Category Archives: Coupons/Promotions

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.”

Yiftee Sees Opportunity in eGift Cards for SMBs

Coupons, pre-paid deals and card-linked offers have established themselves in the local digital promotion ecosystem. But what about gift cards?

Leading Gift Card companies like BlackHawk Network and Incomm provide dozens of gift card slots in retail establishments for hundreds of national brands, from Amazon to Starbucks. On the Internet, First Data’s Gyft and Transaction Wireless provide card-to-online registration for many of the same national brands.

Local merchants don’t really have the same capabilities, however, and are mostly limited to issuing check-like gift certificates. One SMB gift card solution was provided several years ago by Adility. It has since been folded in with Incomm and focuses on validated coupons. A current candidate is Yiftee, a three- year-old startup launched by Donna Novitsky, who previously launched BigTent, a social groupware provider for women currently owned by Care.com.

Yiftee provides online promotion and gift card capabilities to both national and local businesses – the former acting as a traffic draw, and a validation point. “SMBs are more comfortable when they see brands like TGIF or Sephora doing the same as they are about to do,” says Novitsky. She notes that the inspiration for Yiftee came from a deal that BigTent ran several years ago with Groupon. “We wanted to a better job of generating profitable business for SMBs, not bargain hunters with no margin for the SMB.”

The company currently supports 55,000 locations, with 5,000 of those local brands. Ultimately, independent stores and local chains are expected to represent the bulk of the company’s activity, giving consumers the ability to “shop local” for gift cards on mobile and online.

Independent stores pay Yiftee $30 a month (or $240/yr) to put a button on their website and FaceBook and sell unlimited, customized eGift Cards. They also get to take part in the Yiftee network, which is used by both consumers and enterprise customers to find local businesses and purchase eGifts. No setup fees or technology integration or training is required. National players pay $12 per location when they sign up 10 or more. Up to now, chains with up to 300 locations, such as Schlotzsky’s Bakery Cafe, have been the company’s sweet spot.

One additional advantage of using the card is it provides a set of user analytics. Plastic cards don’t provide much data on the purchaser, recipient or occasion, unlike digital cards, notes Novitsky. If advertisers include a TXT link to their ads to “win” a card, they can complement TV, cable TV, radio, social and print campaigns and see what is really working. eGift Cards are frequently used as “Thank You’” presents, for customer recovery, and as marketing incentives by local merchants and community members, such as real estate agents, to drive local business.

Some of the sales for Yiftee come from direct requests by consumers and companies who see a listing on Yiftee.com and want to get a card. (I requested one from “A Little Shop of Bagels” in my hometown). Most, however, are being sold on the merchants’ websites and social media channels, bringing more customers into their stores. Yiftee also signs up merchants via payment processor partners, such as Global Payments.

SMB Loyalty Marketing Trends: A Discussion with Venga CEO Sam Pollaro

Venga CEO Sam Pollaro

The conventional wisdom in the industry is that a loyal customer brings in 5X the revenue of a new customer. A slew of loyalty marketing platforms are reinforcing the CW with new technology that reach deeply into understanding and targeting loyal customers with superior analytics, incentives and ad campaigns.

Loyalty platforms include such players as Upserve (formerly Swipely) and Fishbowl. Another one of these platforms is Venga, a provider of loyalty services for 500+ sit-down restaurants in the U.S., Canada and the U.K.

CEO Sam Pollaro tells us that Venga has seen a shift in the loyalty market over the past couple of years. It has begun to change from explicit loyalty programs (i.e. punch cards or card linked offer programs) to implicit programs using payments and social media to more subtly track customers and their habits.

Pollaro says Venga’s goal in its implicit approach is to “surprise and delight.” “When customers spend $500, an alert might be added to their profile,” and they might be given a dessert or a special table the next time they come in, he says. Or if they have indicated they like a certain kind of wine, they can be notified when a special shipment comes in.

Offine-to-online marketing is another trend that Venga is riding, mostly with the help of social media. Facebook, in particular, uses its direct response capabilities to help Venga develop “Fan Builder” campaigns, that lead to more Facebook likes; “We Miss You” campaigns that target customers that haven’t come in for a while; and “Special Interest” campaigns that will target customers based on their past visit and purchase history with specific imagery in an ad, such as a wine or beer bottle.

