Over four million people are registered with Foursquare. How many actually use the service on a daily basis is significantly lower. Comparing that with the over 600 million on Facebook and almost 200 million on Twitter, Foursquare has quite a bit of ground to cover before they become an ‘it’ social network.

Will they get there? Based on what they offer the great ego of social media the answer is – no.

Like many, I dove into Foursquare…furiously checking in to the point where I actually became a mayor of my favorite Starbucks. And, what did I reap from all this effort?

Badges. I’m sorry but I don’t need no badges!

At this point in its development Foursquare is a game. Collecting badges is fun – for some – but the novelty wears off. And that is the problem. While our smart phones are the gateway to increased connectivity with people and products, we need more rewards than a digital badge. The whole point of social media is “what’s in it for me?”

The obvious success of the coupon giants like Groupon and Living Social proves that people will participate if there is something to gain. Foursquare has an advantage over the other services in that it reaches consumers at the point of sale. It has us at hello. Unfortunately, too many businesses ignore this opportunity. Worse, they try to leverage participation by making a future offer. If you don’t win me on the first visit why should I care about an offer I get on my third check-in?

Referencing my above comment about becoming a Starbucks mayor – you know what my reward was? A congratulations. Woopee! No drink upgrade, free scone – nothing! Starbucks missed an opportunity to reward a loyal – and frequent – customer and Foursquare started to lose my attention.

I do believe it is a matter of time before the Groupon, etc. bloom wears off. Why? Because businesses can only offer loss leaders for so long. Coupons do not guarantee loyalty. Check-ins may not guarantee loyalty but they prove presence. And, isn’t getting people to walk through your front door the key to marketing?

Businesses need to seize this opportunity. Reward me the first time I check-in. The incentive does not need to be huge. Any sort of valuable gesture will do. It shows me you are paying attention and you want to make an effort to earn my loyalty.

At the same time, promise me increased rewards for continuing patronage. Hook me the first time and I am likely to come back for more. The more I visit (and check-in) the more I get. Oh, and the more I spend at your business!

Until Foursquare convinces the business community of this unique advantage the less likely it is that geo-social programs will grow from games to commerce developers.

Your thoughts?

Steve Allan, Social Media Specialist, SMThree