Austin, Texas — Scvngr CEO Seth Priebatsch said today “the game layer has the opportunity to be 10X larger in terms of influence it has on our lives than the social [layer].” Priebatsch was comparing the potential of location-based services to Facebook’s monumental user growth and how that site’s open graph creates expansion opportunities for his company.
The 22-year-old exec made the remarks while delivering the South By Southwest Interactive keynote address in front of a live audience estimated at around 2,500 (pictured). Some 3,500 other SXSW attendees watched via simulcast in 11 other similarly filled rooms at the Austin Convention Center.
Social media companies generally like to publicly talk about user experience more than marketing/business possibilities, but Priebatsch didn’t avoid the topic of monetization. While discussing game mechanics theory, customer acquisition and loyalty were two of his five bullet points.
On the first topic, he said Groupon has proven that engaging consumers with a “free lunch scenario” and then delivering on the promise increases users numbers. A key part to the daily deals site’s success, Priebatsch said, has been removing consumer skepticism about too-good-to-be-true offers by requiring a number of people to purchase the vouchers before they are “tipped.”
“Ninety-five percent of Groupons tip before 8 a.m.,” he said. “So [Groupon] can show you this free lunch, they can justify it to you, and you still don’t have to do any work. It’s the ultimate free lunch dynamic.”
When it comes to loyalty, Priebatsch singled out American Express as a brand that uses the gaming concept of status as a marketing tool with its different levels of credit card membership. “[AmEx has] subdivided it really effectively,” he said. “And don’t think they are doing this by accident. They know what they are doing. They are doing it very specifically… So ‘+1’ to AmEx for status [gaming] in the real world.”
Priebatsch also spoke about “LevelUp,” a Scvngr deals program that launched two days ago as a pilot in Boston and Philadelphia. The initiative puts a gaming twist on Groupon and LivingSocial’s business models by encouraging people to attain status levels at restaurants, bars, and other shops. “If it works,” he said, “we’ll see newcomers becoming regulars.”
In addition, Priebatsch was frank about whether offering rewards on location-based services was even a good idea due to creating false expectations. He pointed to the Facebook Places-Gap effort, which offered a free pair of jeans to people checking into the retailer’s locations.
The fast-talking new media wunderkind said his team researched the Gap campaign and found out that it created little repeat use of Facebook Places. “The interesting question becomes, ‘Did they keep checking in?'” he said. “We did a lot of digging, and resoundingly, the answer is ‘no.’ People didn’t keep checking in. And this gets to the problem of what we may have done with reward [offers]….We may have set up people to always expect something.”
Lastly, a pair of interesting tidbits delivered by Priebatsch about partner Buffalo Wild Wings:
– The restaurant chain has averaged 1,000 check-ins a week at some locations when offering rewards.
– It picked up 130,000 unique Scvngr users in the first five weeks of its effort.