For some time, Foursquare struggled to find some way to monetize their business model. People were interacting with their site and app, so advertising was one option, but it was rather ineffective. When Summer 2014 rolled around, the Foursquare business model was in so much trouble that it seemed like complete failure was on the horizon.
The Foursquare turned a corner. The 5 year information collecting project from check-ins and recommendations built a database that companies could use for demographic targeting. Instead of offering this information for free, Foursquare started charging for access. The journey has been long and arduous, but there are several lessons that can be learned from Foursquare’s journey that can help everyone.
1. Charge For What You Do Best.
Foursquare has long had a dream of building a location-based commerce network. Imagine checking-in at a business to receive custom offers, discounts, and the chance to purchase something from that store through a smartphone or tablet and you get the idea of Foursquare’s dream. The only problem is that this service just isn’t currently feasible. With 50 million subscribers, Foursquare monetized what they do best: their location database.
Check-ins for badges and other aspects of Foursquare are enhancements to the experience that some might consider to be highly forgettable. Every business has something that they do which is highly forgettable. Find the right niche, improve it, and then monetize it.
2. Control the Market.
The data that Foursquare controls is the most developed in the market today. Some giants like Facebook are trying to compete with their Places or Mapping services, but that’s like comparing the value of a quarter to the value of a penny. When a business controls the market with the best product available, then they really can set prices.
Just look at how much Netflix changed their pricing structure when they split DVD services from online streaming. It created an outrage and some consumers left, but many stuck around. Innovations helped Netflix grow. The same has happened in the Foursquare business model. Some customers will go away, but many will stay when what you have is the best.
3. Don’t Just Give Up On Your Dreams.
So Foursquare wanted a full-service location based commerce platform. That may not have come to a reality, but a similar service has been developed. When users check-in on Foursquare now, instead of just generally broadcasting a location, users will receive restaurant suggests, stores that they can visit, and even merchandise or menu suggestions for the business. This encourages local businesses to get information on Foursquare so that their data can be pushed onto consumers in the area after a check-in occurs.
4. New Stuff Brings Old Consumers Back.
Products and services can get stale over time. There’s only so many times you can read “The 37 Best Ways to Make Money Online” and there’s only so many times a consumer can check-in on Foursquare to get badges. It gets old. New ideas bring new life to a company profile and can encourage old users to come back.
That’s what has happened with the Foursquare business model. People who stopped checking in have started using it again.
5. It’s About the Relationship.
The reason why Foursquare has seen successful as of late is that they have taken the approach of being more than just a recommendation or review service like Yelp or Angie’s List. They want to instead be the best friend that is in your smart device. Instead of telling you what to order or get, recommendations are offered so that consumers get to make their own choices. Businesses can highlight their strengths.
Yet the tried and true offerings still exist as well. Reviews are posted. Locations are mapped. Phone numbers can be called. Yet the focus is always on building the relationship and that’s what is encouraging people to use this service so frequently.
6. People Take Security Seriously.
Foursquare has access to a lot of data. The new tracking features are bothersome to some Foursquare users, so the traditional check-in options are available on a separate apps called Swarm. Users can also opt out of the tracking system and indicate their preferences manually. By taking security seriously, Foursquare tells their subscribers that they’re taking their wishes seriously too.
The Foursquare business model might have gotten off to a shaky start, but with 5 years of database building behind it, the future for this company looks quite bright. Take these lessons learned to heart and any business may receive the help it needs to create a firm financial foundation.