As the popularity of Foursquare grows, businesses interest in how the location-based application can help their business grows as well, which is why we’re taking this opportunity to help explain the basics.

What is Foursquare?
Foursquare is a social networking website that allows people to announce to their friends and the world where they are geographically. This service can be used by the infamous iPhone, the increasingly popular Android phones or any other mobile device with GPS or text messaging.

How Does Foursquare Work?
To illustrate, our good fictitious friend Bob is going to help us out. When Bob visits Starbucks, he can pull up the Foursquare mobile application on his phone and check-in. When he does that, it’s announced (similar to a Facebook status update) to his Foursquare friends that he is getting his caffeine fix. Bob can also identify in real time where his friends have checked-in and can even use Foursquare as a medium to find and meet up with them. These check-ins can also be pushed to a variety of other social media platforms, such as Facebook and Twitter, and dramatically expand their audience.

Foursquare 101: How Businesses Use It

  1. Businesses offering deals to Foursquare users incentivize them to check in and check-ins become effective advertisements to those users’ friends. So when Bob got $1 off his Frappuccino® because he checked-in at Starbucks, all of his friends could see that.
  2. Customer check-ins make their nearby friends aware of where they are and increase the likelihood that their friends will join them at the business they are at. In our example, Bob’s friends might even stop by and catch up with him over a latte at Starbucks once they find out he is there, which in turn boosts traffic to this particular coffee shop.
  3. Businesses near other businesses (at malls, for instance) can steal customer traffic and dollars from other stores by offering a deal that is visible when customers are checking-in nearby. For example, Bob might have been heading to another local coffee house and found out that it was his lucky day; the Starbucks just down the street had a deal and stopped by there instead.
  4. Customers go out of their way to stop by and check into businesses to become and stay the mayor (the person with the most number of check-ins). This is especially fueled when businesses offer a special deal just for the Mayor. For example, Bob may even change his commute route to make sure he can keep getting his exclusive mayor discount which keeps him coming back for his venti cappuccino at that location much more frequently.
  5. Boost check in frequency from the most loyal customers by offering a deal to be redeemed after every 3rd check-in. Bob loves this because he is rewarded for being a loyal customer and doesn’t have to carry around one of those paper “buy-10-drinks-and-get-1-free” cards.

Find out more about how to use specific Foursquare specials: Foursquare Specials: How Local, Small Businesses Can Use Them.