Shopkick Attempting to Redefine Location Based Marketing

Jan 25, 2012

If we played a word association game and I said “Location Based Marketing”, you might say “Foursquare”. After all, the system was the first to grab widespread consumer attention in the space and put “LBM” in our marketing lexicon.  Competition has sprung from every corner, and now Shopkick is hoping not just to represent the most formidable competitor to Foursquare, but to leapfrog it and become “the” model for how retailers should incorporate location based marketing into their marketing mix.

In a press release issued yesterday, Shopkick proudly cited some stats that got our attention:

  • 1 billion in-app deals and offers viewed
  • 3 million active users just over a year since launch
  • 5 million walk-ins to partner stores in December 2011, doubling in just four months
  • 10 million product scans, up from 7 million in August 2011 and 3 million in February 2011

Retailers have gotten on board on a national scope, as Shopkick accounted for more than 4,000 individual stores across multiple retailers and 250 of the country’s largest malls participating in the program. The list includes American Eagle Outfitters, Best Buy, Crate and Barrel, Macy’s,  The Sports Authority, Target, Toys”R”Us, west elm and The Wet Seal. A relationship with Simon Property Group (the nation’s largest mall operator) will further proliferate Shopkick penetration across national merchants and even has partnered in to launch something called “Buy and Collect”. Shopkick has also enticed over 35 familiar CPG brands to play the game including Clorox, Kraft Foods, Procter & Gamble, Unilever, and Gerber.

The key to how Shopkick is attempting to redefine location based marketing is its technology.  Patent pending proprietary technology allows the Shopkick app to emit a signal from within the participating store which is picked up by a shopper’s mobile device. Shopkick knows when the consumer is actually, physically, in the store and therefore can pledge to retailers that the promotions and offers sent to that consumer are being optimized based on location and presumably should perform better than alternatives. Shopkick contrasts its technology from the widely deployed GPS technology found on most smartphones, stating that GPS has a typical error radius of 500 yards on mobile phones.

Shopkick does have some cool, innovative technology. And there are others who are offering geo-fencing capabilities, notably the group supporting a Whole Foods test in Boulder, Colorado. For the longer run, redefining location based marketing will take more than technology.

Here are some thoughts to consider:

  1. Being able to identify consumers in proximity of a purchase decision is important, but how detailed is that identification and can custom offers be presented?
  2. Shopkick rewards members with Kicks, a loyalty currency which it owns. Implied in this is that the retailer may be giving up control of its loyalty currency to Shopkick
  3. Though I love the experiment, we’ve yet to see that rewarding consumers just for showing up has legs. A welcome gift is good, but how do we take people from visit to purchase?

Here is an even bigger thought to consider. Shopkick might be a stepping stone to a nationwide coalition loyalty program in the US. From reading the list of participating retailers in this post and applying some imagination to what Simon Property group could do, the retail mall could easily be predicted to have a Shopkick logo right in the middle of every consumer impression. Whether that plays out will be subject to debate and we’ll cover that topic in a future post.

For now, technology aside, Shopkick has one big advantage over Foursquare – a name dropping list of national retailers. Outside of the well publicized test with American Express last year, Foursquare hasn’t much more to crow about. That in itself, might make Shopkick’s attempt to redefine location based marketing much easier.