David: Hey, everybody, welcome to another episode HubSpot’s Inbound Now. I’m your host, David Wells, and with me today is a very special guest, Mr. Aaron Strout.
Welcome to the show, Aaron.
Aaron: Hey, thanks for having me, David.
David: No problem. Aaron is the head of location based marketing at WCG inAustin. He is the author of an upcoming book, “Location Based Marketing for Dummies.” He runs his own podcast, The Quick and Dirty Social Media Podcast on Blog Talk Radio, and he blogs over at his own site, Stroutmeister.com.
I wanted to get you on the show today, Aaron, to talk all about location based marketing, sound good?
Aaron: Well good, you’ve come to the right place.
David: I figured that was the case. Cool. So basically, since Foursquare launched back in ’09 at South by Southwest, how has the location based marketing landscape kind of changed and evolved?
Aaron: Yeah, actually if you don’t mind, I’m going to rewind even a little bit further back to that, which is more like ’07 when I started to use location based services. There was a service called Bright Kite, and there were a few of us geeks, like Doug Haslam and Brian Person and Chris Brogan, and we using and checking into social media events so we could kind of find one another. I used it a lot for a photo blog. At that point, it was really just one of these cool things. It was fun. There were some legs to it, but couldn’t quite see the business use.
I think in ’09 what was exciting was when Foursquare came out. For folks that aren’t that familiar with their history, they had actually been around since 2001, when Dennis Crowley, who’s the CEO, had taken his NYU thesis and then turned it into a business called Dodge Ball. Well, this company out in the Valley, a little search company called Google bought them. They couldn’t quite figure out what they wanted to do with them. I want to say they bought them in ’07 and then spun them off in ’09.
They came out of the gate, I think, with an eye toward, “How can we use this for business?” Even though at the beginning it wasn’t something that I think too many people paid attention to, people did realize that you could check into businesses and that there were some businesses that were actually setting their locations. The real key was some of the businesses that took advantage of the offer functionality as that came along. It started to get people intrigued. Ben and Jerry’s fromNew Englandwas one of those companies that did the Three Scoops of Ice Cream for $3. It was straightforward. All you had to do was check in. If you were the mayor, you’d get an extra scoop for free. So I think it was probably about a year after they launched where businesses really started to figure that maybe there was some there there.
David: Right, gotcha. So since then it’s expanded, like Yelp’s in the game now, Facebook, Gowalla, there are all these different companies. There doesn’t seem to be a shortage. Do you see moving into the future some acquisitions or consolidation there, or do you think it’s kind of still a free for all?
Aaron: Yeah, I think we’ll probably see a little more development before we see too much more consolidation and acquisition. Although, if you remember three or four months ago or maybe it was five or six months ago now, we had eBay acquire Where, which is up in your localBoston. We had another company called Groupon, which folks may have heard of that acquired a company called Whirl out ofSeattle. So there has been some of this acquisitioning. In writing the book, Where definitely came into play. Whirl was one of the six or seven that we recommended companies keeping an eye on, so that threw a little bit of a wrinkle, and I had to go back and kind of edit some of that stuff out. Groupon does promise to reintroduce a new version of Whirl sometime in the future. The nice thing is they did take Jeff Holden, who is the CEO. Jeff was also one of the guys that had originally built the collaborative filtering functionality back when he was at Amazon. So Jeff is a smart guy. He’s their new VP of Product. But I absolutely do see it consolidating, but I think we’re going to see more before we see less.
David: Gotcha. So what about in terms of businesses adopting these location based marketing platforms to drive foot traffic into their business? Do you think we’ve hit critical mass, or is there still a long way to go for this to become more mainstream?
