Friends with Benefits: Starbucks and Foursquare

This week Starbucks announced that mayors of locations on Foursquare between now and June 28 can get one dollar off the custom Frappacino of their choice.   This morning I tried it out and received my discount.  I’ve been a user of Foursquare for several months, but for me personally it was the first time I had experienced a benefit as a consumer.  Starbucks is clearly just experimenting here, but I like the approach – there is little cost or downside to a promotion like this.  Some quick thoughts based on a nice discussion with the employees of the store:

  • Most of the employees didn’t know what Foursquare was, but were really excited about it.
  • They had been eagerly waiting to find out who the mayor was – wondering when the person would show up, what they would say, wondering if the person would be a jerk and pound a fist demanding a discount, claiming “I’m the Mayor!” and wondering if they would know the person already.
  • The employee running the cash register had to check the official “Need to Know” bulletin to know what promotion code to use when ringing me up.  I wasn’t surprised since this is a new idea and approach, and didn’t involve a paper coupon I could turn in.
  • We talked about several other ideas they could explore, like rewarding every 5th checking with something similar to benefit more than just the Mayor.
  • I explained that my role is very social media focused, and since I had been on Foursquare for awhile it may be common at a lot of stores that early adopters (also in the biz) would be most likely to retain mayorships.
  • As I left I heard some other employee ask, “Hey, was that the mayor? He’s here all the time, cool.”

Aside from the recognition, the discount was practical and got me to try a drink I wouldn’t have otherwise purchased (Iced Americano or Iced Latte are more the usual for me).  I appreciated the conversation starter to build a better relationship with the folks who worked there, although we already somewhat knew each other. My primary suggestion to Starbucks would be to see them expand to have more folks benefit.

I could really see an application here for the retail space if handled and designed properly.  Any company that has a multi-channel footprint could leverage Foursquare (or perhaps one of the other location services, like Gowalla, Brightkite or the coming Facebook changes) to build fun and relationships into their strategy.  On the flip side, because these technologies are so new and not as widely adopted, there is an opportunity for more “buzz” just by being first to market.  Or second, after Starbucks and some others (Gradon Tripp pointed out that Ben & Jerry’s offers 3 scoops for $3 for checking in, a 4th free scoop for the mayor, sparking a conversation with Sarah Wallace and others about the correlation between Foursquare and weight gain) .

Get your discount yet?  What do you think about the approach?  Is it a flash in a pan or a part of a bigger picture?

UPDATE: Tipping Point Labs’ Andrew Davis (a previous Marketing Hot Seat author here) today published a great perspective on Starbucks’ promotion, highly worth the read.

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  • As a former Starbucker, I think a free drink would inspire WAY more check-ins and competition. A dollar off a $4+ drink is a little chintzy. I know it's just experimentation, but their product costs are subject to a TREMENDOUS markup — they could easily do something more dramatic for bigger buzz and very little cost detriment. Heck, they throw out several drinks a day (customer satisfaction, wrong drink order, etc.) and give out free drinks for service recovery anyway… it's not a reach.

  • A fair point, especially in light of other promotions like Ben and Jerry's extra scoop for the mayor. At least SBUX is getting in the game, right? I'm curious to see more promotions like these though. And apparently I can get a dollar off every time I order a Frappucino (which for me isn't going to be often) between now and June 28, about six weeks. They are hopeful for mayorship turnover during that time too.

  • Adam,
    Great post! Thanks so much for adding the update to your article. I'm really interested in seeing how Location-Based Services like these guys actually deliver on a revenue model that's sustainable. Do you have any idea if there is money changing hands in the Starbucks transaction?
    Thanks,
    Drew

  • Great question Drew. I don't know but I think I have a way to find out…standby….

  • Wow, that would be great. Please let me know. Monetization of their platform is crucial to long term viability. Understanding their model (and them communicating it early) is always a great way to get Brands involved in their channel. Real Revenue models = Real clients.

  • Based on what I can find so far (no word directly back from Foursquare yet), the “specials” for mayors and frequency of check-in are at no cost to clients. I'm not sure about the bigger deals like Bravo and others though, and custom/special badges definitely have a cost. I hope to dig up more (and would love it if Foursquare or Starbucks weighed in here).

  • Good post, Adam. I was going to try something similar, but based on my research, all Starbucks near my home or work are the domain of mayors who rule them like warlords (22 checkins in the past 60 days was the LOWEST total). Doubt they'll be unseated anytime soon, and certainly not in time for a topical post.

    Then again, the Starbucks crowd is right in the bullseye of the Foursquare demo, so I suppose it's not all that surprising.

  • You hit the nail on the head – my concern with the program is more that only mayors will benefit. Ben&Jerry's rewarding just for checking in, and Pinkberry giving 10% off for anyone who checks in (in NYC, anyways) seem to provide much more meaningful benefits to more customers. We'll see where it goes, but at least SBUX is experimenting.

  • I applaud Starbucks for getting in the game, but I agree with Meg – actual free drinks would provoke more interest and activity in my opinion. Make the prize bigger and you'll have more people trying to turn over the Mayor position. The competition leads to greater sales from more frequent check-ins AND to a great story that will drive more word of mouth and even more coverage from the activity.

    Interesting (though not surprising) that the employees didn't know what Foursquare is…You have to wonder how Foursquare might increase its rate of adoption as employees at participating retail locations become aware and join…and tell their friends…etc. Do you get a sense Adam that Foursquare is thinking that way? Is it about developing an eventual monetization strategy for them, or do they also see it as a growth in members and usage play?

  • Thanks David. Agree on the reward and would add promotions that benefit more users (like Pinkberry 10% off for a check-in).

    If employees start checking in, that would defeat the purpose of mayors (and treating them like customers), even though it could help promote. Peter Kim wrote a great post about who should be checking in: http://www.beingpeterkim.com/2010/04/checking-i… I think the best answer would be for people to declare a category or group, so you could have “employees” and “visitors” separate and reward points, specials, badges and mayorships differently for each.

    Regarding monetization, I definitely think that's the long term plan but for now at least it appears specials are free.

  • Totally agree that employees checking in would diminish the whole Mayor thing (Peter was dead on), and I like the idea of categories for dealing with that. When talking about employee uptake, I was just thinking that if the thousands of Baristas across the country have little knowledge of Foursquare at this point, even if they are barred from checking in at SBUX, their work based familiarity might drive adoption for their own personal use checking in elsewhere. Do this with enough retailers and it could really increase Foursquare's user growth…

  • Adam,
    Thanks so much for the insight! Really informative. This is such a great help.
    I'll keep my eyes out for anything I hear and let you know if I find anything additional out!
    Thanks for taking the time to look into this.
    – drew

  • One more resource on Pricing – rumor of a partnership for D-Lite at $10K, but not sure about the details http://mashable.com/2010/05/11/fashion-foursqua… (thanks to @aboutfoursquare on Twitter). Trying to dig up some more data – if I can gather enough and it's shareable I'll put it up as another post…

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  • So Starbucks is giving away margin to a guy who “is in here all the time” – that’s not exactly expanding their business or adding to their bottom line. Not sure I am all that impressed with Starbucks on this one (although Adam does point out its an experiment). Starbucks already has a genius loyalty program with their pre-paid cards (I loan them money and they pay me back in over time in coffee. When they’ve paid me back in full, I then loan them more money, and…). Anyway, not doubting Starbucks could find a useful play with Foursquare given the former’s footprint (perhaps a referral model: Starbucks gets money for driving foot traffic to another business), but this doesn’t feel like it. Be interesting to see where it goes from here.