Foursquare: Groupon is only ‘version 1.0’ of the daily deals model

Groupon is by far the biggest daily deals company around. The emerging space it occupies is already crowded with carbon copies, though, so how are the successful ones going to stand out from the crowd? And who can do it better than Groupon?

Well, according to Dennis Crowley, there’s plenty of room for improvement.

In a TCTV interview with Erick Schonfeld, the Foursquare CEO says that the current model of a today’s typical daily deals company is “version 1.0,” implying that the new market has a long way to go before fully leveraging modern technology. Foursquare, Dennis says, is “version 2.0 or 3.0,” implying that Groupon and its horde of mimickers are actually behind in some ways.

Specifically, Dennis is referring to internet-born startups that drive foot traffic to businesses—a space that, while the two companies are fundamentally different, Foursquare and Groupon both occupy. Obviously, Groupon is a lot more focused on driving this traffic, while for Foursquare, it’s more of a secondary effect. But Foursquare has key components that Groupon doesn’t, Dennis explains: gaming mechanisms, for example, which in turn drive superior loyalty. In fact, Foursquare’s greatest asset is its ability to create loyalty—and that is where Dennis believes the long-term value lies in daily deals.

What Groupon has done best, Dennis says, is teach “an army of merchants that there are better tools” to market their products and services. And of course, Foursquare isn’t a perfect model, either—merchants have difficulty valuing a checkin compared to financially tangible vouchers and sales. But Dennis insists that Foursquare’s aggregate checkin value should be coveted by merchants because location-based data is a new dynamic of analyzing existing and potential customers—something today’s version 1.0 companies aren’t (yet) doing.