More than 50 percent of customers can be tracked down on Facebook from customer lists with just a phone number, says Pollaro. Because they are Facebook members, there are no opt-in requirements, he notes. The program is especially useful, since restaurants typically can only collect emails from 10-15 percent of their customers. Facebook is also more effective than programs such as Gmail, since Gmail now segregates promotional emails.

Venga is seeing especially good results for its clients since it is targeting consumers that are already fans. Pollaro says the company sees 3-5X typical restaurant response rates. The high click-through rate also cuts cost-per-click rates by 50 percent or more.

Groupon Gets $250 M from Comcast Fund: Synergies with Instacart, Next Door, Closely?

A Comcast-supported fund has plowed $250 million into Groupon, possibly leading to a broader role for the Cable and TV network giant, which could seek to leverage its enormous national and local reach from NBC/Universal and Comcast cable franchises to really make Groupon’s transition to a local marketplaces service work.

There are also possibilities to develop Groupon in the Hispanic market with the Univision Network – the mobile-driven ecommerce Hispanic martketplace is poised to take off. Several options also lend themselves via Comcast Ventures, which holds portfolio investments in Closely (loyalty services), Next Door (hyperlocal neighborhoods) and Instacart (delivery). The latter could play off Groupon’s recent focus on restaurant delivery services.

The investment comes from Arairos, which is headed by former Comcast CFO Michael Angelakis. Comcast funded the effort with $4 billion last year.

if there were any doubt that Comcast was contemplating a hands-on role, the companies said in a statement they would be working together to “identify and implement potential strategic partnership opportunities.”

Comcast is not exactly a newcomer to local marketplaces. In addition to selling advertising, typically at the large SMB level, it has sought to develop several local media properties, from local city guides to Daily Candy, a women’s consumer newsletter that ceased operations in 2013. NBC also has a history with the city guide-and-deals marketplace.

LSA16: Beacons as ‘A Platform Multiplier’

Belly’s John Mazur and Yext’s Raj Nijjer at LSA16. (Photo, LSA Insider)

Wireless in-store Beacons – which can identify registered users and match them to transactions, redemptions etc.– are a key part of loyalty programs run by Belly and First Data’s Perka, among others.

Speaking at LSA16 this week in San Francisco, Belly EVP John Mazur said that the loyalty company now has 12,000 SMB and franchise clients. These include a high percentage of 7-11 outlets. Customers are provided with iPad Minis, which include beacons (although not all of them are installed at this point).

While the beacon efforts are still in their initial stages, Mazur notes that Beacons have resulted in a 30 percent boost in check-ins, as Beacons capture registered members who are browsing in stores and nearby – not just those signing in when they make transactions via card or App. The beacons not only recognize Belly’s seven million registered consumers, but others as well.

“Beacons are a multiplier” for the marketing platform, and support and inform marketing budgets, adds Mazur. “They make things more seamless and reduce friction. “Loyalty, payments and beacons efforts are all converging” to provide better feedback to SMB and to complement marketing solutions, he notes.

Speaking on the same LSA session, Yext‘s Raj Nijjer said Beacons are a key asset to the new geolocation economy, and noted estimates that Beacons will generate $44 Billion in new commerce revenues. “They are truly an online to offline solution,” he said, noting that Yext has deployed beacons to “a lot of SMBs.”

In deploying Beacons, most SMBs initially focus on the retargeting piece — “take 20 percent off for having been in the store.” Messages can be sent to them via email or Facebook five or ten days later. Over the course of several months, Nijjer said that a good Beacon program enables the development of custom audiences and better analytics.

Cardlinx San Francisco: The Drive to ‘Incremental Spend’ by Consumers

The evolution of the card linked space is happening in unexpected ways, as we saw this week at Cardlinx’s San Francisco conference. It was the association’s largest event in its two year history. Basically — the table has been set; a number of early arriving guests have arrived; and we are now waiting for real momentum and numbers to come in.

The first to come on board have been the larger companies, which thrive on the analytics – they want to know who their customers are, and how to market to them. The smaller merchants are more impacted by the direct impact of offers that drive store traffic and are still using their traditional options (ads, dm, coupons, etc.)

