FiveStars modernizes loyalty programs. The only drawback? You

By Richard Nieva , written on January 21, 2013

From The News Desk

As long as there are tech blogs and science fiction, there will always be the debate of humans versus machines. (That is, until the machines rise up and silence all debate.) More specifically, a few weeks ago, I wrote about a human labor force versus an automated one, with the eventual ubiquity of apps like Fandango remaking or displacing part-time jobs in the service industry.

Box office ticketers and cashiers aren’t going away tomorrow, but there are companies that do aim to change the dynamic of these jobs. One of them is FiveStars, a company that specializes in loyalty programs for the digital era. FiveStars signs up both mom and pop shops and large national chains for its loyalty card – one "master key" of sorts that can be used at all participating stores and restaurants. Member companies then get access to all the customer data accrued from the program and are coached by FiveStars on how to roll out their promotions.

The Y-Combinator alum raised a $13.9 million in August from Lightspeed Ventures and DCM, and in late September the company began a program signing up all the shops off of University Avenue, becoming the official VIP card of downtown Palo Alto.

One area the company touts as having real potential, though, is in changing the experience of point of sales transactions. When a FiveStars cardholder swipes his or her card, the employee behind the register all of a sudden has a wealth of information on the person standing in front of him. While any loyalty system might provide a cashier with basic info like a name, FiveStars claims it’s the only one to integrate directly into the POS system and provide information oh how much people spend and what they might buy.

In a way, this could make the offline world look just a bit more like an online retailing experience. Think about it: For a consumer, the Internet is a very hospitable place. Cookies and simple software features have made personalized shopping experiences so commonplace that it’s nothing out of the ordinary for me to go to a website and be greeted with a “Hello, Richard.” That’s been a hallmark of the Internet since its earliest days. “Just imagine if Amazon didn’t know who you were,” says Victor Ho, the company’s CEO.

He makes a good point, but there is one thing standing in the way of the technology sparking a customer service revolution: people. No matter how much information the service provides, it means nothing if a human worker can't put it into action.

One of the most endearing things to me is finding a place where the person behind the counter knows what I want when I walk into a store, and asks if I’ll have the usual. I’ve only found three places like that in my lifetime and even that number seems high. That kind of service, which FiveStars is trying to recreate, only comes from a real familiarity with the customer.

I don’t think there is anything wrong whatsoever with trying to game that relationship with a data cheat sheet that appears on the point of sales device. It’s like cramming months or years of building a customer/employee relationship into the time it takes to swipe a card. It would be like getting mad at Amazon for knowing what I bought last week. But you can’t automate how an employee will use that information. Chris Luo, FiveStar’s VP of marketing and Facebook’s former global head of small and medium business marketing, admits that it does ultimately fall on the employee’s shoulders, and it comes down to an issue of employee training.

Out of sheer coincidence, a few hours before I met with the FiveStars guys, I had lunch with a Silicon Valley VC who was complaining about the service he had in a store. He was at the register, ready to buy an expensive new gadget, when the cashier inadvertently talked him out of the purchase by asking him if he’d seen a new model that hadn’t even been released yet. In this very technology driven store, the most influential factor was the human.

FiveStars has done well to provide that underlying technology, but there is still that human variable that stands in the way of a full-fledged guarantee of an upgrade in customer service. I don’t know what the company can do about that, short of providing employee training itself – though maybe that’s a possibility for the future. People will never be as efficient as a machine. And a machine will never be as warm as a person. For now, call it a stalemate?

[Image courtesy: atomicShed]