Capital One is using Foursquare to push offers to customers

Capital One is piloting the use of location-based customer data to push offers to customers who shop at partner retailers. The bank has been working with data and analytics platform Foursquare to roll out real-time notifications within the mobile banking app. Foursquare, a nine-year-old company that began as a checkin app, is now using its technology to help brands push offers to users based on their location using its software development kit Pilgrim. Capital One has been beta testing location-based offers for a year, with the goal to drive up adoption of its cards at selected retailers and purchase categories. Capital One did not respond to a request for comment. "They use our tools within their app that enables them to recognize using Pilgrim when a phone is in your pocket or and when [the customer] has walked into 105 places in our database of venues that detect where you are," said Foursquare CEO Jeff Glueck, speaking at Benzinga's fintech conference in New York on Wednesday. The technology allows for real-time messaging and analytics, letting banks message contextually relevant offers to consumers physically located at partner retailers. Pushing out location-based offers can help institutions incentivize customers to use their cards at specific establishments; the analytics can also offer insights to help companies understand which types of businesses customers typically use their cards and can help companies cross-check the locations of transactions to fight fraud, according to Foursquare. But the technology is still in its early stages of application. Challenges with location-based marketing are ensuring the offers are relevant and not overwhelming for the consumer, maintaining clarity on permissions, and making sure the offers are compelling enough to stand out among the sea of notifications that users get on a daily basis. "Context is a filter, and the second layer is personalization," said Glueck. "You have to be confident that they're at the place, and it has to be a good [enough] offer -- if it's not a substantial enough offer, [the customer] doesn't bother." Other considerations include time of day, and frequency of the notifications, he added. Foursquare declined to say which retailers are part of the Capital One pilot, but Glueck noted the objective is to become "top of wallet" -- or being the go-to card within the customer's mobile wallet that they use as a default payment method at retailers. The card issuer may also be wanting to drive up use for specific types of purchases, including, for example, gas stations, restaurants or hotels. Capital One has been an early mover among institutions that are personalizing interactions with customers based on user data. Capital One’s Second Look program monitors customers' spending habits. It can give detailed insights into expense patterns of customers, beamed through push notifications. The system is dependent on machine-learning algorithms, but customers have a say on the kinds of alerts they want to receive. While segmenting customers by targeting them to take up offers based on location-based behavioral patterns is the "holy grail" of marketing, companies using the technology need to contend with two risks to manage -- maintaining consistent activity, and avoiding the "creep" factor, said PayGility Advisors partner Christienne Genaro. "The risk for the merchant is that the business it drives is one tie only, like Groupon ... the other risk is that if not done properly, they could be seen as invasive or intrusive by the cardholder -- being pinged by offers they feel are irrelevant, or the feel that they are being 'followed' even if they opt in."