Category Archives: Conferences

SFSW16: Loyalty Must Emulate ‘Cheers,’ Not ‘Minority Report’

Loyalty products ride the crest of big data. They drive engagement and upsells based on customer behavior, and provide the analytics to steer future marketing efforts. But for SMBs, they are also an extra marketing expense and their value is still being established.

After five years or more in the market, we’d conservatively estimate there are fewer than 80,000 SMBs using electronic loyalty products today. Speaking at SFSW16 in San Francisco this week, FiveStars CEO Victor Ho, Belly CEO Logan LaHive and Empyr CEO Jon Carder weighed in on the value proposition and provided a progress report.

Ho noted that loyalty is just one components of a broader customer engagement suite that is being offered (including analytics, payment processing and marketing support.) But the digital punch card remains the most valuable component of the suite.

“In the past, you’d walk into a business, and they’d know who you are,” said Ho. “Now the only thing they compete on is service and personalization.”

Technology can help, adds Ho. But hopefully, the experience will be more like the friendly “Hey Norm” experience of Cheers than the cyborg vision of Minority Report. “You want to build on the existing relationship,” said Ho. “It goes so much further than saving $2” on a coupon.

FiveStars doesn’t report on the number of SMBs it has, but its online map shows more than 1,000 SMBs in the Bay Area. Last year, the company said it was on target to sign up over 8,000 SMBs.

Coffee shops, retailers and salons are its top customers, says Ho. Marijuana shops have been among its fastest growing categories and now represent its second largest retail category.

Belly’s LaHive, meanwhile, said the company and industry have learned a lot over the past five years. At one point, there were 30 companies in the space but now there are just a few, he noted. The problem in the early days was that there was an assumption that it would be driven by new tech channels.

“We put a lot into (Apple’s) Passbook,” says LaHive. But those products are really only about early adopters. Payments and Beacons are the connecting points for retail marketing in those cases. “It doesn’t go through the loyalty programs,” he said.

Yet loyalty programs remain vital for scaling store-to-consumer relationships and targeting specific communications to consumers, he says. And there is a demand for it. The success of loyalty programs such as Starbucks point the way. Chick Fil-A’s new loyalty app is the number one category app in The Apple Store this week, he noted.

LaHive reports that Belly has about 10,000 SMB accounts, and also is beginning to target Enterprise accounts that have local stores as well. Going forward, it is all about physical retailers.

Empyr’s Carder, in a separate SFSW16 session, said the key to winning over SMBs was to bridge the gap in attribution. “There is no way to tell if any of the online advertising has resulted in a an instore sale, or created burn out and attrition, he said. Moreover, the data platforms are valuable for estimating traffic, but they don’t allow you to track 100% of the data.

“They are more of an estimate. They are designed for local advertisers,” he said.

Card- linked “Pay Per Sale” platforms that can track all the data, however, are closer to the mark. Carder notes that MasterCard, Visa and Amex have revolutionized this part of the industry by making their purchase data available “in less than one minute.”

SFSW16: Airbnb Posits Itself as Hyperlocal’s New Face


Airbnb is focusing on posting hyperlocal information as part of its mission to add value and interest in its far-flung listing network. Roughly 75% of its 2.4 million listings in 340,000 cities are located outside of traditional urban centers.

North American Regional Operations head Aaron Zifkin, speaking this week at StreetFight Summit West in San Francisco, said the company is focused on expanding its guidebooks. “We try to get all the information that is useful for everyone who is travelling,” said Zifkin.

Top topics for the guidebooks include restaurants, performances, parks and trails to appeal to everyone from foodies to joggers. Airbnb is culling the information in partnerships with local chambers of commerce and downtown business development districts, along with hosts and other sources.

One of its most ambitious efforts was with the local government in Brooklyn. Airbnb estimates it has added over $200 million to the local economy.

It is a persuasive argument, but there is, of course, also a political angle here. While the company has vowed to collect local taxes, it is facing real pressure from the hospitality industry and local politicians on its alleged tax drain and overall impact on the tourism infrastructure.

Are Loyalty Programs Getting Lost in the Shuffle?

Image from Technology Advice

A wide range of innovative loyalty programs are in the marketplace, and they report impressive ROI and user engagement. But are they a high priority for retailers? Many retailers (and their agencies) have been slow to commit to loyalty programs.

