Loyalty and engagement programs are now flooding the local ecosystem. They see themselves as the next step up from daily deals. At the same time, they hope to be more effective than “buy 10 get one free punch cards,” according to execs from LevelUp, Swipely and Closely who were among those who spoke at Street Fight Summit West in San Francisco.
LevelUp’s John Valentine said results from his company’s loyalty program are already apparent. The discounts and loyalty points give consumers a better feeling of value, and in a review of 500 locations, have resulted in consumers paying 7 percent more on average compared with regular tabs, he said.
Valentine acknowledged that the audience is self-selective. The fact that they have an iPhone suggests they’re more affluent. But it has “gone beyond the cool factor,” he said. “Using a phone for paying is becoming more normal.”
Mostly, however, Valentine said, the race is on to gain a strong customer base. LevelUp claims 200,000 users after just nine or 10 months, and it is growing 20 percent month over month. It winds up paying $5 to $8 apiece for customer acquisition, he said. Even if the industry does a fast switch into NFC, and starts working more with entities such as Google Wallet, “we don’t care,” Valentine added. “We will have a base of customers” and will be in a position of strength.
Swipely’s Angus Davis, meanwhile, suggests it is not going to be so easy getting that customer base. “Acquiring consumers is very difficult,” he said. Swipely’s approach is to build up customer loyalty, and after several months of experimentation, get them to develop restaurant specific loyalty programs.
Ultimately, it is all about fostering more repeat business for restaurants, said Davis. Sixty percent of their business comes from repeat business. Getting customer engagement and providing rich analytics will win merchant accounts over from the legacy of credit card accounts, “where bifurcation and crust has built up.”
A different approach is being taken by Closely. CEO Perry Evans said that the key is to give merchants “tools that get to the heart of loyalty.” Evans is especially intrigued by CardSpring, the new loyalty and promotions platform that allows consumers to opt in to various deals and services. It puts incentives in front of consumers at a time that makes sense. “You want to give them the remote control so they can turn things on and off and decide what channel they want,” he said.
“Consumers are living their lives facedown into their phones and into their network,” said Evans. “Shopping decisions are becoming more live and based on a new combination of quality [review related] and price [putting incentive in front of consumers at time it makes sense]. Give them the remote control to turn things on and off and give them a channel,” he said. That will beat Facebook. “The tools are not there. It centers only around the display ad category.”