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New technology means new marketing.

In the summer of 2010, Foursquare’s Head of Business Development Tristan Walker and American Express’s Vice President of Global Marketing Capabilities David Wolf started talking about ways to work together to redefine loyalty for local merchants.

The fruit of their conversations is now on display in the city Austin, Texas where 60 merchants — including Whole Foods, Starwood Hotels and Stubb’s BBQ — are offering Foursquare users “spend $5, save $5″ rewards when they load the special and swipe their AmEx cards.

The pilot program started Friday and will run through Tuesday, March 15. Participating merchants have posted “Austin Unlocked” window clings to highlight their participation, and Foursquare users need only register their American Express cards to unlock this new type of special — the Loyalty Special…


Loyalty and Location in Real-Time

On Friday, Walker and I journeyed to Le Cafe Crepe so he could demonstrate the special in action. Upon arrival, Walker launched Foursquare, checked in to the cafe, tapped to redeem the offer and then hit the green “Load to Card” button to initiate the special — see a 44-second walk-through in the video above.

Several minutes later (there was a long line), Walker placed his order, the cashier swiped his AmEx card, and then together we waited for proof that the $5 savings reward had been activated by his swipe. Seconds later, Walker received a push notification alerting him that he had successfully redeemed the special. Soon thereafter, he also earned the “Swiped @ SXSW” badge — for each badge redeemed, American Express is donating $1 to Grounded in Music.

Walker was quick to point out that the experience was nearly frictionless, happening exactly at the time of sale without requiring integration with the cafe’s point-of-sale system.

This is what Walker and Wolf believe is a ground breaking initiative that finally creates the closed loop between a consumer’s digital behavior and their offline spending behavior.

Wolf calls the South by Southwest Interactive relationship with Foursquare, “phase one.”

Being a first-of-a-kind program, AmEx decided to not only fund the offer — it’s paying for all of those $5 credits — but to also send out a street team to recruit and train local merchants, print up informative cards for attendees and make QR code pins to get the word out at the festival.

American Express is making the financial investment because it believes it can use phase one to get to phase two: when the company’s local merchant network will be able to set up, run and fund their own offers.

Wolf talks about the partnership as a strategic move on behalf of the company to align itself with a hip startup working on the location-meets-loyalty challenge. “We wanted to partner with a young, innovative company who understands the importance of providing value to merchants,” he said.

Wolf also explains that “American Express is anxious to play in this space because of this closed loop of information that we get.” To create the closed-loop effect, American Express is allowing a third party to access its APIs for card member data, merchant data and transaction data for the first time ever.

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