In an end of the year prediction post I wrote for OPEN Forum, I listed location aware social media tools as something that would get big time attention in 2010. (See: 5 Trends that Will Shape Small Business in 2010)

The idea behind location awareness is that people will use the GPS capabilities in today’s mobile devices to check-in, tweet, review, and refer and add their location while doing so. Today I would like to talk about what I think is one of the first location aware services that is already beginning to impact small business.

The service is called Foursquare and while it’s receiving lots of hype from the bleeding edge social media types as the next Twitter, it may be totally foreign, or at least nonsensical, to many small business owners. While I want to use this post to introduce you to Foursquare, keep in mind that my primary point of view is that of the small business marketer and what I believe Foursquare has to offer, and not really the Foursquare user per se.

Having said that I do first feel the need to give you an overview of Foursquare.

The big picture

Foursquare is a location enabled service that allows users to “check in” when then stop at a bar, restaurant, park, bookstore or really anywhere they want to list. The service further allows users to connect with friends and alert them of your location if you choose. There are other services that have tackled this basic function, such as Loopt, Brightkite, Gowalla, and even Google Latitude, but Foursquare also turned this activity into a game: a point that I believe led to its current role as a leader in this evolving space. (I’m also keeping an eye on Twitter co-founder Jack Dorsey’s location play in private beta called Square)

Foursquare is self-described as – “Think: 50% friend-finder, 30% social cityguide, 20% nightlife game.”

Users compete with check-ins to earn points for their city, badges for various types of activity and to become mayor of frequented spots. Just like Twitter back in early 2007 none of this makes much sense until you play with it a while and until you have some folks to follow and connect with. (In fact, it doesn’t really make that much sense then, but there’s something sort of addictive about it.)

Users also add and update information about businesses, write tips and make suggestions for anyone to consume. This rating and reviewing function treads on the turf of services such as Yelp! and acts as another data point for people trying to locate a good pizza on the Upper East Side for example.

Foursquare is set-up around cities and enhances the kind of neighborhood, hyper-local, branding and community building that is so important to local type small businesses. The service is currently available in a growing list of cities and is driven by iPhone, Android and Blackberry apps. Check out the Foursquare help page for some more detail.

OK and now on the real reason I’m writing today. I’m not ready to suggest that every business rush to Foursquare as the next red hot thing, not yet anyway, but I do want to point our a handful of reasons that many small business should start paying attention to this growing force, even if you don’t get it.

Below are seven reasons why I think Foursquare may hold promise for small business

1) Hyper local, tech savvy, evangelists – Foursquare user are people that really love their neighborhoods, getting out and evangelizing the businesses they love. This tech savvy, early adopter is exactly the kind of consumer business should kill for as they often influence large circles. Embracing Foursquare and giving these tech leaders the tools to promote your business is just plain smart business.

2) Online offline – I’ve been writing a lot about this lately, but Foursquare is yet another way for local business to use the efficient online tools to drive more in-person, offline activity. People are physically checking in to your business and talking about online in what can turn into a tremendously effective one-two punch.

3) Make offers – On a recent trip to Chicago I checked into my Marriott on Foursquare and immediately received notice that three nearby businesses had a special offer for me. Currently Foursquare allows just about any business to use their platform to offer deals and promotions to users. You can visit the Foursquare business page to get your business signed up. It’s free for now, but I’m guessing this is big revenue piece for them in the future.

4) Track and reward – Foursquare’s gaming functionality allows businesses to create special promotions for mayors and badge earners and in effect setting up a competition among their most loyal fans. The image below comes from a special promotion hosted by blynk organic, a restaurant in North Carolina. By creating and communicating Foursquare’s tools and platform you can begin to educate customers and create Foursquare advocates for your business. Some bars and restaurants routinely promote free offers for mayors.

5) The power of making it a game – One of the most intriguing aspects of Foursquare is the game. It’s amazing what some folks will do in order to win a game, come in first or, in this case, be the mayor of a popular spot. Gaming and entertainment are huge money winners (video games rival the movie industry in sales) and any small business that can find ways to add gaming elements tied to patronizing a business may just find a real competitive edge.

6) Automated CRM data – So many small businesses have little of no way to track customer behavior. A coffee shop may have a patron that comes in daily for years, but they have no way to track anything other than a face and friendly smile. Every business should find ways to capture everything they can about a customer. Obviously email is a great tool and can be very effective for follow up marketing. Foursquare usage however goes far beyond that. Foursquare can provide business owners with check-in stats for users. What this means is that the customer that comes in every day can now be tracked and even incentivized to get a free cup of coffee for every tenth check-in. It’s like the digital/social version of the loyalty card. Please tell me you see this as huge potential.

7) Sync with Twitter and Facebook – Like all good social media platforms Foursquare understood the need to integrate with platforms that others already use. Foursquare users have the option to tweet or add a Facebook status update every time they check-in. What this means is that a Facebook user with a few hundred friends might expose your business by way of a Foursquare check-in to thousands of Facebook walls. While many of those folks on Twitter or Facebook may not be in your part of town, I’m thinking it’s still a pretty good thing for the brand.

While I’ll caution again that Foursquare might not be the highest priority for many businesses, it’s something that is coming and will be put to use by businesses outside of the retail and entertainment world (I can already imaging how real estate agents could use this.) Businesses that get how to use, stimulate adoption and promote Foursquare now could hold a significant advantage when and if Foursquare becomes the next Twitter.

Sidebar: Look for Facebook or Google to acquire Foursquare before the year is over.

Image credit: Joshua Kaufman