The event’s large attendance –130+ — reflected the rollout of several key card-linked based projects, such as Plenti from Amex, Macy’s, AT&T, Enterprise Rent a Car, Exxon Mobile and others; and a major card linked rollout from Whole Foods. Living Social has added a card linked element in dining rewards; and Groupon is tentatively preparing one as well, with 15 percent off as a constant feature.

Card linking is also seen as being deeply integrated with payment and messengering programs that are more directly driving commerce. Facebook, for instance — a Cardlinx member –appears to be studying a role for card linking on its growing Messenger platform, which is already set to provide shipping updates, book rides and send money.

Widely used, well-subscribed platforms are expected to add scale to card linked concepts as well. Speaking at the event, Empyr CEO Jon Carder said he could see 20 million active consumers building a $10 billion annual business –with $750 million in revenues going to the participating card linked offer companies. “It is a network effect,” he said. “The more participants, the more consumers you have, the more revenue you get. “

Whole Foods has whole-heartedly embraced its card linked program – which is a bit of a surprise for a company that has historically been “discount reluctant.” Payments Marketing Director Marushka Bland said card linking will give it an edge as the company faces serious competition in the organic grocery space from Kroger, Costco, Walmart and others. The company is now “much more open to worrying about its customers and eager to focus on things like loyalty.”

Whole Foods started rolling out its affinity program on a small scale in 2014. It is currently rolling out digital coupons. “It is about our customers and how they shop with us,” said Bland. “Execution, targeting and attribution” are the keys to the program, with a target goal of 10 percent incremental spend.

Incremental spend is also the chief goal for Excentus President and CEO Brandon Logsdon, who stressed that the key is not to focus on Card Linked Offers, but on getting participation in card linked programs. (He’s right: I’m going to phase out my own references to CLOs.)

Excentus rolled out its Fuel Rewards program in 2012. More than 6.5 million cards have been registered, and there is an active group of 1.4 million linked cards. Customers have spent $450 million on a growing list of affiliating merchants, and gotten $3.6 million back on fuel costs (roughly 5 cents a gallon). Logsdon adds that the merchants are seeing brand new spending from the programs. Fifty percent of those coming in are new customers; and 65 percent of promoted sales are incremental.

Empyr CEO Jon Carder

Empyr CEO Jon Carder

The Failure of ‘Gimmick Commerce’ Brands

Graphic from Recode

“Gimmick Commerce” is one way to look at the sites that entice people to buy things online via promotions, flash sales and subscriptions. Mostly, it represents things that people don’t need.
But it has almost totally failed, per Recode’s Jason Del Rey in a provocative piece this week. In the deals space, Groupon has pivoted to a marketplace focus (i.e. normal shopping) and is trading at just $3 a share. Living Social is publicly struggling and experimenting with new models, like card linked offers.

The other deal sites are gone or totally pivoted. Just yesterday, Nimble Commerce, the last of the major independent deal aggregators, announced it was selling out to BlackHawk Network, a leading gift card company.

Other “gimmick commerce” models have also failed to gain traction. The flash sales space is basically gone, with Fab, Gilt, Ziulily bowing out at fire sale prices, and One Kings Lane positioning itself to do the same. Del Rey concludes that none of these companies have been able to cut into the Amazon behemoth, which accounted for 50 percent of all ecommerce growth last year (although Amazon surely engages in its own Gimmick Commerce).

The only companies that are growing and safe from Amazon are the specialty subscription services. With the exception of some of the high loyalty food delivery companies (Blue Apron) and subscription razor companies (Dollar Shave) most of these probably aren’t keeping their customers.

It’s a big, brave thesis. Rey points to the difficulty of building new brands and creating consumer habits from scratch – and the never receding desire to buy everything from a single source. But it is kind of broad — I don’t know that all these companies should be lumped together. And it shouldn’t be inferred that the new technologies and features like big data analytics, buy buttons, card linking and targeted offers that act as a foundation for these sites are being rejected. They remain transformative and will probably account for a big percentage of the next generation of impulse buying, if not shopping altogether.