The Value of the ‘Implicit’ Check-in

The knock on location-based services like Foursquare is most people don’t like to check in. But many do use Twitter or Facebook to give clues about where they are. A new service is going to help find them on behalf of local businesses that want to get to know their customers better.

LocalResponse aggregates real-time check-ins from dozens of sources, including Foursquare, Gowalla and Instagram. The twist is it also aggregates “implicit” check-ins on Facebook and Twitter. This can be when an update mentions business names, prepositions and geographical mentions and employs between 200 and 300 search terms. Over 80 percent of the data the service aggregates is culled from implicit checkins.

“We’re listening on Facebook and Twitter,” said Nihal Mehta, LocalResponse’s founder and CEO. “We are listening to 150 million tweets a day. We listen at the Twitter fire hose.”

Participating merchants will be able to see in real time all of the end users who have checked in implicitly or explicitly at that merchant’s business, and contact those end users directly with an offer or even a thank you. Merchants send consumers a message that arrives from the merchant’s Twitter account. Mehta said that because the messages come directly from merchants, rather than from a middleman service, the click through rate is 60 percent and the redemption rate for coupons and offers is between 15 and 30 percent.

For now, local merchants can use the service free of charge. Mehta said that at some point, the company may move to a freemium model and add premium features for which it would charge. He said that phase two of the rollout, which is aimed at brands and agencies, will employ either a CPC or a CPM payment model. That program is scheduled to go live on May 10.

The big potential fly in the ointment is freaking people out. A woman tweeting “hitting nobu tonite w bf” is probably not expecting Nobu to reply with an offer while she’s at dinner. As privacy kerfuffles like Facebook’s Beacon experience has shown, consumer expectations drive privacy. The service could also be abused with merchants doing little more than spam like the auto-response bots that already fill Twitter if you mention a product like iPad. Mehta doesn’t believe it will be problem.

“We’re actually seeing users check-in more when they get an offer,” he said.

LocalResponse will frequency cap offers at one per business per week and one per day from any LocalResponse business, according to Mehta. Each tweet will also offer opt-outs for the business and all LocalResponse offers, he said. By tweeting publicly about there whereabouts — “going to shake shack for a burger!” — users have given a “soft opt-in” to the establishment messaging them, according to Mehta. This is a “brand-new mechanic in the public communications medium of Twitter,” he said.

The sheer amount of data that LocalResponse collects is vast; according to Mehta one billion check-ins each month, both implicit and explicit, across more than 200 million unique users. The company has assembled a database of more than 500,000 merchants nationwide in order to match pair that information to existing businesses. Although the private beta testing was conducted almost exclusively in New York, the public beta, which went live on Tuesday, will be national.

LocalResponse grew out of Mehta’s startup Buzzd, a location-based city guide that competed in the same arena as Foursquare and Gowalla. The service generated limited interest among consumers but as the number of end users tweeting, checking in and Facebooking their locations increased, Mehta developed a new business model, using that information to assist merchants interested in reaching out to their regular customers directly.

“Many of the businesses we interviewed complained about Groupon,” said Mehta. “[Small businesses would tell us] that Groupon comes in and runs a deal, brings in hundreds of new customers but we don’t know their names; we can’t contact them again. They are eating margin but we don’t know who these people are.”

LocalResponse has its eyes nationally too, courting brands and agencies to set up campaigns that respond to customers mentioning them or specific terms or locations.  A test campaign with Kraft, for instance, sent coupons to users checked-in at Safeway or Pathway. That aspect rolls out next month, according to Mehta.