At ShopTalk in Las Vegas May 16-18, loyalty programs seemed to have gotten lost in the shuffle of digital solutions (i.e. omni-channel, email, artificial intelligence, email). As eMarketer Yory Wurmser noted, “loyalty programs are of mixed importance…loyalty rates are going down.” He added that programs delivering direct gains in “transactions” or “emotional” allegiance to brands and retailers will have a leg up over pure-play loyalty solutions.

Quidsi CEI Emile Arel Scott also noted the limited appeal of pure-play loyalty programs. “We have gone through so many loyalty programs,” said Arel Scott, whose company is owned by Amazon. “They are a lot of work. Better service and customer feedback are much more important than points,” he said.

“The real struggle is for brands to find a message outside of ‘25% off’ or a sale,” Arel Scott added. “The key is to continue to get more specific in messaging,” he said, noting that chats seem to hold a lot of promise in this direction.

For Index CEO Marc Freed Finnegan, it all comes down to getting customers to build an account with a retailer, where all the data can be kept. An account “remembers everything I buy. Loyalty is a leading way to get there,” he said. But so are mobile accounts and other channels that stimulate incremental revenues.

Does this mean that loyalty programs aren’t poised for success? Not really. Many of them, especially card linked offer programs, have already evolved into broader programs that provide the useful analytics, feedback and targeting capabilities that the ShopTalk panelists alluded to. But it is an ongoing battle to gain a retailer’s attention, given all the industry solutions out there.

ShopTalk: ‘Digitally Native Vertical Brands’ Anchor


Bonobos CEO Andy Dunn (On Right)

The next generation of retail brands will win if they pursue a “digitally native vertical brand” (DNVB) path. So says Bonobos CEO Andy Dunn.

“Vertical brands were a huge part of the last era of retail (Zara, Ikea, Gap), aka the offline one, and now they become the driving story in the future of digital retail,” said Dunn in a Medium post.

Speaking May 18 at ShopTalk in Las Vegas, Dunn says there are 65 digitally vertical brands. Besides Bonobos, a high-end men’s fashion brand, others include Warby Parker, Dollar Shave Club, BirchBox and Jack Threads. We’re just in the “first inning,” he says.

Dunn’s definition of a DNVB is a brand that is customer-centric and highly personalized, while most ecommerce-only companies provide anonymized service with superficial, broad personalization. Nordstrom, which owns 5 percent of Bonobos, is an obvious cohort. But so is Tesla in automotive.

The digitally native approach differs from pure-play ecommerce, “where we have seen a lot of failures,” says Dunn. It is also far removed from legacy retailers and offline brands. Aside from leaders such as Nike and UnderArmour, most are unprepared to disrupt themselves and they also tend to lack their founder’s conviction.

Like Warby Parker, BirchBox (and Amazon), Bonobos is now taking its approach from online to offline. Stores are “amazingly profitable. Productivity is so great on that box,” he says, noting that the average Bonobos location is 800 square feet.

They also allow Bonobos to “sell with the highest possible customer service,” while “pulling back on marketing and technology.” Bonobos currently has 21 stores, and will open 11 more this year. But these aren’t “software companies,” says Dunn. “This is retail. It takes a long time to build. And ultimately, profits and cash-flow matter.”

Westfield’s CEO at ShopTalk: Goodbye Gap And Abercombie, Hello Ford, Events and Gyms

Mall giant Westfield, which receives 400 million visits a year, has refocused on its mission as a people driver for retailers. The 56-year-old company is ditching a horde of its “me too” suburban malls and reinvesting the proceeds in major fashion, tech and financial centers where technology aids and new partnerships with entertainment and lifestyle companies will drive its next generation.

Speaking May 16 at ShopTalk in Las Vegas, Co-CEO Steven Lowy said everything the company is doing is designed to “create move commerce. We are in the business of connecting consumers with retailers. It’s that simple,” he says “Amazon can’t do the things we can do.”

“We are building a digital platform on top of our physical platform,” adds Lowy. “We’ve gone from being a real estate company to a PropTech (Property Technology) company.”

Westfield Labs, a 50 person group, is a major player in the company’s revamp. It has developed a comprehensive grouping of mobile-oriented shopper aids and enhancements. These are being tested this year and then will be rapidly rolled out. Key features include a “searchable” mall that highlights services and specials; loyalty and payment provider programs; and delivery services.

Lowy notes that the company’s premier centers such as The World Trade Center and Century City are the new Westfield prototypes, tying together lifestyle elements for consumers. Movie theaters, event spaces for major brands such as Ford and American Express, beautiful restaurants, coffee shops and top-of-the-line health clubs like Equinox will keep high-end consumers coming to its stores, he says.

