A recent report from BI Intel­li­gence has ana­lyzed pre­cise­ly what loca­tion based ser­vices such as  Foursquare are actu­al­ly all about — and if they can be a gen­uine business.

The report from BI Intel­li­gence has tak­en a look at just how lead­ers in the space are going about attempt­ing to cre­ate sus­tain­able and large-scale busi­ness mod­els by exam­in­ing pre­cise­ly how and why the huge­ly suc­cess­ful Foursquare is suc­ceed­ing.  There are a num­ber of meth­ods being used by Foursquare, includ­ing ana­lyt­ics and yield man­age­ment, cus­tomer loy­al­ty, search and dis­cov­ery and deals.

The Vice Pres­i­dent and Head of Busi­ness Devel­op­ment for Foursquare, Hol­ger Lue­dorf, told BI Intel­li­gence that Foursquare intends to mon­e­tize the “mer­chant dash­board” which it present­ly offers to as many as 500,000 reg­is­tered mem­bers.  This is actu­al­ly a mas­sive oppor­tu­ni­ty due to the fact that local mer­chants have high fixed costs, with the dash­board allow­ing mer­chants to be able to run spe­cials, claim their venue and access a great deal of oth­er infor­ma­tion as to how their cus­tomers are inter­act­ing with their busi­ness in real time.

Foursquare is also intend­ing to replace “a dig­i­tal ver­sion of a stamp card”, which is where check-in spe­cials come in.  Fur­ther­more, Foursquare is present­ly part­ner­ing with such brands as Bra­vo and the New York Times in order to cre­ate brand­ed con­tent and badges linked to the check-in achieve­ments of users.  Because of the fact that it is effec­tive­ly oper­at­ing loy­al­ty rewards pro­grams for oth­er firms it should be able to go about mon­e­tiz­ing these partnerships.

A year ago Foursquare added the Explore fea­ture in order to allow users to search neigh­bor­hoods and to be able to gar­ner rec­om­men­da­tions for local busi­ness­es, a clear chal­lenge to the local reviews site Yelp and even to Google, but also a move to try to increase user engage­ment away from their phones.

Foursquare has also part­nered with a vari­ety of dai­ly deal sites over the course of the past year in order to offer real-time loca­tion-based deals, as well as ink­ing a deal with Amer­i­can Express to allow users access to loca­tion-based deals via their Amer­i­can Express card.