Forget the paper punch cards and plastic key fobs that most people associate with small-business rewards programs. If you want the attention of customers and to promote true brand loyalty, there are digital alternatives—that offer greater transparency and results. Here's a look at LevelUp, the mobile-payments-meets-loyalty program that has quickly become the frontrunner in this race since its national rollout in October 2011.
How It Works: Customers who download the LevelUp mobile app are encouraged to link up a debit or credit card so that they can begin paying for all types of goods and services through their smartphones. Registered users receive notifications about nearby businesses offering discounts to people with LevelUp—usually $5, $10, or $20 credits, which are automatically applied to customers' purchases when they pay with the mobile app. Customers who return to the businesses they've visited can earn even more merchant-specific rewards, which accumulate over time. All merchants have to do in order to get started with LevelUp is add a button on their registers that functions similarly to a house account. Payments and reward redemptions are tracked through LevelUp's own mobile program, which makes for quick integration for businesses with multiple point-of-sale systems.
LevelUp in Action: To encourage return visits, LevelUp merchants can create their own "loyalty constructs" that work similarly to punch cards. Each purchase made through the LevelUp application is tracked, and customers are automatically rewarded with credits each time they return to their favorite establishments. At Fajitas & ‘Ritas in Boston, for example, customers are given $3 for signing up for the program, $5 when LevelUp periodically includes Fajitas & 'Ritas on its Featured list and $10 once they spend at least $100. The credits that customers earn can be spent immediately or used at a later date.
Why It Works: One of the biggest complaints about daily deals companies is that they bring new customers through the door without offering any incentive to drive repeat business. LevelUp has solved this issue by using immediate credits to help businesses acquire new customers, and then rewarding loyalty with additional credits that accumulate over time.
The system itself is especially useful for small businesses with multiple locations. At Sebastians, a salad and sandwich shop with six locations in Boston, director of marketing Mike Conley was struggling to create a loyalty program that worked across multiple point-of-sale systems. LevelUp offered a solution by bypassing Conley's POS systems and using its own mobile payment system to track and redeem credits instead. Staffers at all six Sebastians locations can accept payments and track rewards by scanning their customers' mobile phones, which made it possible for Conley to implement a loyalty program without changing the POS system his company was already using.
Before integrating LevelUp at all six of its Boston locations, the team at Sebastians decided to start small with a trial run at the Kendall Square shop in August 2011. Unsurprisingly, Conley says the application was an instant hit. LevelUp customers spent $500 at Sebastians' Kendall Square location during the first week of use. "That is a pretty good start, considering this is the first time anybody is paying with their phones," says Conley. LevelUp usage at Sebastians' six locations has grown from 500 unique users to 2,200 in the past four months. At Fajitas & 'Ritas, owner Brad Fredericks says between 15 and 20 guests are now paying through the LevelUp app each week. Aside from the financials, LevelUp has given these merchants a way to target their marketing efforts using statistics that show the return rate, average spending and lifetime spending of each customer who pays through the mobile app.
Maximizing the Benefits: LevelUp advises its merchants to market its services to their customers by using a combination of printed promotional materials, social media outreach and periodic e-mail blasts. To make that process even easier for merchants, the company offers customizable templates for e-mail, Facebook and Twitter marketing. Reps for LevelUp also recommend that businesses prepare their staffs ahead of time with educational training videos and PowerPoint presentations, all available on the LevelUp website. At Sebastians, Conley advertised his company's partnership with LevelUp in the same way he would advertise any new loyalty program: by passing out sidewalk flyers, adding the LevelUp logo to his company website, including information about the program in customer newsletters and creating menu inserts with additional info.
Stephanie Miles is based in Portland, Ore. She writes the “Case Study” series for local businesses on Street Fight.
Photo credit: Courtesy LevelUp