RewardLoop: SMB Loyalty Effort Focuses on POS ‘Work Around’

We’ve calculated that more than $287 Million has been invested in more than 20 transaction marketing players. The investment reflects the inherent opportunities in transaction marketing, which is a synergistic mash of loyalty programs, offers, reputation management and the “big data” sets that can analyze behavior and target specific customers.

A lot of progress has been made. To different degrees, the players can tell when visits were made, how long it had been since the last visit, what offers were used and how much customers are spending. But integration with in-store Point of Sales has been more of a challenge.

Some players say they’re already working with major POS systems, and can even track sales of specific inventory. Others say it isn’t really true.

Full integration with POS systems is the challenge being addressed by two main players: CardSpring, and RewardLoop. CardSpring’s work- around is to work with the processor companies that send transaction information to the financial institutions, such as FirstData. Initial partners include companies such as ScoutMob.

RewardLoop’s work-around is more basic: it intercepts the printer language via a small adapter that sits in-line between the POS and the receipt printer. The $100 device is said to be compatible with 85 percent of POS systems and “most” of the csah registers manufactured within the last ten years.

The company has received $1 million in a Series A financing led by Madrona Venture Group. The seven person company is based in Vancouver, B.C., and was founded 2 1/2 years ago.

Co-founder Nigel Malkin, a veteran of Wantsa, a deals platform provider, notes there are more than 350 POS platforms in circulation today. “It makes it impossible for any loyalty company to truly scale, “ he says. “There is massive fragmentation. Forget about partnering with (all) the POS” systems. The only option has been to replace the POS system, a la alternative payment systems such as Square. That works best with small businesses that have not invested in POS.

But the RewardLoop adapter can “listen” to the print data stream between the POS and the printer. “You don’t need to replace anything,” says Malkin. The adaptor adds a loyalty program call-to action to each bill footer, and a one time-use QR code. Customers scan their receipts to collect rewards on virtual stamp cards that appear on their mobile phones. In addition to the expected customer loyalty dynamics, “it provides a rich profile in real time.” Malkin says the service is especially good for high purchase volume environments, such as pet stores and fast food.

The service was first tested in August 2011. Malkin reports that “the results were off the chart” at one Vancouver coffee shop that previously been using a paper punch card. After three months, 23 percent of the shop’s transactions were being linked to RewardLoop loyalty programs. The paper loyalty card never had more than 1-2 percent.

Malkin says that RewardLoop is ready to work with anyone that has an existing merchant relationship, and is especially targeting cash register and POS sales/service organizations, ad agencies and food service businesses. It has already developed relationships with (undisclosed) resellers with direct sales for regional and national chains.