There may be no such thing as loyalty anymore. But there is something called Loyalty 2.0—this is a new wave of companies helping stores and restaurants offer things like digital coupons, deals, and rewards to repeat customers. And a lot of Boston and New York startups are getting in on the trend.
One of them is BuyWithMe, a local deals startup with offices in both cities. Last month, the company acquired Edhance, which specializes in credit card-linked offers and other loyalty programs for the college market. The startup also announced a partnership with Foursquare to help merge mobile check-ins with deals. And earlier this week, BuyWithMe picked up Scoop St., a group-buying site focused on New York deals. (It was BuyWithMe’s fifth acquisition of 2011.)
It has been a strategic show of force for BuyWithMe—and a sign of where the local deals market is heading. Aside from consolidating with smaller sites, deals companies are focusing more on working with local merchants to help them expand their businesses in sustainable ways, rather than just giving them one-off deals.
BuyWithMe CEO Jim Crowley, who has been on the job since the beginning of this year, told me a few weeks ago that his company is becoming “more merchant-centric.” That is, local stores and merchants “can create ongoing loyalty-based offerings” through BuyWithMe, he said. Furthermore, his company is trying to “close the reporting loop,” he said, so stores can tell how well (or how badly) their loyalty programs are working—and get advice on what they can do to improve their sales.
In addition to the companies mentioned above, plenty of others like SCVNGR, Clovr Media, SavingStar, Eversave, and Cartera Commerce (formerly Mall Networks) have complementary and competitive approaches to Loyalty 2.0—as do bigger e-commerce players like Groupon, LivingSocial, Gilt Groupe, and Rue La La.
“Lots of entrepreneurs move into the loyalty space because it’s really compelling,” Crowley said. “We’re speaking to thousands of merchants a day. It’s giving us very, very broad coverage.”
The other big theme right now for BuyWithMe, and the loyalty sector, is the mobile interface. “Where we’re going, we’ve married ourselves into two key elements—payment and the phone. We want to allow these things to come together,” Crowley said. The idea (which is certainly not unique to his company) is to enable a customer to walk into a restaurant, for instance, and redeem a daily deal on his iPhone or Android phone. And if he bought the deal using a credit card, the restaurant could activate an ongoing offer so that the customer will get, say, 10 percent off on Tuesday nights (which might usually be slow) if he spends $50 on the card.
Meanwhile, BuyWithMe “is continuing to execute and grow very, very rapidly,” Crowley said. The company had 187 employees as of a few weeks ago. It has active deals in 13 U.S. cities, with “a couple more coming,” he said.
Crowley, who held senior executive roles at Turbine and m-Qube prior to BuyWithMe, also shared a broader lesson learned from his experience to date. “Make sure you have a plan you can execute to, move swiftly, and ensure you build a very, very good team,” he said. “The velocity of business across my various companies, each year it goes faster. Your need to move quickly seems to be at a heightened premium.”