Aaron: Yeah, David. I was mentioning this to someone the other day that if you think about this as being a journey and making it analogous to you or I going on vacation, the wheels of the airplane have just touched down on the tarmac. So you are at the very, very beginning point of how this is going to work. I think there are a few things that are going on that are bit right. So those two acquisitions were significant in the fact that you had some big companies in eBay and Groupon saying, “We see some value in this.” Then you’ve seen some deals recently, the most notable, I think, is American Express partnering up with Foursquare and offering a deal that is really quite a compelling deal. So if you’re a merchant and you enter into this program that people who come in and use their AmEx card get checked in and take advantage of the deal, as long as you’ve connected your AmEx account with your Foursquare account. Now we have the president, Obama, like him or not, but he’s using Foursquare. So you starting to get some serious uptake, but we have a long way to go before I think businesses really start to take those two too seriously.
David: Gotcha. So is there a benefit then of becoming an early adopter of these location based marketing services?
Aaron: Yeah, absolutely. It’s interesting because we’re having this conversation with Google+ right now, and Scott Monty, who I think you’re probably friendly with and I’m friendly with as well, over at Ford had the advantage of being one of two companies really that’s been allowed into Google+. They get to do a lot of things and experiment and learn on the fly, and they get the benefit of the doubt. You still have a little bit of wiggle room. It’s starting to get a little bit later in the game with places like Foursquare where you have had probably, I don’t know, a hundred different big brands sign up and do some experimentation. But you get a little bit more wiggle room, versus let’s look at Facebook or Twitter. They’re semi-mature social media channels. One’s got almost 700 million users. The other’s got 200 million. If a company goes in, especially a big company and screws up now, it’s a very visible thing. You end up on the front page of Ad Age, and the front page of USA Today, or The Wall Street Journal. I think with the location based things, it’s not to say that if you make a mistake, it won’t get some notice, but I think both customers and the press and social media in general are willing to cut you more slack if you’re going in and playing around with them.
Instagram is one of those right now. It’s one of my favorite services. It’s a photo sharing service. It sits on top of Foursquare. But there are five million people that are there already, but I’ve noticed a lot of brands starting to adopt it, and I love the fact that brands are starting to adopt it. I am willing, personally, to give them a wide berth because I’m like, “Hey, it’s cool that you’re here and you’re hanging out and you’re posting pictures and going in and liking other people’s pictures.” So I think I may not be the perfect use case, but there are a lot of people that think that way.
David: Right. So it’s them jumping in and people being accepting because they’re trying something new, engaging in the community there. So I think that’s a valid point there. So with companies doing location based marketing right now, what are some of the key components on building a successful campaign that you’ve seen?
Aaron: I never thought you’d ask. That’s one of the things we cover in depth in the book, and if I haven’t mentioned them yet, I would like to mention Schneider Mike, or Mike Schneider is his official name, but Schneider Mike is his sort of Ronald Dino [SP] or his handle that he uses everywhere. We like to have what we call the Five Golden Rules. So the essence is to make sure you’re going out and exploring, right now. There are five or six major services, and I think you mentioned most of them – Yelp, Facebook, Places, Foursquare, Gowalla, SCVNGR. There’s a new one that I’m introducing in the mix called Local Response, and they don’t actually really run on their own platform. They leverage Twitter and sort of scrape in other check-ins from other services. But that’s one, explore the services. Get set up on a lot of them. Even if you’re not going to use them, make sure you go in and claim your location so that someone else doesn’t box you out or that there’s not fraudulent activity there.
The second is to make sure that you go in and you start to embrace some of the influencers that have been checking in. You want to pick one or two services that’s right for you and probably Foursquare, maybe Facebook Places. If you’re a small business, Yelp is a good place to look.
Then once you do that, start thinking about an offer and making sure an offer syncs up with what are your business goals, what are you trying to accomplish? Is it to drive loyalty? Is it to drive engagement? Is it to increase foot traffic or sales? Knowing what your goal is and matching that up with an offer, which by the way doesn’t have to be a monetary offer, it could be experiential. Come in and do a coffee tasting with the manager, or come in and meet the VP of Technology and do a blogging session over lunch. It could be recognition, getting their name and poster up on the wall. That goes a long way with some people.
