Groupon Divests Breadcrumb to Upserve: RIP Platform Dreams


Groupon’s vision of using Point of Sales to position itself as a “Local Operating System for Commerce” is effectively over, with the divestiture of its Breadcrumb Point of Sales division to Upserve, the Providence-based restaurant loyalty and analytics company formerly known as Swipely. Groupon had purchased Breadcrumb in 2012.

Thought to be worth $100 million by Piper Jaffray analyst Gene Muenster in April 2015, Breadcrumb is being given to Upserve in return for an undisclosed minority position. Groupon – which has been taking cash for other divestitures, such as for South Korea’s T-Mon — has a similar ownership interest in Serviz, a southern California home services marketplace.

Rumors of Groupon’s efforts to unload the division have surfaced since spring 2015. By that time, Groupon’s hopes of making POS an anchor for a broad commerce platform were clearly not realistic.

Groupon’s concept for the platform, however, was a bold one: a virtuous circle of deals, marketplace goods, payment processing, services and analytics. Groupon’s recent (and ongoing) push into delivery via its purchase of Order Up was also thought to strengthen its value proposition for restaurants. Most of all, a robust POS-based system would provide long-term stickiness with its merchants. At the same time, it would also position Groupon as a platform player against a set of diverse, more blue chip players such as Amex, Verifone and First Data.

Ultimately, Breadcrumb’s technology may have been good at restaurant analytics and management — it will complement Upserve’s capabilities. But from a marketing perspective, it has been limited. Groupon wasn’t able to leverage the technology to win restaurants accounts.

Upserve won’t confirm how many customers it gets with the acquisition, but it may have involved fewer than 2,000. Before the deal, CEO Angus Davis told us last month that it had “thousands” of restaurant clients. In a press release, Upserve says that it will now have 6,000 total.

Does the divestiture of Breadcrumb have broader implications for the future of POS-based loyalty and offers programs – including card linked offers? We have seen people in the industry contend that loyalty programs and analytics have moved away from explicit programs such as card linked offers towards implicit programs (experiences, etc.)

Given Groupon’s other distractions, however, we would not draw such broad conclusions. While we anxiously await reports of success in this category, there is still a lot of activity: First Data’s Clover, for instance, continues to leverage its relationship with the Perka loyalty program; Belly, FiveStars, Edo, Linkable and Affinity continue to build up their loyalty efforts; and companies like Empyr are also using POS as part of their Online to Offline marketing programs.


Breadcrumb’s Interface

Local Onliner Bookshelf: The FinTech Book

The application of Financial Technology is a major part of our vision for local ‘close the loop,” transaction marketing. As an executive from MasterCard Advisors noted during one of our 2011 events, “You are what you buy, not what you search for.”

Customer analytics, prepaid deals, loyalty programs, card linked offers, small business loan programs and alternative payment services such as ApplePay constitute the bulk of the local angle for FinTech. And in theory, it brings the banks and credit card industry directly into the local marketing sphere. There’s a reason we’ve seen a steady stream of local marketing leaders flocking to events like Money2020.

Beyond our local focus, however, the development of FinTech has mostly been used to bring about an alternative to traditional banking, which has largely failed to evolve with the times: over-charging, over-complicating and under-delivering for services – especially to SMBs. As Citi’s Chief of Client Experience for Digital Heather Cox said: “People need banking, they don’t necessarily need banks.” If banks are going to re-engage, it will only be to use their remaining market power to rebundle the host of financial services now available from numerous players.

These themes dominate in The FinTech Book, a new crowd-sourced reference work comprised of contributions by 86 FinTech authorities. Compiled by Susanne Chishti and Janos Barberis, the book is heavily oriented towards international markets. London is the hub of the FinTech world, not San Francisco.

Oddly, given its overall depth, there is almost nothing on the use of FinTech for transaction marketing (and the paper back version of the book is quite floppy and hard to hold — go electronic.) But this book will remain the standard reference on the FinTech landscape for some time.