Westfield will also get rid of some brands that haven’t kept up with a true, omnichannel approach. “You may not see The Gap and Abercombie (& Fitch),” says Lowy. “The business has shifted.”

Westfields Co-CEO Steven Lowy

Westfields Co-CEO Steven Lowry at ShopTalk16 in Las Vegas

MarTech’s Growing Impact on Local, SMB and Niche Marketing


Chief MarTec Scott Brinker

MarTech — the integration of software and marketing — is a wild card in the new generation of marketing. The new era of Martech takes into account not only ads and promotion, but content and experience, social and relationships, commerce and sales, data and management. The question for us is how it all ultimately applies to local, SMB and niche marketing.

It is certainly true that we’re increasingly focused on MarTech-centric issues: such as driving more customer loyalty and upsells via engagement, utility, targeted promotions and analytics. In our space, its been the differentiator and evolved focus for such social and promotions oriented companies as Radius Intelligence, Surefire Social and Signpost.

The keys are the “marketing pace layers,” as described by sector pioneer Scott Brinker, in his new book, “Hacking Marketing.” Brinker notes that in the modern era, campaigns take weeks, tactics take days but feedback and iterations (i.e. social media and messaging) are in real time and have become increasingly important. While advertising will often retain a central place, other critical channels are now invited into the “core“ marketing experience. Brinker thinks it is a 70/30 ratio.

In a keynote live streamed at his MarTech conference today in San Francisco, Brinker previewed many of the attributes of the MarTech revolution. Brinker notes that there were 350 companies in the space in 2013, 1,000 in 2014, 2,000 in 2015 and more than 3,500 in 2016 – 87% growth in the last year alone.

One of the key attributes of the space is that its scope and marketing relies on so many pieces that the Microsofts and SAPs of old –which assembled monolithic building blocks of tech — no longer really apply. All the companies in the space are constantly iterating and borrowing or partnering from each other. “The real story is: how do you leverage the opportunities,” says Brinker.

LSA16: Thumbtack Focuses on Creating an ‘SMB OS’

Thumbtack President and Co-founder Jonathan Swanson

Thumbtack is an SMB sleeper. It has raised $275 million, using it to develop a profile-based, one click referral system. Last quarter, 200,000 service SMBs bought some level of lead bundles, which can be purchased in packages ranging from $10 to $600 per week.

Under Thumbtack’s model, service pros only buy the number of leads they want to deal with. Consumers receive a choice of 3-5 referrals per query (yes, sort of like Home Advisor.) The beauty of it: no sales force — the single greatest expense in the industry. Thumbtack simply finds its service pros via sophisticated searches and builds a searchable profile. In some cases, it is enfranchising entire new groups that don’t have storefronts and aren’t typically approached for marketing (i.e. photographers, dog walkers)

We’ll see whether Thumbtack hits a wall with the model, given that many SMBs have needed a push from a sales consultant to keep their foot on the gas. Meanwhile, the Thumbtack team isn’t waiting to see what happens. It plans to deepen its engagement with SMBs by developing a comprehensive SMB “operating system” that will connect all the dots for busy service pros that need help with scheduling, presence, marketing and back office chores.

Speaking at LSA 16 this week in San Francisco, President and co -founder Jonathan Swanson says the company is basically extending its longtime mission of moving away from the omnipresent directory model and be more Amazon-like. He calls it a “features” approach. “The more we looked at our competitors, the more they looked the same,” he says. Competitors include such companies as Angie’s List, HomeAdvisor, Porch, Amazon, Google, Dex, Hibu and others.

Swanson says that the company’s main mission is to extend its relationship with its service pros, and make that relationship more rewarding. Churn isn’t an issue since there is no contract – just new business. “Once a professional is hired (using) Thumbtack, they stay with us forever. If they are being hired, they come back again and again,” he says.

The SMB operating system concept isn’t necessarily a new one. Groupon was talking about it a couple of years ago, seeking to enlist partners from a wide variety of niches to “close the loop” on its payments and loyalty system.

Thumbtack’s vision is to leverage its core competencies, mostly using internally developed resources. “We’re good at Adwords, payments, scheduling,” says Swanson.

With the OS in place, service pros can “open the App, tell us their skills and we can tell them what they can earn in different parts of the country. We’d help you start a small business, get a license and get customers. You focus on what you love doing, and we’ll focus on everything else.” The company, meanwhile, can also educate consumers on their bids and what they can expect to pay. Many consumers, for instance, wouldn’t realize that a quality photographer wouldn’t bid on a $500 photo shoot.