The fourth is making sure that you’re testing and learning and optimizing, and measuring what you need to do to really do any of those three. Then the last is what we call operationalize, and that is making sure that if you do decide to set up an offer and you are running a program, that you get everybody trained that needs to be trained so that you don’t get that deer in the headlights look when someone gets that offer, is all excited, holds up their phone and shows it to the manager or the owner or the wait staff and they kind of look at them like, “What the hell is that? Answer your phone.” But then they understand what the purpose is, because there’s nothing that’s more of a turnoff than not understanding that.
David: Right. So one of the points that you touched on there is businesses building a loyalty program with these location based services. It’s almost like a free or a cheap way to do that. Have you seen some really cool examples of companies using these location based services to build up a loyalty program.
Aaron: Yeah. So the forward author of our book, B.J. Emerson, has been doing this for a couple of years now with his company, Tasti D-Lite. Tasti D-Lite is fairly major food chain. So they’ve got a loyalty program where you can attach your Foursquare account, Twitter, and Facebook and literally through the swipe of a card, all of a sudden you can check into those. The benefit is that you actually get additional points for checking in. Starwood has started to do this. Now they’ve got an existing loyalty program, but they’re building on it where if you attach your Starwood account with Foursquare and check in – I was just out inL.A.– you get an extra 150 for checking in. There’s another service called Top Guest that does something similar, and you get credit, not only for checking in, but for posting pictures and things like that.
I’ve seen other local companies, some inAustin. There’s a company called the Hideout Theatre, and it’s got a coffee shop downstairs. The theatre is smart, where they don’t just benefit you for the first time you check in or if you’re the mayor, but it basically, I think, the first 5th and 10th time you get a two-for-one ticket and the mayor gets half price off all the time. I think that goes into perpetuity. So every sort of fifth time you go, you’re getting this extra benefit, and smart companies will start to think about how do I do that.
Then lastly, Level Up, which is a new offering by SCVNGR, is a payment system. Mike actually did a video on this the other day, which is pretty cool, on his Tech Interruption series where you can go in and pay and it acts as a payment system. The real key though is that unlike some locations where you don’t know for sure if someone’s really checked in or not or if someone’s really buying something to take advantage of the offer, you have to pay and as you pay it, just like the Starbucks loyalty card, which is not location based, it knows every time you’ve gone and paid with your card and it gives you credit. After every 15, you get a free cup of coffee. Level Up does something similar.
David: Gotcha, cool. So with the location based, like kind of point of purchase thing, that’s a relatively new trend, right? Do you see that kind of expanding much, much vaster in the future?
Aaron: I think it will be an element of it. So there are companies like Shopkick, whom I didn’t mention, and they’re very much focused on trying integrate scanning in store and point of purchase so that they can actually demonstrate, if they’re giving things away of real value, gift cards, etc., that they know for a fact that people have actually been in the store and then scanned and purchased the thing. So I think there will be an element of it because there are different flavors of location. You touched on the loyalty piece, that’s a key one. I think there’s a relationship building or an engagement. That can be loyalty, but it can also just be getting closer to your customers and finding out where their head is at.
But there will also be this mobile couponing that will work very similarly to the way a lot of traditional couponing works, except: one, you’ll know where people are; two, you can do better targeting of them; and three you can make sure that you’re not giving away something that you would have already, you know, if someone comes into the store, say CVS, and there’s a candy bar or something that they were already coming in to buy and you give them 50% off. It’s like, yeah they’re surprised and delighted, but they were already going to buy the candy bar. You didn’t need to give that away.
So I think that the more you can tightly tie in some of these elements to the point of sale, the bigger retail stores will embrace this. But I don’t know if it’s going to be the end all be all. It will definitely add scale. It will add comfort, I think, to a lot of these customers.
David: Right. Is one of the stipulations though, when they do swipe that card, that’s like checking them in and basically broadcasting to their social graph that, “Hey, I just checked in at CVS.” Is that one of the stipulations on most of these?