Artificial Intelligence Helps Fill-In Schedules for SMBs

Marketing automation is playing a key role in making local scale for many marketers. It’s been front-and- center for companies like Demand Force, InfusionSoft and SignPost. Another contender is Frederick, a 20+ person marketing automation company based in San Francisco that was recently acquired by Booker.

Frederick takes a Big Data approach to data it receives from Booker and a host of other platforms. Using a combination of artificial intelligence and automation, it works with SMBs in a number of vertical categories that rely on frequent visits from customers (i.e. health & beauty, auto repair) to fill appointment slots. It also helps reinforce and engage customer relationships via reminders, review solicitations, upsells and cross-sells.

The company’s goal is to build a 1:1 marketing plan for its customers. In doing so, Frederick CEO and co-founder Corey Kossack tells us that the company looks at a number of variables, including customer transaction history, service sale-through rates, staff utilization rates and daily occupancy information.

While there hasn’t been a long track record – the company was founded in 2014 — customers are averaging revenue growth of 30% year over year, says Kossack. “What we have found is that structured data can be used to drive better results than segmenting a Constant Contact list,” he says.

Frederick’s application of Artificial Intelligence is what Kossack believes is its differentiator. “We are unique here in that we make decisions on behalf of the business based on proprietary algorithms,” he says. “Frederick is like a living, breathing marketer, studying millions of data points to determine what to do next.”

Local Onliner Bookshelf: Disrupted: My Misadventures in the Start-up Bubble

I had mixed feelings when I first heard about Dan Lyons’ new book, Disrupted: My Misadventure in the Start-Up Bubble.

The book focuses on Lyons’s short, 1 ½ year tenure as a content person at HubSpot, the much admired SaaS (Software as a Service) company for SMB Inbound Marketing that successfully IPO’d in 2014. Lyons clearly had some scores to settle with the company, where at 52, he was twice as old as the average employee. As a lifelong journalist who rose to be Newsweek’s Tech Editor and the secret writer of The Fake Steve Jobs blog, he was unlikely to drink the non-critical, cheerleading Kool-Aid that he claims the corporate leadership demanded in exchange for little supervision, endless snacks and beer, and “unlimited vacations.”

In my own experience, the HubSpot leadership team has done a great deal to articulate the opportunities of social media and content marketing focused “Inbound marketing” as a cheap and efficient substitute for advertising. But Lyons lands many punches against the company, whose executives he derides as “charlatans.”

According to Lyons, the new concepts of Inbound Marketing are a cover for little or no controls, and in fact, the company doesn’t even abide by them internally. Lyons observes that its sales and marketing costs aren’t based on inbound marketing. The high levels of SMB churn that the company experienced required endless pitching by the company’s telemarketing center to bring in replacement customers.

Lyons also notes that companies like HubSpot tend to get a free ride from critical eyes, with the tech press looking for exciting VC heroes like Marc Andreessen and John Doerr. The VCs are really just glorified salesmen, he feels, with little concern for making profits or rewarding mom and pop investors.

Much of the book focuses on a terrible human resources situation at Hubspot for Lyons, who was a prize catch to join the team as TheFakeSteveJobs celebrity blogger and was given a very senior level salary (never disclosed). He never really fit in at the startup with its cult-like culture (he claims), lack of a hierarchy that would reward senior level people, and constantly shifting strategies.

To be sure, Lyons, while often funny, can be a self-righteous whiner at times. But in this account, he takes no prisoners, and raises many important points about the need to look beyond the rhetoric when evaluating new, high-flying tech companies.

Posts Over At NextWaveSMB: Amazon Echo, Mapvertising, SMB Listings, Website Options, Video’s Next Generation

Here is a peek at the 5 most recent entries from my new blog: NextWaveSMB (sponsored by Booker). We’re taking a fresh look at some of the tech issues coming up for SMBs.

