For those of you who missed it today, Facebook launched into the location based social media business. This, in my humble opinion, has huge implications for car dealers.
First… some background:
Just to catch everyone up, location based media is mostly tied to mobile device usage as it uses cell towers and satellites your triangulate the location of your phone to target your exact location. Then, when you go somewhere like a restaurant you are given the option to check in, which basically means you give your phone permission to locate you and share your position with the all your friends on that particular service.
Foursquare is the most popular location based app in the auto industry, although outside the industry foursquare is neck and neck with Gowalla. Each have raving fans very loyal to their platforms and they are fierce competitors. In both foursquare and Gowalla, users earn points by check-in at places which unlock digital rewards called badges or stamps. If you are the most frequent visitor to a location you earn special designation that can earn you discounts or bragging rights. It’s like a game to compete with your friends to earn digital coupons, or statuses.
Location based services are somewhat new, about 2 years old, but are certainly the talk of the town. Business implications are potentially huge, but best practice details are still somewhat experimental since the market is so young.
I know of a dealer who is putting tips in foursquare that offers to buy a customers trade, regardless if they purchase a car from this dealership or not. This way when a customers checks in at a competitive store, the customer gets a friendly invitation to check out my friends store for an appraisal and he gets a shot at the deal. There is also talk about using this as a digital rewards program, much like a hertz gold card, except requiring the customer to check in at your business, this drives foot traffic for people looking to earn badges and discounts.
As I stated early, it’s the wild-west as to how to monetize these location based platforms, but because they drive users from the virtual word to a physical location, the opportunities are HUGE for local businesses like dealerships.
Until now the space has been pioneered by foursquare and Gowalla, about 40 smaller companies. Yelp is also getting into this business and as of today, so is faebook with a product called “facebook places.”
How will Facebook places effect dealerships?
Mass adoption – time to add to your mix.
The first thing that I see with location based services is that is has NOT been a ‘’must-have’ in a dealership’s marketing arsenal until now. Ive spoken to a few hundred dealers in the last few months and I often get asked when to engage location based media. My advice was that because foursquare has only about 2.5 million users, its not big enough to justify for everyone to be involved. I recommend dealers watch the space and see how it matures unless their store is known for being cutting edge as its core competency. These leading edge dealerships need to get involved immediately to pioneer the market because that is what defines them, however, for most pragmatic dealers, there was not enough critical mass to get involved… this has now changed.
While foursquare has 2.5 million users, facebook has 500 million users clearly in one day the location based media market has hit a whole new level of scale that will now take off fast. Unless location based media fails completely, its time for dealers to jump in.
Reputation Management – new speed and scope:
In addition to an element of critical mass, think of how much easier facebook is than foursquare at adding comments, likes and other interactions to content. On foursquare almost all of the interaction stops once the check-in happens. On facebook the conversation is just getting going once a status update/wall post is made. Because of this you can certainly expect people to like/comment and respond at a much higher rate to the facebook check-ins about your dealership than they would on foursquare. Your customers’ friends will have a much lower barrier to adding real time opinions to your customers visits at your dealership.
Imagine this scenario: a customer comes to your showroom and checks in via facebook, instantly a few hundred of your customers’ friends will see that they are visiting your dealerships. How will your customers friends respond? What opinions will be shared with your customer on your showroom? Will it help the sale or will it be like adding a hundred third-basemen to your car deal?
These interactions will put a whole new spin and speed on reputation management. Your dealership will be talked about much more online, and it will be hard to track these conversations since facebook does not open up all of its content to the search engines, or even to other facebook users. (More on this later)
This level of transparency between friends, and the new speed at which information will be shared about your store, possibly without your knowledge, means you had better be on your “customer service” game. Simply responding to bad reviews will become an inadequate strategy; you had better stop the bad review before it happens. This level of proactive customer service is nothing new to those of you that read my post about how social media wont fix your dealership.
Privacy issues – be careful where you are tagged
There are some potential privacy issues with places, particularly with tagging, however but facebook is clearly playing conservative with the general privacy settings since their recent privacy fiasco. The default privacy setting is that your location, when you “allow,” will only show your check-ins to your friends, you will have to manually switch it to be open to the world. (Again, this is why you will not necessarily see or have access to a large percentage of the discussions about your dealership.)
You can tag anyone you like in your posts with you, even if they are not there, as long as tagging is “on” for them. This, in my opinion is where there some privacy complaints will come in. Friends could play a cruel joke such as taging you at a stip club even though you are not there, sharing this false location with your spouse who thinks you are on a business trip. Ouch. Far fetched? Sure. But the point is the same, think of all the places you don’t want to personally be tagged or have your business tagged. Are you going to give this control to others?
The good news is you are notified anytime someone tags you, and you can immediately remove the tag, but because this is done in real time, coupled with the viral nature of the web, it could mean trouble for some people, especially celebrities, those with estranged stalker exes, or businesses with reputations to protect.
Tagging could, however, be very useful for dealerships to tag themselves, and to be tagged, when they are out and about doing good things like attending local charity events and community activities. It will be much easier to share with the world how involved you are with the community and the positive benefits of that are huge. This is just another example of how social media is a very sharp tool, but it cuts both ways, good and bad.
Connect with business pages
Little has been said about how places will be integrated with business pages, except is sounded like users could tag themselves at your business, it then creates a “wall” of news stories of people who check in at that page, and that business could click a link at the bottom of a location’s page and claim it as their own.
The facebook place page for a particular location will show who has checked in at that location. It is unclear if, due to privacy settings, business will have access to all the comments and check-ins at their location. It is also unclear if business can advertise on these pages. This would be HOT advertising real estate, especially if you can place your ads on your competitors’ pages. If nothing else you could spark a hot bidding war over competitors pages, increasing the cost per click for ads on a for them.
Certainly this is valuable real estate and I guarantee facebook will drive lots of revenue from these pages despite being tight lipped about their plans at this point. Again, this is another “wait and see” opportunity, so keep a keen eye out…
Virtual world vs Physical world
The real value in location-based media is that it makes a direct connection between people hanging out in the virtual world, and now driving them back to the physical world, which is where our cash registers ring. Facebook places will be a sure way to guarantee ROI for local business… its just exactly clear how or when. One thing is certain though location based media will mature to being one of the most quantifiable ways to drive ROI from the web. Now that facebook is in the game with their HUGE audience location based media is not something any local business can ignore.