Location-based services like Foursquare give merchants and brands an opportunity to connect with their consumer, but what is a realistic expectation for check-in and redemption rates?

Lets start with some recent statistics for the use of geosocial and location-based services.

Earlier this month the Pew Internet & American Life Project released their report on Geosocial and Location-Based Services on Smartphones stating that while 28% of American adults use mobile and social location-based services, only 4% of all adults use their phones to check in to locations using geosocial services such as Foursquare or Gowalla.

It shouldn’t be a surprise that only 4% of adults use their phones to check-in to location-based services like Foursquare. As of June 2011, Foursquare only has 10 million registered users suggesting a majority of those adults use the service.

The research goes on to show that one in ten smartphone owners (12%) have used a geosocial (“check-in”) service such as Foursquare or Gowalla, and 55% of smartphone owners have used a location- based information service.

And finally, it appears that services like Foursquare are most popular with younger adults (under age 50) and minorities.

Check-In Rate (CIR) Benchmarks

So, what is a realistic check-in rate for your brand’s geosocial presence? Here are some guidelines:

  • While Pew reports 4-5% of Americans adults use their phones to check-in to location-based services, this would assume 100% of your consumers would check-in – which isn’t likely.
  • The Washington Redskins reported a check-in rate of 2.6% during the 2010 NFL season, but they were offering a reward (a Redskins badge) and had a lot of falsified check-ins from Indonesia to unlock the badge.
  • My research from the 2010 NFL season shows that only 0.26% of NFL fans checked-in to the stadium on game day.

As a brand or merchant, if you have not allocated any dollars towards an awareness campaign you should likely expect a low check-in rate for your business. I would assume a CIR (check-in rate) of 0.25% – 0.50% or lower at the start of your campaign.

Unlock / Redemption Rate (URR) Benchmarks

Now that you have created a geosocial offer, what is a realistic redemption rate for your brand? Here are some guidelines:

  • In August 2010, Chili’s Grill & Bar reported that the chain saw a redemption rate of 20%. (Source)
  • In May 2011, Murphy USA reported that 15,000 people checked-in over 1,000 locations in one weekend for $2 off a $20 gas purchase. While it isn’t a clear redemption rate, it does show that only 15 people redeemed the offer per store. (Source)
  • In November 2010, Virgin America reported a 92% redemption rate for a three-day fare sale and promotion on Loopt. (Source)
  • LocalResponse, a 3rd party service, reports a 60% click-through rate (CTR) on offers and a 15-20% redemption rate on recent offers. (Source)

The data suggests a redemption rate of 20% is a solid benchmark, but I would actually recommend establishing a benchmark of 3-5%. Why? In my years of digital experience, e-commerce transactions convert at a rate of 1.5 – 5.0%. This is a good place to start, especially without any media behind your promotional offer.

It is also important to note the type of offer. A fare sale from Virgin America is much more attractive than a $5 off coupon. I would recommend testing multiple offers across the different location-based and geosocial services out there. This will allow you to develop your own benchmarks going forward.

What do you think of geosocial campaigns? Have you run a geosocial campaign on Foursquare, Gowalla, Facebook or similar service? Would you share the check-in and redemption rates? Share your thoughts below.

Source: Kathryn ZickuhrAaron Smith, Geosocial and Location-Based Services on Smartphones, Pew Internet & American Life Project, September 6, 2011, Download the Full Report.