So…You Come Here Often? Chatterfly Takes Loyalty Digital

August 10, 2011

8:00 am

In a world of extreme couponing, instant deals, and group buying, businesses are constantly looking for innovative ways to not only attract new customers, but to keep the ones they have.  Loyal customers are happy consumers.

The loyalty model has been around for decades, often serving as a fundamental part of marketing strategy.  We are all familiar with the “buy 10 get 1 free” punch card used to encourage customer retention; however this is difficult to track.

Chatterfly simplifies the experience with their iPhone and Android apps, both launching today.  The app gives frequent customers reward points for doing what loyal customers already do:  spread the word.  Points are earned by buying products or services, sharing positive experiences on social media and brand engagement through fun activities like photo scavenger hunts.

Consumers have been romantically swept off their feet with hundreds of daily discount sites; Chatterfly hopes to be a long-term partner for local businesses in this space.  We all know what happens with daily deal sites like Living Social and Groupon.  They have become household names serving up savings by the boatload, but the dark side is that sometimes the influx of bargain seekers turns to gridlock.  Businesses who offer a hot deal might not be equipped to handle the volume of customers that flood their doors and overwhelm staff.

“Unlike many deal-of-the-day programs like Groupon or Living Social that focus on short term gratification, Chatterfly is focused on the long-term, rewarding, repeat customers for loyalty and encouraging friends and family to join in,” says Chatterfly CEO Charles Yim.  If you’ve ever been a “regular” you know that businesses might give you a few extra french fries with your burger or free caramel flavoring in your trendy frappuccino.  Chatterfly allows businesses to directly track these rewards given to faithful customers.

Not without competition, Chatterfly is among a sizzling class of startups such as PlacePop, who announced it closed a $1.4 million round of funding.  PlacePop is a check in service, whereas Chatterfly uses QR codes placed at registers.  Chatterfly asserts that QR codes better secure the business-customer relationship – the QR code you scan to verify your purchase reduces the chances of fraudulent activity.

Of course, the check-in 400 lb gorilla is FourSquare.  To be certain, this is a different model than loyalty-centric Chatterfly, but it could be a force to be reckoned with as FourSquare gathers traction.

Google has also dipped its omnipresent pen into the business loyalty inkwell, announcing its swift acquisition of the startup Punchd last month.  Punchd might be the simplest of the bunch as it is essentially a digital loyalty punch card on your phone.

Others in the space include RewardMe, which lets you earn reward points for purchases and referrals, and WeReward, which lets customers earn cash or points for check ins.

Chatterfly, on the other hand, hopes to create long term trust between consumers and businesses.  Of course the model works best if businesses around you use it, but the service currently lets users collect points that can go towards global rewards.  This hedges against the reality of businesses shelving products that can be redeemed for points at a later date.

Ears are perking up at these emerging loyalty services around the tech world; Chatterfly is right on the cutting edge and has lofty goals.  Taking on the daily deal titans may not happen overnight, but as far as local businesses are concerned, promoting the acquisition of customers who love you has a better ring than the daily deal pump and dump.  With loyalty rewards, consumers advocate their favorite local haunts and return again and again, same bat-time same bat-channel.

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Patrick has been involved in the DC and Seattle startup communities for over 2 years… an eternity in tech startups! He has taken two companies from vision to reality as Operations Manager. Fresh off orchestrating a dream move from Seattle to New York, he intends on returning to finance/consulting while advising eager start-ups whenever possible. Reach him on twitter @Skelley84

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