Location Marketing has been gaining momentum for the last few years through location-based services like Yelp, Foursquare and Gowalla, and just as Social Engagement burst into the boardroom in 2008, Location Marketing is set for the same explosion in 2011. With Facebook’s recent introduction of Deals, Location Marketing has begun to receive mainstream attention. In case you missed the announcement, you’ll want to watch this short video to get an idea of just how big this could be.

Because Facebook Deals could be big for some of our clients, @cjrwInteractive decided to create a test Deal to get a solid understanding of the full process. The test Deal was simple enough: check into the CJRW Interactive office and receive a free pumpkin spice donut. Here is a quick walk-through of our experience:

Creating a Deal

The first step in creating a Deal is to claim a Place on Facebook. Once a place has been claimed, the rest of the Deal creation process is terribly simple. You will need to plan ahead for the following:

• Deal type: Individual, Friend, Loyalty or Charity. The Deal types allow for different triggers to deliver the deal. For instance, a Friend Deal can only be unlocked when a group of customers check in together.
• Deal definition: A brief statement of the Deal that is being offered, along with the action the customer must perform to claim the deal.
• Details and restrictions: Number of Deals available along with the time span that the Deal is active. The minimum time frame for a Deal is three hours.

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Once the details have been entered and the Deal has been created, it is then sent to Facebook for approval. In our experience, the approval process took 20 hours. It is important to know that the Deal details are not locked once the Deal has been approved by Facebook. We found that the time frame could be adjusted up until the time that the Deal expired.

Customer Experience

In our test we found the most consistent customer experience occurred when using touch.facebook.com. iPhone users could not access Deals without updating their Facebook application to the most current version. Android users could not access the Deal via any version of the Facebook application. At the time of the test, Blackberry did not have an application available that would allow customers to claim the Deal.

Finding nearby Deals is relatively user friendly as long as the user is in immediate proximity of the Facebook Place offering the Deal. As pictured above, Facebook Places with active Deals are marked with a yellow box  in the same way that Foursquare lets users know of nearby specials. Claiming a Deal is a simple touch process that is made available once a user performs the required trigger, in our test the trigger was an individual check-in.

Instructions for Deal redemption are delivered inside the application and via an e-mail sent to the e-mail account the customer has registered with Facebook. As with any reward redemption that takes place by presenting a screen, room for fraud exists. In case of suspicious activity, a Facebook page administrator can view the Place check-in history to verify that a check-in is true.

Promotion for the Brand/Business

The ability to attract new customers with incentives and reward loyal customers for their patronage are the obvious benefits of Facebook Deals. Perhaps the most significant features of Facebook Deals are the automatic publicity and tacit referrals a business receives by way of updates to user streams. On average, Facebook users have 130 friends, meaning each check-in could serve as 130 word-of-mouth endorsements.

Overall First Impression of Facebook Deals

The customer experience was frustrating, and has a long way to go. With the exception of iPhone users with the most current version of the Facebook app, we had to assist every user in order for them to claim our Deal. Any business planning on running a Facebook Deal needs to have a very well-prepared customer service team to help users as they attempt to claim the Deal.

The strength of Facebook Deals is the simplicity of Deal creation. The process is streamlined and built with the most basic user in mind. Just as Facebook has made it easy to target and buy advertising placement on Facebook, businesses can easily create their own Deals without outside assistance.

With more than 200 million active users currently accessing Facebook through their mobile devices, it is easy see the great value proposition Deals will hold once the mobile device issues are addressed. As Facebook works out the bugs on their end, businesses would be wise to do the same by experimenting with Facebook Deals now so they will be prepared to excel when the service matures.