Location-Based Services: Should Business Owners Use Them?

The following article is a guest post by Chris Barnwell.

A business in this connected world has a lot of options to help market its products, services and the brand itself.  Right now, small business owners can operate at the same scale as their much larger competitors. This is because today’s business owners have access to a lot of tools.

The downside, however, is that there are a lot of tools that are mere fads, and yet there are also others that take hold for some time and then slowly fizzle out.  With the coming of location-based services, a lot of business owners want to see if sites such as Foursquare, Highlight and Path are worth spending time and money on to promote their businesses.

The Criticisms

Foursquare and other location-based services might be reporting a staggering rise in users, with Foursquare now having more than 15 million.  However, Forrester Research senior analyst Melissa Parrish says that most of these users are not active.  In fact, in a December 2011 study authored by Parrish, it was found that only 5% of American adults are using location-based check-in apps, while seven out of 10 Americans have not even heard about these services!

Another criticism about location-based services is the potential for harm that it brings to its users.  In short, security issues are turning a lot of people off. Because you are giving away information about where you are at various times of the day, it will be easy for people to track you down.  The U.S. Army has sounded the alarm that the use of these apps and services might help a stalker find out about your habits: what places you often visit and at what times. This leads many to ask the question: is that badge worth your life?

Jason Falls at Social Media Explorer Blog also laments that location-based services should offer something useful to its users.  Falls writes that location should not be everything that an app does; instead it should serve as a support feature, like how it can be used in Facebook, Twitter and Path. Otherwise, it is just plain useless, boring and a lot scary.

But You Might Still Want to Consider Them for Your Business

Now that you are aware of the pitfalls associated with location-based services and apps, take a look at the reasons why you should still consider it if you are a small business owner.

1. It could help boost your local business profile ranking on Google Places and other similar sites. While it is still unknown just how important location-based services are, there are indications that it does help with your ranking.

For one, Google has admitted that they are starting the use of social signals in order to gauge how relevant and prominent a site is. They have also said that prominence is one of the ranking factors that they are looking at when ranking business listings on Google Places. It is likely that they are looking at the number of check-ins you have for your venue as one of such signals.

It’s a guess, but it could help.

2. It gets customers through your door and it also encourages them to buy.

A New York Times blog post in October 2011 relates the experience of a coffee shop owner who says that he sold 34% more drinks because of his GoWalla initiatives.

Shane Reed, owner of Strange Brew Coffee House, used Gowalla to give customers a 10% discount on any drink when they check into the place. They can easily redeem this by showing their smartphones to the barista.

3. Tell people where you are.

The best thing about location-based services is that it can show your business to people who are actually online.  So a user who checks into a neighboring coffee shop might see that your business is right around the corner and enticed to check you out, too.

Most location-based services also offer a map that can help people locate you more easily.

4. Get that social recommendation.

Location-based services that are also social networks can help you get people to recommend you to their friends.  They can leave tips or comments about your place. Even the act of checking in is a great signal that could serve as an invitation to their friends to check out your place.

5. Fine-tune your marketing campaigns.

There are a lot of data that you could get from having a venue on location-based services. For example, you could see just what kinds of discounts or specials are most popular with your customers, or you could check out whether your customers are leaving negative tips about your place, giving you the chance to address or improve on these.

Photo credit: John Fischer 

Chris Barnwell works for SEO Inc., a locally owned search engine optimization company located in sunny Southern California.  For over 13 years they have created customized SEM, Social Media, and location based solutions for small business owners.