Today I had the chance to talk to Kent Lindstrom, CEO of LBS start-up PlacePop. The company is building mobile loyalty card apps to reward users who visit local businesses, and allow those merchants to drive foot traffic. Think of it like Foursquare with more structured local offers.
Lindstrom is former CEO of Friendster. During (and after) Friendster’s rise and fall in the U.S., it took on new life in many Asian markets. Due to mobile’s saturation in these markets, it was a natural distribution point for Friendster and an eye opener for Lindstrom as a business to be in.
The timing is also right for this as we continue to argue that the game mechanics driving the likes of Foursquare will lose novelty. A user “value exchange” based more on monetary significance will be vital. Crowley and company are the first to admit this, and recent funding gives them runway to implement it (see yesterday’s venue page revamp).
PlacePop’s free iPhone app uses similar language as LooptStar, but it creates an interface closer to physical loyalty cards. This includes numbers that are physically punched (tapped) whenever a user checks in. This format has the benefit of familiarity, argues Lindstrom, so there is no “re-education” on the part of users and advertisers.
There is also the simplicity of standardization so users aren’t carrying around 12 different loyalty cards, each with different tiers of achievement. PlacePop has a standardized system involving bronze, silver, gold and platinum levels (each tied to the number of check-ins).
Cards are prepopulated for local businesses, while they can show up to claim their profile and start making offers. But it would seem that before the system reaches a critical mass of real merchant offers, there is a bit of a chicken-and-egg challenge in getting users to check in.
Lindstrom argues that this early usage is driven by social means and game mechanics (hey, Foursquare did it). This comes full with Facebook and Twitter integration for communicating check-ins and achievement back to these social graphs. Still, check-in fatigue looms as a challenge in this new age of geo-social apps.
As for businesses showing up to claim listings, that’s likewise a challenge we’ve been shouting amid the noise in the mobile/local/social space. For PlacePop, the activity on the network could be a selling point (again, a function of chicken and egg). But more so, Lindstrom argues back to the familiarity point for small and large businesses alike.
“When you’re talking about CMOs of publicly traded companies, they know what to do with loyalty cards because they’ve been doing it for so long,” says Lindstrom. “Then when they go to their 58-year-old CEO, they’re not talking about mayorships and badges … it’s a familiar conversation.”
One additional challenge here is what I like to call “check-in fraud.” This is when you check in to a place when you’re not really there. It’s rampant on Foursquare, but it’s beginning to pull back on rewarding badges and mayorships when this happens (governed by GPS positioning), with a view toward monetizing the service.
Lindstrom recognizes this problem and asserts that it can be circumvented by offering check-ins only within 300 feet of a business. More so, urge businesses to make offers that aren’t conducive to fraud (i.e., buy one, get one free). And he argues that check-ins tied to Facebook or Twitter benefit businesses virally, regardless of a user’s coordinates.
Next up for Lindstrom and company will be tying the offers to mobile payments, a parallel area of growth that will open lots of doors when it hits full stride. This could make the product more transaction-based, rather than just check-ins — another enticement for advertisers. Lindstrom is also big on the idea of casting a wide net to reach SMBs.
“That’s exactly where we want to play,” he says, sell it directly, through SEO, or work with a Yellow Pages company or someone like that to sell it.”
Related: Lindstrom and I will be speaking (separate panels) at next week’s Geo-Loco show in San Francisco. You can check out the agenda and register here.