The Psychology of Foursquare

    

 

      Geo-location is quickly becoming the feature de jour for existing networks and startups. While lots of attention has been lavished upon existing networks adding locational features (i.e. Facebook, Twitter) and various location-centric networks (Gowalla, Rummble, Loopt, etc.), Foursquare seems to have taken the lionshare of public perception. For those that aren't familiar with the service yet, I'm not going to explain much about it here, however, various articles, the network itself and a good section of Mashable are more than willing to give you the basics.                                         

     Considering Foursquare within the normal geo-location trend, its clear to see that it occupies a space that uniquely reaches the consumer. While each network can move from its place on the incredibly good looking Venn Diagram by adding features or emphasizing different functionality, in general, Foursquare occupies a space that aims to connect users while entertaining. This game/network hybrid, means that clear psychological principles can be used to explain how Foursquare works, why its going to succeed and what we can expect from it in the future.

How Foursquare Works....

      At its heart, Foursquare is about facilitating users sharing their locations with their friends.Therefore, the value of the network comes from the amount of useful location information present for users. When we think about this as the network's main goal, it becomes clear how all the network's related features come together to encourage generative behaviour. Overall, 5 core Foursquare features exist outside of simply "checking in", these are: 

- Mayorships 

- Tips 

- Tagging 

- Badges 

- Venue Specials 

  

       Mayorships are probably Foursquare's most obvious feature and the factor that firmly places the network within the 'gaming' spectrum of geo-location. Through assigning a mayor to a venue due to frequent check-ins, Foursquare 'operantly conditions' (encourages the intended behavior with reinforcement) for frequent interest and activity. The fact that most venues currently offer no formal response for being the mayor is a common sense rebuttal to the effectiveness of mayorships. However, if we consider the larger gaming environment, there are external benefits encouraging mayorship. The process of becoming a venue's mayor requires a minimum amount of check-ins at its least and a rather competitive streak at its maximum, therefore, achieving a mayorship and protecting it becomes a cycle of effort justification, ownership and competition. Concepts such as endowment effect, show that when consumers perceive something to be 'theirs', they place a larger value on it.While some people may become mayors of a venue due to frequently visiting it regardless of Foursquare, once someone owns the title, there becomes the presence of atleast a little bit of loss aversion to relinquishing it, as an increased value has been endowed to the title. 

 

      More tangibly than mayorships, badges enhance the competitive token economy that encourages check-ins. Whereas mayorships enhance the venue's attractiveness, badges enhance the check-in itself's attractiveness. Through providing variety to the base network activity, the user experience is kept novel and users have something to consider when considering whether to continue on with the network experience. The fact that badges are displayed on a user's page means that they are internally non-competitive while being externally objects to compare against ones own. The badges can also confer different information about a user's behaviour to others. The 'Swarm' badge (given when checking in with 50 people or more) requires collaboration or a knowledge of popular events, something that speaks to the user's openness. Other badges, such as the 'Superstar' (checking in at 50 venues) are easier to achieve as the user progressively uses the network, but still signal to others that the user is varied in his locations & interests. These signals may not seem to be worth much, but as a user's involvement within the network increases, so does his emphasis on the value of what he signals others.

 

        Most tangibly, Venue Specials can help to reinforce the intangible benefits of mayorships and badges, by providing real perks to the token economy of checking in. Users who aren't fully engaged by competing for the mayorship of a venue on ownership alone can be swayed by deals such as: 20% of a meal for the mayor, free drinks for the mayor or 15% off purchase to those who check in. These real life incentives can help to condition checking in at non-promotional venues as well, as the behaviour becomes more routine. Within venue specials, those which offer a benefit to everyone who checks-in serve to encourage general behviour, while those that offer mayoral perks increase the value of owning a venue tangibly. Through both efforts, the value of interacting with the network increases, simultaneously increasing the value of intangible mayorship benefits or badges. 

 

      The cataloging of Venue specials within Foursquare allows the network to also provide value as a recommendation engine. As shown in the sweet sweet Venn Diagram above, Foursquare wouldn't traditionally play largely in the area of recommendations relative to services such as Qype radar or Rummble, but the ability to point out tangible deals close to the user, coupled with their Tagging & Tips functions, means that the capability to do such is there. Tips and Tagging deliver recommendation value to the user, while also encouraging contributors to display their knowledge of local venues. Where as the mayoral function encourages localized competition, tips & tagging encourage localized collaboration. These features may seem ancillary to the more emphasized features within the network, but they offer a valuable reinforcement factor for use through the provision of dynamic and localized information.

Why Foursquare Will Succeed....

