How Location Helps Small Businesses Capitalize On Customers [Video]

It is no secret the online deal space has exploded over the past few years. Companies like Groupon, LivingSocial, and Bloomspot have seen incredible growth and for good reason: The online small business revolution is upon us. Offering discounts on goods and services is nothing new, but having location data and intent is a holy grail.

"If you think about how local business acquire customers, often they know very little about who is coming into their location," says Mark Suster, Partner at GRP Partners. "I think mobile gives people that opportunity." 

Mobile location may turn out to be the most pivotal innovation for small businesses since the cash register. Thanks to the work of companies like Foursquare who have pioneered the "check-in," businesses can now monitor more efficiently who is coming to their store, and also who is visiting their competitors. This data is vital to any business, and the quickest to embrace and adapt have taken it a step further and started offering deals to customers who check in.

From my experience and research, we are just scratching at the surface of how mobile location can empower a business. For proprietors loyalty has always been the name of the game, and it's now turned into a key investment theme in consumer technology. I use "frequent" customer cards all the time, and cannot wait for the day when my repeat purchases are tracked electronically so that my wallet does not resemble George Costanza's, full of receipts and 10th-sandwich-free cards.

"If I go somewhere once a month, should I be different than someone who goes there once a year or has never been there before?" says James D. Robinson, Managing Partner, RRE Ventures. "Well, in the past there was no way for the restaurant to discern that."

A number of companies are attacking loyalty from various angles. The most notable brand at the moment is Klout, which tracks my social influence online. I hope this will one day translate to a deal or upgrade because I am recognized as an important customer. Recently I visited Seth Priebatsch, founder of LevelUp, which leverages the game mechanics from his other company SCVNGR to create new types of loyalty rewards for businesses. It will be very interesting to keep an eye on how the incumbent daily deal companies integrate loyalty programs. Clearly online-based loyalty is an emerging mobile category, as is the intersection between mobile location technology and small business. As my good friend David Tisch puts it: "This is the first time in history when small businesses don't feel like the Internet is a trick, and see it as a tool to gain more users or better relationships with their current customers."

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