Aaron: Most of them haven’t got there yet. Some of them are, like I said, Tasti D-Lite is doing it and they try to give the end user the control. I think that’s probably always going to be the right approach, but you can make it better, and this is one of things we advocate in the book, is the more reasons you give for someone sharing their check-in with their Facebood or other social networks, the better. If you say, “Look, you get 25 points for checking in or you get 25% off, but you can level off and get additional offers, or you get more points, or whatever, for sharing it with Facebook, sharing it with Twitter.” That’s where the real power is, but I think you’ve got to let the user choose how they want to do that and how they want to share versus just automatically assuming. Again, that can all be done at the user level. But if you give them brand incentives, I think that people will absolutely want to do that.
David: Right, gotcha, cool. So another chapter in your upcoming book here is what happens beyond the check-in, what happens after that. So can you dive a little bit into that concept?
Aaron: Sure. In full disclosure, that was one of the chapters that Mike handled, so Mike is definitely more of the expert in the beyond the check-in than me. But I think there are a few different ways we took that, and that is; one, thinking about the benefit that geo awareness adds to any kind of transaction business data, etc. So one of the things we don’t think about is that there’s this location based service that all of us have been using for three or four years on our phones called Google Maps. It’s one of the most used and one of the most effective . . . I’m sorry my color just got a little funky. I’m not sure why we went green like that. But anyway, ah, here we go.
David: That’s going to go in the blooper reel.
Aaron: Yeah, I was geo transporting myself to a different place.
But in thinking about things like Google Places that are geo necessary but they’re not necessarily relying on someone checking in or some of these mobile ads, mobile couponing, where you’re close by in proximity, but you’re not necessary checked into a place. So one of the things Mike and I try to do is think through what were some of those services. Then obviously, there’s the other element of what can you do once you know people have checked in? Can you add that into your loyalty program? Can you add that into your communications?
I was talking to another localAustincompany the other day, Digby, that does some very cool mobile eCommerce. One of the things they’re trying to think about is, if you can get someone to check in on one of the apps that they’ve built at one time, they can passively know whether you’ve been in a store or not. Now that sounds a little bit creepy, but they don’t do anything with the data and they don’t personally identify you. What they know and they can share with the company is that can say, “Look, we’ve got sort of a notification that says this person has been to the store.” You don’t do anything while they’re there, or you do, but you can send them an email after the fact and then you can also start to look for patterns and say, “Could we do more with this?” So it’s how do you think about that? How do you get more into this passive check-in mode? So it is a little clunky sometimes to ask people to check in, so can you get a little more regular, whether it’s the point of sale swipe or whether it’s just like on a laptop where you’ve got your Wifi enabled, you could say, “Always connect me when I’m in my local Starbucks or always connect me at home, or ask me.”
So I have a theory that someday with some of these services you’ll walk out of your door, whether it’s using your accelerometer or you’ll have your house geo-fenced, it will trigger and say, “Hey, Aaron, you’re leaving. I know based on the time that you’re probably going to work. I’m going to turn on your usual default, which says check you into work, check you into the gym, check you into the sandwich shop, or whatever, unless you tell me otherwise.” If it sees that I’m leaving, and it’s maybe 9:00 or 10:00 at night, it might say, “Whoa, his privacy settings are sensitive to anything after 8:00. I’m going to default you into the ‘Only Check In Proactively’ unless you tell me otherwise.” That way it gives me the control, but makes it a little bit easier. I think stores will follow suite and make their geo-fencing or having a much tighter sort of loop in terms of where you can check in. Once they do that, then we’ll avoid, you know, if I’m walking down Boyleson Street in Boston or South Congress Street in Austin, if I walk by every store and it auto checks me in, I might check in to 50 stores unknowingly unless they have this geo-fencing technology.
