ZenReach’s Big Bet on SMB WiFi Access

Online to Offline (O2O) marketing hasn’t grown as quickly as expected, in part, because registering for it is too hard. Now, former eBayLocal head Jack Abraham is introducing ZenReach, a simpler O2O service with minimal “friction.” ZenReach is based on plain vanilla WiFi access that a network of SMBs will provide to consumers in exchange for track their behavior and ultimately, the ability to target them for promotions.

The San Francisco-based service has been under development for 3 years and raised $50 million from the likes of Peter Thiel’s Founders Fund, Formation 8 (co-founder Joe Londsale sits on the board), Bain Capital, First Round Capital, Felicis Ventures and SV Angel.

It has 150 employees in three offices –San Francisco (headquarters), Scottsdale and Waterloo — and hopes to double the employee count within a year or so and add a European base in Dublin.

Abraham and company are not the first to use the carrot of free WiFi hotspots in exchange for showing advertising and eventually, building links to commerce. Nor is the concept of using WiFi home pages as a gateway for targeting consumers unique. Since 2005, other contenders have included AnchorFree, which was airport oriented, and currently such players as WaveSpot and Intersection. (WaveSpot values its free marketing router at $199)

But with the rise of universal mobile marketing, the timing of a WiFi- based service is much stronger. There is also plenty of room to grow. Wi-Fi is currently being used in 28% of SMB locations, per a recent survey by Unacast.

The three key questions are:

1: Whether WiFi is an ideal, universal O2O channel. A WiFi based system competes against other O2O channels, including cellular check-ins, POS-based systems, email push systems and Card Linked Offers (none mutually exclusive)

2: Whether ZenReach’s simple registration will quickly gain the volume of consumers eluding other O2O providers

3: Whether the tradeoffs in keeping things simple will position the company for the big “close the loop” O2O payday anticipated from targeting and commerce.

On the latter point, ZenReach has made a definite tradeoff between its simple registration (i.e. providing your email , gender and age info on a one time basis) and adding more friction points to provide a greater level of services and analysis (i.e. linking credit cards and integrating with Point of Sales systems). It expects the easy registration process to help SMBs boost their customer lists by as much as 5x.

ZenReach makes no bones about providing simpler, less sophisticated analytics to its SMB customers –something it calls “smart CRM.” For instance, instead of showing purchase histories of every customer, it provides “walkthrough rates,” which provide incremental visits spurred by the App. From there, it can provide averages based on every purchase made at the store, which can give store a “good enough” sense of traffic, marketing conversion, and revenues. It also provides some basic segmenting capabilities.

But it also allows SMBs to integrate it with other advanced services that it has already acquired, such as emails from OpenTable or purchase data from a POS. Over time, it expects to add other capabilities, such as loyalty campaigns.


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