Where the online and real worlds collide

Location-based marketing (LBM) is changing the way companies market to consumers. From Foursquare specials and Facebook deals to Deal of the Day group coupons, consumers are checking in, sharing offers and spreading the word through their social networks.

I sat down with Rob Reed, CEO of MomentFeed, the location-based analytic experts, to explore the opportunities of this marketing revolution.

Tim: How does your company, MomentFeed, help location-based marketers?

Rob: As we all know, location-based marketing engages consumers when they are in a particular location using a mobile device. What MomentFeed does it ensure that those consumer engagements bear fruit in terms of sales. We work with companies and their agencies to develop strategies that help them get the most value from their customer relationships — the proverbial biggest bang for their LBM buck. We provide the tools and intelligence to build and manage their customer relationships over the long-term.

Tim: How do you do that?

Rob: We aggregate the data from across all the geo-social networks – from Foursquare, Facebook, Twitter, Gowella, etc — to present a 360-degree look at your consumer’s behaviour in the real world. Besides providing the analytics — the tools that measure the effectiveness of this channel, we also design and manage campaigns and CRM platforms to optimize the ROI.

Tim: And how do you achieve that? Give us an example.

Rob: Sure. Three guys walk in to a Starbucks…

Tim: Sounds like a joke?

Rob: (LAUGHS) … so while these guys are waiting for their order, one guy checks in with Foursquare and pushes it to Twitter. The next guy takes a photo with his pals on Instagram and posts it to Facebook. The third guy writes a review about the service on Yelp. Now even though all three are at Starbucks, each is indicating a slightly different level of engagement with the brand. We have the tools that analyze these three engagements and assign values to each.

Tim: So it’s not just where a consumer is anymore but how engaged in the brand they are while they’re at that location?

Rob: Exactly. And how to encourage, reciprocate, and optimize those engagements. Foursquare, Facebook, Gowalla, Yelp, Twitter, and other services are providing the basic tools, but each part of a larger ecosystem…one that also includes a company’s POS system. Our solution helps companies leverage the location-based engagement ecosystem as a whole.

Tim: Can a company use location engagement analytics to build its customer database or customer loyalty?

Rob: Yes. And this is actually revolutionizing the coupon by making delivering immediate as well as long-term value. In the traditional model, Jamba Juice puts out a 2-for-1 coupon via print, digital, or direct mail. Anyone can pick up this coupon, redeem it and get a free smoothie. The problem with this model is that, first, you don’t know if that person was already a loyal customer who would have bought anyways. If so, you’ve lost money. Or someone might just take up that one offer and never come back. But what if you take that coupon and wrap it into a check-in? Now they have to check-in on, say, Facebook to unlock the coupon. You’ve just added social, word-of-mouth value to that coupon because now they’re sharing that experience with their friends, who might also be interested in the offer. In addition, now that you have them engaged, you can get them to opt-in to your CRM system. So those are two huge advantages that traditional couponing doesn’t offer, and companies can do all of this via MomentFeed.

Tim: So are you able to weight the value of different engagements and then encourage customers to continue that engagement?

Rob: Yes. In terms of our Engagement Score as a Key Performance Indicator, it’s much like time spent and pages viewed for web analytics. If someone checks-in and then just closes the app, we consider this a weak engagement because you don’t really know why the person checked-in. If they’re just telling their friends where they are, then the location is incidental. But if they push it to Twitter or Facebook … if they take a photo or share any other part of the brand experience, it represents a much deeper and more valuable engagement. All of this needs to be measured.

Tim: So clients can promote more than just a location?

Rob: Exactly. It differentiates between those who are just using this as a local social networking utility and those that are actually engaging with the brand. They both have value, but the later has much more value for the brand. Obviously, if the person then opts into your CRM, that is as good as you can hope for from a consumer engagement.

Tim: More changes are coming with things like Foursquare specials and Facebook deals. How important is it for marketers to add location-based engagement to their marketing mix?

Rob: Right now, we are at the tip of the iceberg with location-based engagement as a marketing and CRM channel. That’s because smartphone adoption is still relatively low. Because that is the only limiting factor…people need a smartphone to participate. We are currently between 25-30% adoption in the US. By the end of the year, we will be around 50%, and by 2015 we will pretty much hit smartphone ubiquity, worldwide.

In turn, smartphone adoption will lead to a similar rate of growth in location-based engagement. And this is really as good as it gets in terms of direct marketing and CRM. You have a person engaged in real time while he or she is actually in one of your stores. Now you can reciprocate that engagement, make an offer with some type of value exchanged for their attention, and pull them into your CRM. For brick and mortars, it is essential that they start to utilize this new channel and figure it out before their competitors get ahead of them.

Tim: How can companies use location engagement analytics to fine-tune their LBM efforts?

Rob: Great question. Remember, this is still early days, and the rulebook is still being written. So what companies need to do initially is test. For example, an A/B split: you take a group of locations and run, say, a Foursquare special. Then you take another set of locations that are equal in terms of traffic and run a Facebook deal. You run it for two weeks and see how they perform against each other. Then layer in different variables. Are you using a window cling? Are you promoting through other channels, paid or un-paid? Again, all this data can be monitored and measured.

Tim: Anything else an agency or business should look for in the Location Based Marketing space?

Rob: I would just encourage a business to start observing how their customers behave in their stores. Are they looking around at the merchandise and your point of purchase (POP) displays? Or are their noses buried in their smartphones? And if that’s the case, then this is where you need to be if you want to reach them. As your POP displays become less effective, engaging people on their smartphones will become more effective. It’s clear that this is where consumer attention has shifted.

So my message to Starbucks is this: if you want to sell me that coffee mug on the shelf five feet away, you have to find a way to make it part of my smartphone experience because that’s where my attention is focused.

Tim: Very good advice. This has been extremely informative; I appreciate you taking the time to share your perspective with us.

Rob: Anytime, this is an exciting topic that is revolutionizing how we can engage with our audience.
Rob ReedRob Reed is Founder and CEO of Momentfeed. Previously he was VP of Marketing and Government Relations for Zumbox, a web-based platform for the delivery of postal mail. Among other things, he developed key partnerships with the mayors of San Francisco, New York City, Minneapolis, and others. Rob is also the founder of Max Gladwell, a leading independent blog covering social media, sustainability, and entrepreneurship. He’s been syndicated on more than 85 blogs including The Huffington Post, Mashable, and Treehugger. He’s also been listed twice among the Top 100 Social Media and Internet Marketing Bloggers (#32).