Written by Malia Spencer of the Pittsburgh Business Times. Published June 3rd, 2011 at 6:00am EDT. See original article here.
Thus far, seven restaurants in the Pittsburgh area have registered to use LoyalTree, which replaces traditional loyalty cards with a smartphone app that offers customers a way to redeem deals for repeat visits and gives businesses insight into their customer’s purchasing habits. There are more than 1,000 customers who have signed up to participate.
“We created a very intricate and modern version of the punch card,” Cardeeo CEOBrock Bergman said. “Instead of carrying it in your wallet or on a key chain, we put it on a device and we keep track of (rewards) for them.”
Here’s how it works: A customer downloads the free app and fills out a quick profile that is good for every business in the LoyalTree network. Consumers select which business they want to enroll with, and, at each business, there is a specific quick response (QR) code that is available for scanning. Each time a business is visited, consumers scan the code and receive a “punch.” Once enough punches are received, then LoyalTree sends a voucher to the phone to be redeemed at the store. Specific business rewards can also be sent on birthdays and when a consumer signs up.
“We try to make it as easy and hassle-free to gain rewards at your favorite businesses in Pittsburgh,” Bergman said, adding that the program also sends out reminders prior to a reward’s expiration. So far, the product is just in the Pittsburgh region, but a launch in the New York metro area is planned for the next one to three months, Bergman said.
Cardeeo generates revenue by charging a monthly fee to businesses based on the number of locations a business has. For instance, a tanning salon with one location will have a different price than a tanning salon with five locations. So far, the company is generating revenue but is not breaking even.
“We are interested in new social media things and different things to drive customer loyalty business instead of the typical standard or the way the chains do things,” she said. As the program grows, the Square Cafe rewards will change, but for now include a free milkshake on birthdays and a free coffee for signing up.
LoyalTree also is aiming to help businesses gain insight into their customers and offers periodic reports as well as real-time information to business owners based on the customer profiles and purchase habits.
LoyalTree is going after the growing loyalty program market. There were 9.8 million memberships in restaurant loyalty programs last year, according to a customer loyalty program study by the research group COLLOQUY, an increase of 17 percent from the previous survey in 2008 and up 41 percent from the 2006 survey. Across all industries nationwide, membership in loyalty programs was up 16.3 percent last year over 2009 levels to more than 2 billion memberships, and the average American household was enrolled in 18 programs.
Nine more businesses are expected to launch LoyalTree across 35 new locations in the next few weeks, Bergman said.
Cardeeo isn’t the only local company to jump into the loyalty program business. Devotee, a start-up launched last year out of the South Side incubator AlphaLab, created a loyalty platform that gave users the ability to open an app and tell friends on social networks where that person was. These check-ins would earn points and then points could be redeemed for free items at participating businesses.