March 5, 2012
Improving the customer experience via better loyalty reward programs is a hot startup concept. We have covered numerous companies in this space – most recently Social Rewards, Plink, Womply, and Belly.
And now there’s Swipely. Based in Providence, RI, the 2 year old startup is backed by Grelyock Partners, has 30-35 employees, and is currently operating in Providence, Boston, San Francisco, and NYC and just starting to expand to DC.
Here’s the twist: The Swipely platform converts the credit card network into a loyalty tool for local mom-and-pop merchants, letting them engage with customers via targeted messages after they leave the store. Because it operates via credit card, consumers don’t need to carry loyalty cards, vouchers, or coupons or check in on mobile phone. Basically, you get to earn automatic rewards without doing anything.
As founder and CEO Angus Davis told me,
“Imagine if Amazon deleted all of their customer information every night. Well, that’s what happens on Main Street every night. It takes a tremendous amount of time to set up a loyalty program, and it can get very expensive. Most of them aren’t even online. Swipely bridges the gap between your offline – credit card – and online – email.”
Swipely’s secret weapon, which I think bodes very well for their future, is their CMO, who is the former Senior VP of Marketing at CVS – she created the ExtraCare card and has brought all of those enterprise-level direct marketing programs to Swipely. Right now, 50-65% of their network (320 merchants or so) are restaurants, mostly table service. The rest of the merchants are split between services, like salons and spas, and specialty retail.
Here’s how it works:
Consumers can sign up for Swipely on the web or in the store (a mobile app is coming soon). You just type in an existing debit or credit card once (their system is super encrypted) , and every time you use that card at a participating merchant, you earn rewards. Emails keep you updated you on your rewards, and Davis pointed out that most merchants offer an immediate cash-back reward on the first purchase. “Most merchants also offer a loyalty program, like 1 point for every dollar you spend,” Davis said. “It is seamless and pain-free, and costs nothing.”
The real winners are merchants, because the program simply integrates with the credit card network (which Swipely, rather than another merchant, runs), so there is no need to buy new hardware or software or train staff. I asked Davis about their revenue model. “Every merchant has to pay a fee for credit card transactions. Because we process those credit card transactions, we still collect a fee, but we turn that fee into an investment in the business – merchants get analytics, rewards program, and direct marketing in return, instead of just the ability to process transactions. The cost of accepting credit cards does not go up, and merchants get a lot of benefits in return.”
Davis said their long term ambition is to be a marketing department for Main Street, offering a variety of marketing services, like customer acquisition, benchmark and analytics data. For now, they are focusing their expansion on major cities, and then they will work to get into smaller towns.
If you’re in DC, let them know what local merchants you’d like to see added to their network – you can send them a message via Twitter @Swipely.
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