MLM SF: Mobile Shopping and Loyalty — Closing the Local Loop

Here in San Francisco at BIA/Kelsey’s Mobile Local Media conference, a panel of three young companies offered a glimpse into the leading edge of mobile shopping and loyalty marketing.

Moderator Peter Krasilovsky walked each panelist through an examination of his business model, framing a conversation about the evolution of the hyper-competitive mobile payments and transaction marketing space.

Some common features include using loyalty points to drive behavior — store visits, meal purchases and so on — and a seamless experience, where no phone or coupon or loyalty card needs to be presented at the point of sale by consumers. For merchants, the incentives range from higher customer intake, more frequent in-store visits to higher average purchase value.

Josh Capilouto, director of sales operations at SCVNGR/LevelUp

LevelUp is an alternative payment system. The model is users download the app, link a credit card and pay at the point of sale using that card. The LevelUp business model is pay for performance via onboarding and loyalty campaigns. For example, a new customer might be offered two free dollars as an inducement to come into the store. If that money is spent, LevelUp gets a piece of that offer redemption. The same works with loyalty offers. If an offer is to spend $50 for a $5 credit, LevelUp gets a taste of that $5.

LevelUp is in 25 cities via the remove sales channel and is live with direct sales in eight cities, with three more expected by the end of summer or early fall.

Doug Galen, Chief Revenue Officer, Shopkick

Shopkick is a loyalty platform that works with partners to offer points of “kicks” to reward in-store visits. CRO Galen offered his view on the key trends driving mobile shopping.

He cited two key trends:

1. “There will be more change in retail in the next five years than there were in the last 100.”

2. “The mobile impact on shopping is happening faster than expected.”

Two minor supporting trends:

1. Retail is losing walk-ins and needs a solution to drive in-store traffic. Retailers want walk-ins and will pay for them. They have 25 percent to 50 percent conversion rates.

2. Consumers have too many loyalty cards — fragmentation hurts everyone.

Galen was asked about the restaurant chain Denny’s, which built own app. Why should a company work with Shopkick rather than build its own app? What did they miss out on? Galen said they missed 85 percent to 90 percent of their customer base. Most consumers will not use 40 different apps, Galen said. At best, 10 percent of a company’s most loyal users will.

Jon Carder, CEO, Mogl
The name dropper of the day was Mogl CEO Carder, who talked about a recent invitation to Richard Branson’s private island for dinner.

The Mogl model is to use game mechanics to build a network of restaurants, sign up consumer who synch a credit card, earning the chance to win cash back (10 percent for each visit), accumulate points that are redeemed as meals for charity or win a large jackpot.

Carder said the beauty is that different users are there for different reasons. Some people like to give to charity, others like cash, others like points.

One notable feature of Mogl is the cost to restaurants. The company charges restaurants 15 percent of sale. Carder said this isn’t a challenge. “As long as restaurants see ROI, they don’t care.”

he said the average restaurant pays $400 a month and experiences little attrition. “They will pay for value,” he said. “They are tired of cheap but valueless services.”