Pepsi Loot & Shopkick, Social Media's First Location-based Loyalty Programs

Back in January, when I wrote, "Tasti D-Lite Program Needs Geolocation To Sell Product," I questioned why this ice-cream vendor was not 'geotagging' their tweets to enhance their loyalty program. At that time, Twitter was just rolling out its geolocation tool and Tasti D-Lite was missing an opportunity by not restricting their tweets to locations where their promotions were offered. Today, 'Pepsi Loot' the and 'shopkick' apps are the first two consumer product applications to offer location-based loyalty programs that will geo-target customers.

In mid-May, PepsiCo will launch Pepsi Loot, an iPhone app that uses geo-targeting for people to find nearby restaurants that serve Pepsi beverages, ranging from chains Taco Bell, Pizza Hut, Arby's and Panda Express to individual restaurants that have Pepsi contracts.

Similar to the established location-based social networks that exist like Foursquare and Gowalla, "check-ins" Katherine McPheeKatherine McPheewill be an important component of this application. Customers that check-in to restaurants that offer Pepsi will begin to earn loyalty 'loot' points which can then be used to obtain downloadable songs from artists such as Keane, Katherine McPhee and Jamie Cullum. Additionally, Pepsi customer restaurants have the opportunity to provide exclusive Pepsi Loot offers to their patrons, such as a free drink with an entrée purchase.

Taking their commitment to location-based marketing one step further, PepsiCo also recently became the exclusive non-alcoholic beverage partner with Foursquare, which will customize programs and retailer-specific experiments for the company beginning in June.

Shopkick is a new Palo Alto-based startup funded by Kleiner Perkins's iFund  and Reid Hoffman, founder and Chairman of LinkedIn, and investor in Facebook. BestBuy and Macy’s announced that they will be launch partners of a forthcoming app from 'shopkick' that will let consumers receive personalized offers, product information and peer advice, as well as guidance on which stores have the best deals.

Shopkick's first app CauseWorld, currently in the market, is a free, location-based mobile application for iPhone,iPod Touch and Android phones, which allows users to collect "karma points" while shopping, and then convert them into cash donations for charitable causes.  The response to shopkick's CauseWorld has been significant, where more than $100,000 have been donated to help earthquake victims in Haiti through the American Red Cross.

While Foursquare has a relatively small user base of one million, they have built a business model that both Pepsi Loot and shopkick have emulated. In March, Foursquare introduced a tool that lets businesses see who is checking into their locations, providing a dashboard of analytics that includes numbers of check-ins, the male-to-female ratio, the top days and times Foursquare visitors come, and the top visitors.

Rewards and loyalty programs like the ones outlined here are breaking new ground on the mobile landscape. If Foursquare and these product apps are going to succeed in this space, they need to continue to up their game with incentives of significance and appeal to a wide audience to stimulate mass adoption. However, with the groundwork laid here, I am certain that other types of companies like hotels and airlines will begin to rethink their existing dated loyalty programs to adopt some of these new practices.