Technology: Marketing

Technology is giving merchants a newer, slicker, 21st-century way to offer customers reward/loyalty programs, signaling a shift away from those wallet-clogging buy-ten-get-one-free punch cards.

Indeed, merchants of all kinds are signing up for tech programs that enable them to keep tabs on their regulars and reach out to new customers while the customers pile up reward points with the swipe of a card. Merchants include coffee shops, bakeries, full-service restaurants, gyms, spas, salons, car washes and sandwich shops, among others.

Among the providers of this kind of program is Chicago-based Belly, a major player in the growing field, which says more than 3 million users have thrown away their punch-cards forever in favor of Belly’s digital loyalty app and card that can be used anywhere. Belly has signed up more than 7,000 merchants in nearly 20 cities, including some in the Phoenix area, who are using the company’s “punch-card killing iPad.”

And FiveStars, headquartered in San Francisco, boasts that more than 4 million consumers are tossing their punch cards in favor of its digital loyalty app. Company officials say FiveStars, which targets small businesses, works with more than 5,000 merchants throughout the country.

Victor Ho, FiveStars CEO, explains how technology enables his loyalty/rewards program to work. “Our world-class engineering team has developed patented technology that enables our software to run across any point-of-sale,” Ho says. “This is a significant differentiator for FiveStars versus our competition. Our competitors typically just give away an iPad that isn’t integrated with a merchant’s point-of-sale and only reward people for visiting a store, regardless how much a customer spends.” 

FiveStars uses big data to identify customers and help merchants to be more informed about who comes in and how often. It then tells merchants who to send loyalty rewards, coupons and perks, depending on when they came in last, what they bought and other data. If a customer hasn’t been into a coffee shop for a while, for instance, FiveStars’ software alerts the merchant to send them a freebie to get them back in.

Furthermore, FiveStars says the platform personalizes commerce in the real world by “leveraging big data, predictive analytics and cloud-based marketing automation, aiming to make offline transactions as personalized as they are online by building a ubiquitous software platform at the merchant point-of-sale.”

At Belly, CEO Logan LaHive says, “We’ve built an iPad app that businesses can set up in their stores so that as their customers visit they can earn points, which can be redeemed for rewards. Belly enables customers to use one card or app to scan in on the Belly iPads to earn points.” Belly members use the same BellyCard or mobile app to earn points at any Belly business. “In addition to loyalty, we offer our partner businesses tools to not only create these digital connections with their customers, but to enhance and automate them.”

For example, LaHive mentions email marketing, social media engagement, online reputation management, mobile discovery and targeted offers to attract new customers and provide access to customer insights. “All are features we’ve built to help our clients run their business and make more informed marketing decisions that drive sales,” LaHive says.

Phoenix-area merchants who have signed on to the next generation of loyalty/rewards programs are delighted with the results, and so, it seems, are their customers.

Amy Black, who owns Jimmy and Joe’s Pizzeria restaurants in Mesa, Chandler and Ahwatukee, says the FiveStars database has enabled her to set up three tiers of rewards. Based on how much a customer spends, rewards range from a slice of pizza and a soft drink to a 16-inch pizza to a 24-incher.

“It’s better than anything I’ve ever done before,” Black says. “I try to go after two types of customers — repeat and new customers. If we haven’t seen someone for a while, we send a text message offering free cookies and coffee.”

Another FiveStars client, Ashly Young, owns Chloe’s Corner at Kierland Commons and C3 Kitchen at Scottsdale Quarter. “It’s working really well,” Young says. “They both get lots of foot traffic.” In addition to awarding breakfast or lunch items based on accumulated points, Chloe’s and C3 both give their customers “happy birthday milk shakes,” Young says. “Our customers love it,” Young says. “They’re getting something just for being customers.” And Young receives weekly updates from FiveStars on her account. “They keep track for us,” she says.

When Katie Downing, manager of Bookmans Entertainment Exchange in Phoenix, was facing three years of light rail construction right in front of her store, she turned to Belly. “We decided we needed to offer our customers an incentive and reward for braving the construction zone,” Downing says.

Bookmans built its reputation on the concept that “used” is not a dirty word, Downing says. “Bookmans relies on our customers for what we sell, including books, music, movies, video games and systems, magazines, comics, electronics and musical instruments, to list a few,” she says. “We regularly host in-store events ranging from art exhibits, musical performances and anime festivals to reptile adoptions, yoga classes and yo-yo workshops.”

Bookmans’ rewards range from an automatic 10 percent off a purchase to free books, movies, video games and gift cards. “So far, it’s been great,” Downing says. “Our regulars come in more often and our newer guests love the idea of getting a discount on top of already discounted merchandise. We have also utilized the Belly email campaigns to incentivize a return trip to the store with free gift cards and bogo (buy one, get one) DVD offers.”

It seems that punch cards, as Belly’s website proudly proclaims, “are so last century.”