Everyone loves free stuff. If you can integrate that simple truth into your startup, you might earn enough good karmic energy to have a shot. Or at the very least, you’ll pique a reporter’s interest enough to write about you. Chicago-based Belly certainly isn’t the first company to help offer customers freebies, but it might be the one to do it in the most advantageous way to merchants.
Today digital loyalty program company announced the national launch of Belly Bites. It’s a digital free sample program. Small and medium-sized merchants offer customers a promotional item, like a free latte or haircut, in hopes of luring them in and getting them hooked as a regular customer. The redeemable coupons go out either to local customers via an email list or on Belly’s website. Chief executive Logan LaHive boasts that it is a “pay for performance,” model, meaning if a new customer doesn’t redeem the coupon, the merchant doesn’t pay Belly. The company rolled out a test version of the program three months ago to merchants in Chicago, and now offers it to all its merchant clients.
Again, Belly isn’t the first to do this. Social gifting is such a question mark that, to make it work, many companies have pushed variations on the theme. Wrapp and Boomerang have taken to giving out small denomination gift cards to spur business. Boomerang has even moved partly into the loyalty market, giving brands the ability to give the gift cards away themselves through email lists, without a customer initiating the giving on a social network.
But Belly is doing it in a more complete way for a merchant. Underneath the Belly Bites program, the company’s main service gives customers access to a local merchant’s loyalty rewards program by letting them check in via smartphone app, or using a universal loyalty card, as opposed to a paper punch card.
While Boomerang allows brands to use its emailing platform as a sort of white label technology, Belly is involved in all aspects of a company’s loyalty program and data collecting, including tracking where customers live, what time they come in, and how often they return. That way, giving away a free sample is part of a measured campaign, and not one-off act somewhere on the Internet. The company launched as a spinout of Lightbank in 2011, and last April raised a $10 million Series B from Andreessen Horowitz.
Like social gifting, digital loyalty is a problem with many startups grasping at a solution. FiveStars, backed by Y-Combinator, also offers a universal loyalty card and data about customers. LaHive, though, says the big difference is how far ahead in scale his company is. Belly is in 4,000 stores in 15 cities including Chicago, San Francisco and Washington, DC. The focus is on small and medium businesses, but Belly is also in a few locations at some large chain customers including McDonalds and UPS.
One of Belly’s key differentiators is the point of sale experience. Belly installs a customer-facing iPad in its clients’ stores. That way, customers enter their own personal information, like email address or phone number. They can also post to Facebook or Tweet about their purchase.
You can’t help but think of just how awkward a it might feel to stand in front of a store proprietor while you Tweet. When asked if it might be intimidating for customers, LaHive concedes it might be for some. It’s especially true for a customer who obliges just to be polite, but wants nothing more than pay for his coffee and leave. There’s a fine line there, but it might be worth the awkward moment if it means the person’s information can be captured. Once that’s in the system, the merchant can track that customer’s preferences to better suit him and reward him for his loyalty. Everyone (presumably) wins.
But you run the risk of causing an experience that’s so off-putting that the customer thinks twice about coming back — a test of loyalty if I ever saw one.
[Image courtesy: LWY]