pushed to any user in the area;
• A limited-scope acquisition play – offered the first time a user checks in to a place (OrderIt.ca does this when you order from new restaurants through their service – this is a similar concept);
• A loyalty play by tying the offers to a certain number of visits to the location in question – a bit like a rewards card.

Similarly, we’ve already heard about “Mayor Specials” (for example at Coffee Groundz in Houston, Texas) where the mayor of a certain location gets either a free beer or coffee. There’s room for a concerted push in this area, beyond their own website, to the owners of businesses that have proven popular with users.

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Google has made its billions from providing contextually relevant ads to its users. Google Maps goes one further, providing slightly more targeting based on your search. Foursquare can go even deeper, targeting the areas that you frequent.

This is gold. Online retailers have a relatively easy solution to generating traffic – online ads drive people to your website. Real-world businesses have a different problem. It’s harder to drive people through your door through the current web channels.

Imagine, though, that I received ads targeted to the place where I am now, whenever I checked in. As a small business owner, why on earth wouldn’t you want to invest in ads targeted people who you know are right outside your door? The conversions are a little harder to measure than through an e-commerce site, but it’s a powerful concept.

Focus

All of these things require one foundational step: FOCUS.

Foursquare needs to focus on developing a critical mass in its core markets. Only with a significant number of users in a market does Foursquare become a viable investment for businesses. Right now, just a handful of businesses are running a Foursquare promotion, and most of these are in the big cities where Foursquare has been for awhile.

New York, Boston, Toronto – wherever these markets are, the Foursquare team should think about how they can drive deeper adoption of the tool in those communities, first from a consumer perspective and then from a business perspective – where the clear business model lies.

What do you think? Have you tried Foursquare? Where do you think the potential lies?