      Now that we've looked at how Foursquare currently functions, its worth noting why principles that will help it succeed.On a general level, the biggest argument against geo-located networks is the reticence of users to share their locations. Sites like "Please Rob Me" make light of the mostly irrational fear that burglars and bandits will strike your home once they find out you're away online. Disregarding the idea that most seasoned criminals can safely assume that working individuals won't be home during working hours, some real privacy concerns are present.Stalkers and other nee'r do wells do exist on the internet, but common sense and privacy controls are usually effective measures against such. Foursquare's block of accessing the current user location data of non-friends means that selective network friending can preserve privacy pretty effectively. 

       Despite these privacy preventing measures, a user's current location seems to be one of the last common hold outs of online sharing. Its only when you consider the progression of online sharing, that it becomes clear how geo-location will be accepted. While Facebook allowed users to tell the world 'who they are' and Twitter allows users to tell the world 'what they're doing', Foursquare and others help to answer the next logical question, 'Where they're doing it'.

     I spoke to a post graduate business class last month on Social media usage and after discussing Twitter, covered the current geo-location trends. While only 1 person out of 39 had heard of and used Foursquare, the concept of geo-located data sharing was met with rather pronounced concerns and disdain. It was only after framing previous types of sharing to the class that many finally began to consider the concept. As I related to the students:

"If someone had told you in 2002 that you would upload holiday albums for other loose acquaintances or possible strangers to see, as well as allow them to upload and tag photos of you, some would balk rather loudly. If I had told you in 2005 you would be frequently posting small updates about relatively mundane aspects of your life, on a service for almost everyone to see, most would probably doubt it. Therefore, when I claim that in a few years most of you'll be sharing locations with your friends online, does it seem as far fetched as before?"

     This mental framing of what is acceptable and unacceptable to share online is highly subjective against what the general public is doing. As more people adopt geo-located services, through either Foursquare or during the roll out of such services on Facebook & Twitter, users will habituate and finally fully accept the concept.

       This roll-out of geo-located features by larger social networks exists as the largest risk to smaller contenders such as Foursquare. Facebook's 300 million users and Twitter's 105 million represent a possible geo-location adoption base that dwarfs Foursquare's 1 million users, creating the risk that the smaller contenders will be absorbed or forced out. When looking at the way Foursquare works though, its clear that some of its features are well positioned to help the network survive, and even prosper from, the entry of Facebook. Foursquare's integration with Twitter and Facebook mean that its token economy and reinforcing features can extend beyond the reach of the network, reaching a user base that has already become used to sharing locations, but haven't heard of Foursquare. While some Facebook users may approach Foursquare from more of a 'Facebook game' perspective than users who originally utilized the service to connect with friends, the success of other forms of Facebook entertainment bodes well for the network.

What can we expect in the future from Foursquare?....
          As we can see above, Foursquare's user experience and viability seem to predict a strong future for the network, but what can expect it to offer next? Looking at how the current Foursquare experience functions, atleast two logical areas for development exist: Expanding Venue Specials & External Platform Integration.

 Foursquare check-ins at specific Venues in Las Vegas were broadcasted onto a digital billboard...

            Foursquare's current venue specials are currently the tangible reinforcement for the overall site. As the network grows in prominence, we can only expect these to become more widespread and creative. Companies such as the FT, giving day passes to mayors of venues near business schools, have already shown creative ways to promote both Foursquare and their own product/content. In the future, this expanded benefit for checking in can develop further through access to exclusive content, publicity and brand interaction.

            Outside of the network, Foursquare's future lies in developing External Platform Integration. The roll-out of geo-located features on Facebook & Twitter are only the start of the myriad of options a user has when thinking about using geo-location. Foursquare's future lies in being able to syndicate network information to other platforms and recieve information in return. The use of Facebook's own network to promote content should only be the start of Foursquare's platform integration. Connecting usage to other geo-located networks such as Rummble or Gowalla means that the reinforcing economy of Foursquare can spread further, while also minimizing a user's barriers to check-in. Users can't be expected to check-in regularly on multiple clients and until one network comes out as the king of geo-location options, the future lies in creating an ease of use.

Social Networks, Geolocation, Recommendations and Double Jeopardy....

      Warren Buffet was attributed to once saying "Your premium brand had better be delivering something special, or it’s not going to get the business”, but is this necessarily true? While logic would dictate that those brands which charge more must deliver a greater value in return, theories such as Ehrenberg's "Double Jeopardy" highlight the power larger brands have in the market place."Double Jeopardy" as described by William Mcphee and more famously, Andrew Ehrenberg, describes the concept that lower market share brands face a double challenge in competing with larger brands as they lack market share and brand loyalty from consumers. In such situations, the advantage large brands have from such jeopardy may encourage consumers to repeat purchasing behavior on factors beyond the value delivered by a specific purchase.

     To combat the advantage large market share brands have in the market place, smaller brands much differentiate. However, as large brands hold the advantage of possessing the promise of a standardized consumer experience, smaller brands must assure the consumer of quality, while still differentiating in tangible ways from larger competitors. Certain sectors allow for this more so than others, with clothing and food retailers serving as an example where double jeopardy and large brand advantage is chipped away by factors such as convenience, location, product differentiation and varied cost. In an example of such, Pizza Hut may provide a standardized dining experience over the Italian bistro down the corner, but consumer taste may eschew what is seen as pedestrian fare for a more personalized experience.