1. “Hey Alexa, Hire a Plumber”
“Amazon Echo is an 9” wireless speaker that hears your spoken query and quickly retrieves “answers” from the Internet, your computer, or the Internet of Things in your house (i.e. your Nest Thermostat). You can ask it to play a song or turn off your lights. You can also ask for a ride from Uber or hire a service pro…..”

2. The New Mapvertising
“Here’s a fairly safe prediction: mapvertising will become much more important in coming years…. It will go far beyond the SMB’s use of maps today, which typically focus on throwing a basic map on the Website, and boosting search rankings. Indeed, several marketing concepts are in development that integrates maps with local offerings, including local delivery services and ‘Connected Cars.’”

3. Building Up SMB Lists for Impact
“Almost 80 percent of SMBs maintain some kind of customer list, according to BIA/Kelsey. The vast majority, however, don’t have a real strategy for adding to the list, or zero-ing in on specific customers. Given the technology and services available, the under-leveraging of customer lists is a missed opportunity……”

4. Weighing SMB Website Options: What Are Your Real Needs?
“For many SMBs, Websites remain highly relevant anchors for driving leads and showcasing relevant content and services– blogs, maps, photos, videos, event calendars and scheduling. The question for many SMBs is: how much Website do you need? Websites are hardly a “one size fits all” affair…..”

5. Video’s Next Generation: Driving SMB Awareness and Engagement
“Video for SMBs is entering a new generation, as it becomes more oriented towards online and mobile and can take advantage of cheap and easy video tools. Now, it is up to SMBs to rethink and get more engaged with their video strategies. Today, SMB videos can be produced on smart phones for little or no cost, or at a higher level by networks of trained videographers. And video search has become so sophisticated that videos can be found across the Internet via search engines and other platforms.…”

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.

“Hey Alexa!” HomeAdvisor, TalkLocal Are Customizing for Amazon Echo

Amazon Echo represents a new eco-system for commerce, and is arguably, one of the biggest innovations in recent years. By simply voicing a request triggered by a common command, (“Hey, Alexa”), users can tap into hundreds of apps that are being specially designed to link their Web info – from movies and music to medical info. The key to Echo’s success over Apple Siri or Microsoft Cortana is that it is hands-free. The speaker can “hear” across the room and very quickly respond.

Over the next several months, Echo is likely to go even bigger, as the original $179 hands free speaker is now being supplemented by Amazon Tap, a smaller $129 portable speaker. The software is also being built into various devices.

We’ve been wondering how long it would take for it to hook into local services. Last week, HomeAdvisor added its Instant Booking feature, which sends service pros out to a location. CEO Chris Terrill said in a statement that “Smart-home platforms are the next big growth accelerators for local home services, and no other player in our category has the scale or technology to unlock the power of the connected home for homeowners.”

TalkLocal is also being added to the system. That makes total sense to us. TalkLocal is a service that automatically captures user’s calls, transcribes the message for its request elements, and links it to local services as a lead.

Co-founder Manpreet Singh tells us that TalkLocal initially expects a modest trickle of leads – 12 or so – to come in via Echo. “Few people will anticipate their plumbing needs. You’d have to be very lucky to discover us while in the midst of a plumbing problem,” he says. “Over time, more people will discover us.”

Deploying for Echo has been an experience for TalkLocal, which has worked closely with the Echo team in Seattle. Singh notes that TalkLocal has had to adapt to Alexia’s unique linguistic needs. “Designing commands and rules for a voice-enabled AI can be like finding a powerful but very clever trickster genie,” he jokes.

Experimentation has also been required. While TalkLocal provides over 40 service categories, it will launch with just a few. “Each service category is a virtual paradigm shift in terms of relevant terminology and possible linguistic pitfalls,” says Singh. We also want to give ourselves the opportunity to learn more about how users interact with the current skill.”

Singh adds that TalkLocal plans to do beta testing “with a ton of users” before launch. “We need as many users as possible engaging with this new type of technology. We can only anticipate so much about what people will say and do, or what expletive or prank requests they might try to submit,” he says.

TalkLocal’s Manpreet Singh