Location-based loyalty: Beyond an extra shot for the mayor

Loyalty programmes have been given a boost by location-based services and social media. Companies like Groupon can use twitter and the like to pump out masses of offers to huge groups, taking advantage of ridiculously fast scaling to become HUGE. Location-based applications like Foursquare, Gowalla and the rest have created a bridge between peoples movement, their custom and the chance to personalise services, deals and offers based on their habits and a GPS signal. Real-time, customised retailing is not that far away (shudder).

This is all great if a) you have a smartphone, b) you feel it’s worth it letting people know where you are 24/7 and c), all you do is shop.

Local loyalty

In exploring wider retail issues (read ‘decaying retail landscape’), like the point of constantly acquiring more ‘stuff’, the hoarding of capital (and jobs) by massive retailers, and the transformation of high streets into either ghost towns, or, freakish copies, perhaps we can do better than thinking we’ve cracked it by offering an extra-shot to the mayor?

Location-based loyalty programmes, enabled by cheap, easy-to-use technology, can become a transformative mechanism for resetting retail (pt I here) and helping high streets, neighborhoods and communities thrive by offering an incentive to participate in a local economy. Location-based loyalty programmes can combine the shift to collaboration and new currencies that are emerging online based around reputation etc, with the now urgent need to reconfigure our approach to retail and consumption.

This is not a new idea – the Brixton pound,a type of social currency which recently celebrated its 1st birthday, aims to keep money in Brixton. it has over 170 retailers signed up and over B£30o00 in circulation – (and they do good discounts).

Creating wider networks

Taking a social currency and adding a location-based loyalty effect that taps into the emerging participative economy and personal digital currencies landscape should be a logical step for all neighborhoods. The networks and ideas are already there both on and offline. Also, you don’t need a smartphone. It can be done by text message or by keyring.

More importantly , loyalty currency earn’t doesn’t just have to come in the form of a physical discount. Offering something distinct, unique and community-focused adds another layer to participation in a neighborhood, stimulating more interaction and broadening the network effect.

You walk into the store your card checks you in and you earn currency which can be used across a range of local networks, making it a more attractive choice than schlepping to the megastore and racking up your points. It helps independent retailers collaborate rather than just compete giving them scale against the rapacious megastores. It also brings customers into the equation as well as other parts of civil society. For although the customers wont be buying out of altruism – i.e. wanting to help their area out, they will undoubtedly get more out of a growing relationship and loose network benefits of being part of a community where you know where your money is going.

Collaboration wins

This is the essence of why collaboration trumps 20th Century scalable efficiency every time. Who has your best interest at heart? The chain retailer whose profits end up being spent on the CEOs alpine retreat? Or, the neighborhood business that values your personal participation in their venture (their real lives). Friendly customer service alone, much like uninspiring corporate responsibility and faux-localism, don’t cut it anymore.

Giving over money for an inanimate object has had its day -and it was found wanting. Next gen retailers will win by building communities around their enterprises. These communities will extend across local, physical and digital networks. A new social currency that takes advantage of location-based loyalty possibilities has the potential to take spending back from the big retailers (until they up their game and respond to the changes demanded) and create participative, neighborhood-focused economies that are diverse, supportive and enjoyable. Eventually retail will become less of a zero sum game. These type of incremental rewards can become powerful (quickly scalable) demonstrations of an alternative.