Loyalty leader Belly expands its footprint by rolling out to 2,600 7-Eleven locations

By Michael Carney , written on August 27, 2014

From The News Desk

Digital loyalty startup Belly is extending its already impressive market lead today with the announcement that 7-Eleven, one of the company’s strategic investors, will roll-out the iPad-based platform in 2,600 of its convenience stores by the end of the year.

The roll-out will be spread across the Northeastern US as well as in Vancouver, British Columbia, marking Belly’s first official international launch (the company had beta tested a number of independent locations in the city earlier this summer). The company rolled out pilot installations of its platform in 7-Eleven’s Chicago, Austin, and Los Angeles stores. Early success in this limited deployment paved the way for a broader rollout that could eventually see the company’s tablets installed in the chain’s 8,500 US locations and more than 45,000 worldwide – a footprint that makes it the largest convenience store chain in the world.

“When you’re working with large enterprise companies, these decisions do take time, and require consensus – they require buy-in from store operations and marketing teams,” LaHive says. “The timing is based on an existing calendar of marketing and operations initiatives. We’ve spent time looking into the data to see what stores give the best opportunity for success and to ask ourselves, what markets and experiences haven’t we tested. Plus, it’s not like this is something that you just flip a switch and you’re live. We need to install one to two iPads in each store. Location is key, as is cashier training. It’s been a joint effort and we’re making sure to invest the time to get it right.”

In total, Belly currently has 7,500 worldwide locations, the majority of which are small- and mid-sized businesses (SMBs). By the end of the year, LaHive expects that number to exceed 10,000. But the 7-Eleven relationship, like similar relationships with McDonald’s, Domino’s, and Chick-fil-A, represent a growing enterprise focus. Belly CEO Logan LaHive likes to point out that his company has the largest customer-facing screen network in North America, a position that gives Belly enormous power in terms of delivering content and also collecting behavioral data.

Consumers can carry mobile app-based Belly loyalty cards that can be scanned when visiting a partner merchant. Repeat visits and other forms of in-store engagements result in rewards. On the flip side, this allows merchants to drive repeat visits, increase average order value, and gather customer insights. Belly sees hundreds of thousands of check-ins per week from its more than three million members.

Succeeding in the local space is no easy task, nor is rolling out hardware to these customers on a nationwide basis. Fortunately, Belly has experience in both areas, given LaHive’s prior role in building RedBox as an early employee and the fact that the company was seeded by Lightbank, a Chicago-based VC and incubator founded by two of Groupon’s founders. These experiences, both good and bad, have helped guide Belly’s rollout and were a big reason that Andreessen Horowitz was willing to lead the company’s $10 million Series A round in 2012, according to partner and former OpenTable CEO Jeff Jordan*. Belly is also backed by NEA, DAG Ventures, and Cisco.

Despite Belly’s pedigree, this business is as much about operational excellence as it is about product and marketing. The primary focus for the remainder of the year, according to LaHive, will be to train and support 7-Eleven’s own internal store operations team in installing and then driving engagement around the company’s in-store tablets. Everyone from management down to hourly cashiers inside the company’s stores needs to understand the consumer value proposition, and how to guide a customer through the reward redemption process.

“Sure we want to ensure that corporate is satisfied, but it’s just as important that these messages make it down to the individual sales rep level,” LaHive says. “We need to ensure that it’s more than just a nice announcement, but also that the rollout and operations and ongoing support are in place. Our results have gotten better with each deployment.”

7-Eleven’s decision to invest in Belly, and subsequently to greenlight this major rollout, came from a 15 store trial in Chicago. Better than expected results, as measured by increase in customer repeat visit rate and average order value, led the program to expand to 85 storefronts within the region. Moreover, the startup gave the brick-and-mortar giant richer analytics into its consumers, their demographics, preferences, and shopping behavior than it ever had before.

This data, combined with the nationwide network of physical touchpoints with consumers, is where LaHive believes Belly stands apart. Even Square and Groupon, which have installed hardware and software in merchant storefronts across the country, lack the ability to engage with the consumer in the ways that Belly can. The closest thing to this experience in the market might be Foursquare, but even with six-times the funding and a several year head start, the check-in and mobile discovery platform has yet to figure out its business to business monetization strategy. Belly’s customers pay the company a recurring monthly licensing fee for access to its platform.

LaHive anticipates further leveraging these data driven insights to one day offer his customers retail merchandising, marketing services, and maybe even payments products as part of the Belly platform. Working with a client the size of 7-Eleven has helped Belly evaluate what features are required at the enterprise level that may be unnecessary for SMBs. But according to LaHive, everything that the company has developed as part of this partnership is now available to all of the company’s clients. Put another way, 7-Eleven doesn’t get favored nation status, just because it’s an investor or the company’s largest customer.

Belly has just over 100 employees today, approximately 75 of which are based in its Chicago headquarters and 25 to 30 of which are based around the country in its various geographic markets. The new 7-Eleven rollout won’t mean a significant increase in this headcount, LaHive says. Belly is now 12 months removed from its most recent funding round, but the company is not currently fundraising, according to its CEO.

“Our continued growth and position in the market puts us in a strong position from a fundraising perspective when we decide the time is right,” LaHive says. “But we’re fortunate that our revenue has been supporting our growth as well. To be honest – and I know this is cliche – but we’re really heads down at the moment and focused on this rollout.”

With more than 6 million SMBs in America, a large portion of which are retail businesses, there is an enormous amount of greenfield out there for Belly to claim. And if the company can land a few more whales like 7-Eleven that nationwide iPad network will continue to grow larger and more dense. Adding clients the size and visibility of 7-Eleven also adds credibility and reach to the Belly brand, a factor that will prove critical if the company is to become the nation’s default digital loyalty platform.

“Our goal is to build a platform that enables merchants small and large to operate on a level playing field,” LaHive says. “At the same time, we’re trying to provide consumers what we consider to be a world class experience everywhere from taco trucks and cupcake shops all the way up to large global retail. That’s all built through our back-end platform that is available to everyone. The bigger our network gets, the better the experience will be for everyone.”

*Disclosure: Jeff Jordan and fellow Andreessen Horowitz partners Marc Andreessen and Chris Dixon are investors in Pando.