      Using the food retailing example further, it becomes clear how smaller market share (i.e. non-chain) restaurants face the dual challenge of differentiating in image while still assuring the consumer of quality vs. larger chain restaurants. Segments of consumers may always ignore larger brands out of principle (I for one irrationally loathe Arby's), but attracting the majority of consumers hinges on convincing them of not only an interesting and different product, but also of a level of performance and quality. The development of social media use within the last decade provides a unique opportunity for such retailers. Large brands have the challenge of convincing users to trust them in a way small brands don't. The "corporate stigma" of such means that smaller brands have the opportunity to gain consumer trust quicker. While these brands still have to convince consumers of their standard of quality, they have the ability to confer an earnestness to their image that goes well with the communication model found in social media.

The ability of recommendation sites to get the word out about smaller retailers works both ways....

        Sites such as Qype and Yelp operate as a network of consumer reviews and recommendations with an established and growing database of users and locations. Having been established since 2004-2005, these sites have become a hub of user generated information for consumers, providing third party recommendations on the standards of quality provided by smaller/medium brands. Where smaller restaurants lacked the ability to widely spread their message of differentiation and quality, these recommendation sites have taken on the job for them. These recommendations chip away at an already weakened double jeopardy concept (due to the sector's composition and nature), allowing small food retailers to speak with a verifiable quality larger than their size.
    
        With the benefits of sites like Qype, the next issues for smaller brands and reputation in social media becomes the level to which user recommendations are trusted by others. A recommendation from a trusted source or with demonstrable elements can hold more impact than a glut of others. With the advent of microblogging sites, reviews have become much more instant, allowing users to confer a level of immediacy to their thoughts on smaller brands and retailers. While sites like Twitter may trim the amount of detail that can be given about a business or consumer experience, it does allow for opinions to be disseminated while still in the retail experience. Furthering this, geolocated services such as Gowalla, Foursquare, Rummble, Loopt, Dopplr, etc. add perhaps the highest level of authenticity to consumer reviews, confirmation that the reviewer is currently there or was in the past. By demonstrating consumer action, these services extend the depth of consumer reviews, as well as opening new avenues for promotion through their network.

Just a few of the many networks that are driving the ability of small brands to establish big loyalty

      The opportunities afforded by social media channels may challenge the traditional idea of brand loyalty and scale, but they can be co opted in both offensive (small to medium brands) and defensive (large brands) ways. For small to medium companies attempting to use social media advocacy to build their brand, its important to remember a few concepts:
          1.) Make sure the product delivers on its claims....no amount of advocacy will help (or actually be present) if the consumer experience is negative
          2.) Be honest about how your product fits into the consumer's mind.....performance and reputation building will function differently for different products. People are more apt to recommend certain product types overothers.
          3.) If the product fit is right, take advantage of the enthusiasm of networks and network users to grow their community....Just monitoring what people are saying is fine, but to actually chip away at large market share brand dominance, offensive measures promoting consumer involvement are useful. Programs such as Foursquare's "Foursquare for Businesses" initiative are useful to go beyond user recommendations to user interaction.

Larger companies face a more defensive structure when dealing with social networks and their brand loyalty. Without the organizational agility of smaller to medium sized brands, loyalty has to be protected through more thoughtful measures:
           1.)  Make sure the product and the surrounding associated products....no amount of advocacy will help (or actually be present) if the consumer experience is negative or if brand perception is firmly entrenched. Larger brands with multiple locations are at more of a disadvantage when it comes to standardizing the consumer experience.
           2.) Use the scale of the brand to respond robustly to consumer comments. Unlike smaller brands, large brands aren't as likely to be able to build up earnest consumer recommendations as quickly without overcoming perceptions about corporations and size. The increased resources of big brands means that one can go beyond reacting to consumer reviews and opinions and actually respond, rectify and encourage advocacy.
            3.) Don't simply match what smaller brands are doing to increase advocacy, surpass it. If the resources are present to dwarf smaller brands interaction with the consumer, do it. Consider social network partnerships (as long as it fits the brand identity) or cross network promotions. The more users that can be gathered through the brand's scale effectively, the better.

        While the points made about double jeopardy and social media don't easily extend to all market categories, the original concept stays the same. Consumers may be more apt to review bars, pubs, restaurants and other retailers more than cereal brands, but that doesn't mean that something like smaller FMCG breakfast products can't leverage some consumer sentiment to affect distribution and retailer adoption. Within the above example, double jeopardy and brand loyalty is affected by inherent factors within the restaurant market, however the idea is clear that the way brands maintain and generate loyalty and adoption is changing rapidly due to the ongoing advancements in social media.