Why Yelp (And Every Retailer) Should Jump On The Foursquare Bandwagon

dennis crowley

When I first heard of Foursquare, I’ll admit that I didn’t jump on it right away.  I knew the founders, Dennis and Naveen, but I’m not really much of a gamer, nor am I much of a bar hopper, so the idea of turning my nightlife into a competition didn’t seem so appealing to me.  Plus, I don’t have an iPhone, so that seemed like it should be the third strike for me.

However, I discovered my own reason for using it.  I was talking with a friend about how I stumbled into a great restaurant (August) walking around Greenwich Village, but couldn’t remember the name of it.  I was saying how I wished there was an app that pulled my credit card data to track where I had been.  I was always forgetting the places I had gone.

“Why don’t you use Foursquare?”

Aaaaaah.  That made so much sense.  Forget the game.  Forget the bar hopping.  Foursquare would be a dirt simple way to just record the places I had been–and that’s all I wanted to do with it.  I signed up and started using it through the mobile site on my Sprint Mogul.  I’ll admit, I quickly got hooked.

I definitely started getting sucked into the game, too.  Getting badges and seeing where my friends were was fun.  The other night, I realised that I was about to go to a place that Mike Galpert had been to about an hour or so before me, so I called him to ask what he had.  Indeed, the spinach gnocci at Supper was excellent.

That’s when I realised how valuable Foursquare really is from a business perspective.  Mike made a recommendation to me, but Foursquare was the service that actually knew that I went, because I checked in.  Being able to connect web advertising, recommendations, and social media buzz to an actual person walking into your store has long been the holy grail of the advertising world.  We spent lots of money and effort online to drum up our brand, but does it actually drive food traffic?  Foursquare knows.

Think about it from Yelp’s perspective.  Yelp helps you figure out where to eat, and gives you recommendations, but it only knows about the people who write reviews.  That represents only a small percentage of the overall Yelp traffic–so while Yelp tries to make the business case for advertising and using it’s retail services, it doesn’t really know how much real live foot traffic it drives.  Foursquare is the missing link, enabling you to come full circle from a review or recommendation to an in person visit from a real customer.  Best of all, it has figured out a compelling reason to get you to submit that data–in the form of a fun game you play with your friends. 

Additionally valuable is that the game syncs up with Twitter and Facebook, so Foursquare users are telling the world where they are and the places they’ve visited at any given moment.

What Foursquare does is even more valuable than the Yelp mobile app itself.  It not only records where you’ve been, but it also encourages others to visit the same place and join you.  If I was a business, and I had the choice of getting all my customers on Yelp or on Foursquare, Foursquare seems much more compelling.  It’s not about reviews so much, so I have less downside of a bad rating or review killing my business.  Plus, it encourages others who aren’t even on the app to come join their friends and check out my business.  More Foursquare users will check in and promote my store than the number of Yelpers who will rate my store and then publish that rating.  On top of that, Foursquare helps me identify who my best customers are, putting a name to a face.

So if I’m Yelp, Foursquare has valuable data that I need–whether or not my recommendations are actually driving anyone to visit the store–and has a much more compelling social media network effect.  Yelp’s current social network isn’t well tied to their site.  I can have friends on Yelp, but it’s not totally clear how having friends improves my navigation of the site or my ability to get ratings–as opposed to Foursquare which is all about tight networks of friends. 

But Yelp also has stuff that Foursquare really needs–distribution and content.  A deal or some funding from Yelp could put Foursquare on the map as the default “Where am I now?” app and make Yelp’s social media offering to a business complete and compelling.  They’d finally be able to figure out exactly how much traffic their site drives in the door.  They’d know which reviewers were the most influential–not just to other reviewers but to actual paying customers.

I think Yelp needs to act fast on this, because if I’m Foursquare, I’d start going straight to retail establishments and striking deals.  I’d get every single Starbucks to start encouraging their customers to use Foursquare and check-in to their favourite Starbucks.  I’d know whether or not that was driving feet in the door from other check-ins and who my best customers were.  Foursquare should built a neat little self serve portal that allows retailers to claim their establishments, and track who’s coming in and when. 

Yelp has an “Elite” badge for the best users of Yelp, but how long before Foursquare allows retailers to create their own Elite badges for their best customers–rewarding people who support the store, not just the ratings site.   If I’m Shake Shack, I want to know who the Shake Shack Elite is, not the Yelp Elite–the latter doesn’t really directly help me as a business.  The more a site enables me to have a direct relationship with my customers, the more valuable it’s going to be for me and overall.  Starbucks, Jamba Juice, NYSC, Dunkin doughnuts, etc. should be all over FourSquare right now trying to figure out how to get their customers on it.

If Yelp doesn’t strike up a distribution deal with Foursquare soon, I think they’re going to regret it.  The deal is simple.  We’ll invest a couple hundred grand in you and promote you to our users.  You give us the data (through a sync to Yelp accounts) of who goes to an establishment based on a Yelp review.  That will help Yelp sell it’s service to retailers and restaurants.  Yelp should provide reviews in Foursquare in exchange for promoting Foursquare’s “Tips” and “ToDo’s” as well.

Google proved that you needed to be able to tell a retailer exactly how advertising helps their business and help them track ROI.  Foursquare is well positioned to capture that all important retail visit–the hardest piece of data to get short of diving into your credit card statement.  That makes them a serious player in the local ad space–and one that will undoubtedly pass on an early Google exit based on Crowley’s past experience. 

Charlie O’Donnell (SA 100 #61) is co-founder and CEO of Path 101, a NYC-based startup, and founder of NextNY, a tech community group. He blogs at This Is Going To Be Big, where this post was originally published.

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