David: Gotcha. I think that’s one of the biggest things. I don’t really use too many location based services because I don’t have the habit built into my day-to-day. I have to actively take out my phone and check in to all these places. It really is a habit, but I think what you’re talking about when it will actually be kind of, “Hey, do you want to check in here? We noticed that you’re here.” I think that’ll actually help adoption a lot more and kind of expand where this is going, right?
Aaron: And give you something for it. One of the things that I think smart people, smart retailers and companies will do is they’ll start to create an experience so when you walk in and they can, not just give you discounts, but maybe give you benefits, like, “Oh, I noticed that you’ve been here before.” And when you go into the dressing room to try on those pair of jeans that you’d like to share that with your Facebook friends and ask them what they think. “Well, we can do that because we know you’re already here. Do you want to turn on that service?” So they’re going to have it so tightly geo-fenced that when you walk into the dressing room, once you’ve hit the okay button because you don’t want to be too voyeuristic, showing things that shouldn’t be shown. But it can make life easier for you, and I think the more they can add value to your life, the more inclined people will be to do these kinds of things.
David: Right, cool. So with these location based services, is it just for brick and mortar places with a lot of different locations, with a lot of foot traffic, or can other single locations or lower foot traffic areas and businesses use this?
Aaron: Yeah, that’s a great question, and I think if you look at companies like Bravo TV, companies that are either publications or they’re consumer package goods, there are things that you can do, whether they’re educational, they can be partnerships with the actual retail locations. You could do things that are taking advantage of events or maybe things that are in certain cities, maybe around holidays, etc. But if you look at what some of the companies, like Bravo, like Red Bull has done, like Pepsi has done, like Coke has done, they’re being smart about how they do it. So they might go in and tag locations where they know people are buying their product, or Bravo or History Channel. History Channel’s being smart because their saying, look, say you check in to the Statue of Liberty. This is where so and so took place, and this is where blah, blah, blah, and you can go and see this particular episode. So it gives you historical facts which are fairly interesting.
My partner in crime, which I mentioned before, Schneider Mike, his agency has gone in and set up an Allen and Gerritsen page on Foursquare. So now if you are following them and you check into any Barnes & Noble to buy the book, it will pop up and say, “Hey, while you’re here you should check out Aaron and Mike’s book, ‘Location Based Marketing for Dummies.’” So even though Allen and Gerritsen has a physical location, they’re not going to have people regularly checking in there. But if they have people checking in that are friends of theirs, it reminds them to buy the book when they’re in all the different Barnes & Nobles.
David: Gotcha, cool. So one of the big things about location based services is actually measuring the effectiveness, all that foot traffic coming in, is it from the service? Is it from your campaign? What are some tips that you can give to capture as much data as possible and really prove the validity of this medium?
Aaron: Yeah. So a lot of the platforms offer their own dashboards if you’ve gone in and claimed you location. So if you go to Foursquare and claim your location, if you go to Yelp and claim your location, you get a dashboard that gives you a fairly rich set of data that talks about who’s checked in, what are the demographics, time of day, all that good stuff. So that can be helpful in terms of watching peaks, spikes, what the mix is, what the check-in times are, how your offer uptake had done, things like that. Particularly for bigger stores, if you want to manage multiple locations, multiple services, they are tools, like MomentFeed, that’s a good one. That’s helps you manage across multiple locations and multiple services. There are two others, one called Geotoko and one called Valuevine. So Geotoko also allows you to manage multiple offers. There’s this new service, which I mentioned, Local Response, which allows you to mine Twitter and take explicit and inferred check-ins and actually present offers to them.
So this is one of the things that Mike and I talk a lot about in the book as well. This is a space that will continue to evolve. One of the things that we do have is we have a website. It’s LocationBasedMarketingForDummies.com, and that’s going to be the book site and we’re going to keep a regular blog there. You’ll be able to find out about some of these services as they evolve because Mike and I will keep Wiki pages, that will let users contribute as well to, that talk about all these different services that can help measure and monitor.
David: Right. That was actually one of my questions, the third party tools that you would recommend because they’re all in different places, the dashboards are in different places, but those three services sound like it’s a way to kind of streamline all this stuff. So, cool.
