American Express yesterday announced the rollout of a marketing partnership with Foursquare allowing customers to link their AmEx and Foursquare accounts to take advantage of special deals at retailers including Sports Authority, H&M and several New York restaurants. When users see an offer they want, they check in on their phone at participating locations to "load" the deal to their card. The saving is automatically credited to their account.
The program's national launch follows a pilot the two companies ran at the South by Southwest conference in March. Edward Gilligan, vice chairman of American Express, told The New York Times that cardholders participating in the test spent 20% more on average than those who didn't have access to the special deals. He also indicated the card giant hopes to attract younger, more tech-savvy customers by teaming up with Foursquare.
For Foursquare, the arrangement provides a credibility boost and enhances the company's efforts to shift toward providing users real-world rewards for check-ins, rather than simply the mayorships or virtual badges the service became known for. The start-up, which now claims 10 million users, isn't getting revenue from the deal but is hoping it leads to more lucrative alliances. That makes sense. But can AmEx lure younger users via Foursquare?
That seems like a tougher proposition. Gilligan said the company doesn't tend to skew "under 35." For one thing, most American Express cards are installment accounts that have to be paid off at the end of each month. If younger consumers tend to favor revolving credit cards that can be paid over time, will the offers be compelling enough to make them sign up for an AmEx card?
The initial AmEx/Foursquare deals include a $10 credit for spending $75 or more at H&M, and a $20 rebate for spending $50 at Sports Authority. Not bad, but not necessarily dazzling enough to make someone want to get an American Express card.
Success in new customer acquisition will also depend on how much effort AmEx and Foursquare put behind marketing the program to non-cardholders. What -- if any -- plans they have in that regard, aren't clear from the announcement.
When it comes to getting existing cardholders to spend more, that remains to be seen. The test done at the South by Southwest conference showing 20% higher spending by people in the pilot may be somewhat inflated by the concentration of seriously tech-savvy users the conference attracts. That hothouse environment is also well-suited to people sharing information about the local deals, increasing conversions. As American Express expands the program beyond a handful of stores, it will be interesting to see if it translates into higher spending more widely.