Foursquare Would Beat Groupon for Specials If Only They Had More Users

Maybe there's a business model in here somewhere! (Photo:

Mashable has a guide up today that shows the process for offering discounts through the service–it’s easy, automated, and gives businesses lots of options. The best part: It’s still free for businesses to use Foursquare to offer specials to new and returning customers, an obvious advantage over Groupon’s 50 percent take. The worst: Compared to Groupon’s 50 million+ users, not that many people use Foursquare–even in the start-up’s native New York City. Last we’d heard, the service had around seven million users, a third of which were outside the U.S.

(Usage is spotty even in the start-up’s neighborhood: This weekend, Betabeat found ourselves in a cute new coffee shop in the East Village that would have benefited from a little social media love, but could not find the shop on Foursquare and could not convince our friend to check in–“I don’t do Foursquare”–once we’d created a venue.)

Too bad, because Foursquare specials are much better for businesses. Owners who have claimed their venues can offer seven different kinds of specials to reward either new or existing users. They can manage the entire thing online and tweak the details–how many customers have to check in at once to trigger a flash special, for example, or time the special to coincide with the slow part of the day. If the discount turns out to be overwhelming, as has happened to some businesses that didn’t quite know what they were getting into with Groupon, the owner can shut down the offer.

That’s another sticking point though–quality control. Without a salesforce, Foursquare isn’t monitoring whether these businesses are honoring their specials. What if the specials aren’t explained to the staff? Or the owner decides the whole Foursquare thing is too much trouble but doesn’t bother to remove the offer. New customers see the offer on Foursquare and waltz in to collect their free bubble teas–only to find that the guy behind the counter has no idea what they’re talking about.

As the specials program stands now, it’s still a good way for small businesses to potentially get a small boost. It’s basically a risk-free experiment. It’s also a way Foursquare can encourage activity in the ecosystem while experimenting with a possible future revenue generator. The challenge remains overcoming the deep-seated aversion in the majority of the population to location-based services (creepy, etc.). Free stuff is usually a good way to do this, though.

Foursquare Would Beat Groupon for Specials If Only They Had More Users