It is clear that the competitive dynamic Foursquare created by incentivizing users to check in for points and aspire to reach mayorship was a big win. I think an even bigger win is going to be their concept of following brands for unique experiences.
Let’s pick Zagat as an example. On Zagat’s page I have a recommended set of places to visit from a source that I trust. By adding it as a location-based ‘to do’ I have definitely flagged myself as a lead. It gets better.
My scoreboard prominently displays how I’m doing with my to-dos, making them a fairly important component of my (virtual) stature.
There are also badges and other rewards for finishing the entire to-do list.
Foursquare has also figured out an intelligent way to make the virtual stature of mayorship more real. Being the ‘mayor’ of a venue is hard work, and it is clear that the ‘mayor’ of a restaurant probably has a decent sense of the menu and knows the restaurant well. How Foursquare leverages this is just brilliant. What was once a virtual status symbol has advanced into a real status symbol through a ‘Meet the Mayor’ series (highlighted above). This has two effects. One, people now see that being a mayor can ‘lead to something’ and they are therefore more enthusiastic about their check-ins. Two, Zagat.com gets to play host to the mayors, who are likely to be influencers at that location, and is therefore Zagat is able to affiliate itself with the influencers (and potentially influence them). Might also be an opportunity for Zagat to get fresh data about the food quality at the restaurant from the mayor.
So, what’s the business model? Getting a restaurant on someone’s radar is hard work and it is usually a word-of-mouth or restaurant review exercise. Now, Fourquare has added itself to the lead generation business and they also have a clear metric that they can offer restaurants (or other venues) about how well the lead converted. Moreover, they charge Zagat to be a featured list provider and potentially do a revenue share based on the number of to-dos which people completed because of seeing the restaurant on the Zagat list. There are certainly other revenue generation opportunities but if you do some quick napkin math, it is easy to see how this could be big business.
