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Loyalty Programs: The Potentially Huge New Power of Mobile Social Media

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Perhaps the most useful marketing tool in the social marketing shed is the oft-neglected loyalty program.  Consumers love reward programs (heck, an entire Oscar-winning movie was devoted to the power of reward programs last year), and nothing says “I want you to return to my website and buy things” more than “I will give you things for free if you return to my website and buy things.”

Recently, some of the more innovative thinkers on the social media front have started to realize that by combining geotagging, social media platforms and traditional loyalty programs, they could simultaneously (a) track the behavior of their customers in real time, and (b) drive people to physically go places in order to earn rewards.

This past week, Loopt has introduced a “check-in” style rewards program/game called Loopt Star that has many folks buzzing about the possiblities.   Effectively, this turns your mobile device into a “virtual loyalty card.”  Just as with Foursquare and MyTown, simply going somewhere allows you to “check-in” through a social media site, announcing to others your location.  But rather than merely tell your friends about where you might happen to be (or earn nonsense game benefits like becoming the “mayor” of some random location) you earn coupons, can redeem benefits with participating stores, or otherwise interact in real life with the places you go.

Check into the Gap twice and get 25% off.  Future benefits will, apparently, allow you to earn rewards at places like Burger King, bars, and a variety of other retailers.

This is, for obvious reasons, potentially significant for the growth of social media because it provides a tangible benefit that can be measured.  One of the few things holding back social media from becoming as totally dominating as it could be is the lack of metrics.  How on earth do you measure the value of participation, or the impact of your efforts.  With a program like this, suddenly you can.  

There are, of course, also a variety of legal issues raised by this type of program.  As with any loyalty program, there are a number of state laws that apply, and simply copying your airline’s frequent flyer program will not suffice (the FAA preempts state laws, so frequent flyer programs are not a good model).  You also need to consider practical issues, like redemption and how to structure your participation in a third-party program where administration and customer interaction may be out of your control.

But despite the complexities, every business with a physical presence needs to consider whether and how to ride this coming geotagging wave.  While your customers may not be as crazily obsessive about earning points with you as George Clooney in Up in The Air, you never know, and why miss out on the opportunity?