Aaron: Yeah. Like I said, MomentFeed, Geotoko and Valuevine, all good services, all smart, savvy people. I have the luxury of knowing the three CEOs that run the companies. They’re very responsive guys, very interested in location and seeing it succeed. What I’ll say is, if you check their service out and you don’t see something you like and you have a need, talk to them because they’re constantly adjusting their product roadmap, and if there’s something that you as a business wants to do and they see a value in it, then I think they would absolutely consider adding it to their product roadmap.
David: Cool, awesome. So where do you personally keep up to date with all this location based stuff because it’s constantly changing, constantly evolving? What resources would you point people to?
Aaron: Yeah. Obviously, we have a selfish reason to say pay attention to Mike and me. There’s a Twitter feed Mr_LBS, which is helpful. Asif Kahn, who runs the Location Based Marketing Association, he does a nice job. It’s TheLMBA.com. So they’re a good resource. Then pay attention to the different providers like the Gowalla, the Foursquare sites, their Twitter handles, their blogs. There’s a woman named Jen Van Grove, she’s @JBruin on Twitter. She writes for Mashable. She does a lot of coverage of the location based space. Then there are people like Kunur Patel who is one of the writers for Ad Age. Kunur does a nice job as well, focusing on location based as well as other social media tools and services. So that’s some of the places that we try to keep an eye on.
I have a list that I’ve actually built if someone checks out my Twitter handle @Aaron Strout. You can see my LBS Twitter stream that I’ve got. So I have a lot of the sort of big brains in the space and some of the ones that I just mentioned are already tagged on there.
David: Awesome, cool. So for the people out there listening and watching, what would be the one takeaway, what would be the one thing if they were trying to dip their toe into location based marketing, where would you point them to?
Aaron: I would say get set up on Foursquare. I have a friend and colleague, Brian Reed, that just did this on vacation a couple of weeks. We actually did a blog post on my company blog, blog.WCGworld.com. What he talked about was how much fun it was to test it out. Now, I know you asked about businesses specifically, try it out as a consumer and check in to some places and get some ideas, and then get your company set up. Claim your location. Think about maybe a light offer that you could do. There are absolutely things that you could do without giving away the firm. Maybe the thing that you do give away is you do a coffee on Friday mornings with coffee and doughnuts and get to meet the owner. So there are things that you could spend $20 on that aren’t going to take the shirt off your back. But I think experimenting with them and see what works, and if you like that, maybe try another service or two. Try out Yelp. Facebook is good for bigger companies. The gamification element is not there as much, so it’s not quite as much fun, but they have a service as well. But try a couple of them out and see what the reactions are. Try reaching out to some of the folks that are checking in. I think a lot of companies will see some value to that.
David: Awesome, cool. So where can people find you online, Aaron?
Aaron: I try to be fairly straightforward, @AaronStrout on Twitter. I have been doing a lot of my blogging on my company blog with some of my other smart colleagues. I mentioned that blog, it’s WCGworld.com, as in like the planet earth world. You mentioned my blog, blog.stroutmeister.com. I mentioned the LocationBasedMarketingForDummies.com. We do the Quick and Dirty podcast. If you just look under Twitter @quickndirty, we do that regularly on Thursdays and we talk a lot about location based services as well, my co-host, Kyle Flaherty and I. I think those are some pretty good places to check me out. Instagram is also a fun place if you like photos. I spend a lot of time taking picture over there.
David: Nice, awesome. Well, I appreciate your time and coming on the show and sharing all this awesome knowledge on the location based marketing industry and where it’s headed. I personally took away a lot of stuff from this interview, and I hope our audience did as well. I want to get you back some day on the show.
Aaron: Perfect. Thank you for taking the time to have me on. I love HubSpot, and it’s been a pleasure doing this.
David: Awesome, cool. Thanks, man.
Aaron: All right. Thanks, David.