Case Study: Creating Loyalty Program on the Cheap Using Check-Ins

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The game dynamics of location-based services like SCVNGR aren’t just for consumers’ kicks. Fajitas & ‘Ritas proprietor Brad Fredericks in Boston, for one, has paired SCVNGR, as well as its spinoff service, LevelUp, with social advertising company LocalResponse to create a loyalty program that rewards customers for repeat visits. And if anyone’s counting, LevelUp is winning by at least a mile.

How did you first get involved with SCVNGR?
I think we were just cold-called by SCVNGR at the outset of its launch. It was very early on and I was intrigued. They approached us about doing some rewards for SCVNGR itself. We didn’t see a lot of business initially, but since they progressed with LevelUp, which you probably know is a platform for paying with mobile phones, the activity has increased considerably. Of course LevelUp is recent. I think we just started it in July. And SCNVGR itself, we were using a year before that.

Can you tell me about the different rewards that you’ve been able to offer?
For SCVNGR’s original game check-in game format, customers earn points by checking in and taking photos. They can redeem their points for free soda, two free nacho toppings, free dessert and finally, 15 percent off a guest check. For SCVNGR’s LevelUp loyalty program, the award levels are $3 for signing up for the program, $5 for when LevelUp does a feature email broadcast about Fajitas & ‘Ritas, and $10 once a customer spends $100. All along I thought that we would like to do a loyalty program or frequent dining program — we [were going to] call it “Fajita ‘Rita Eat-ah” — but I never launched it because I never had what I believed to be a good platform for it. The LevelUp payment platform seems to provide a solution for a program I had thought of implementing, but never did.

How did you come up with this particular rewards you offer? Is that something SCVNGR helped with?
That is correct. There were some suggestions, and I sat down with my account rep Adam and we came up with them.

Do you have any sense of how many people are using SCVNGR or LevelUp at your restaurant?
Yes, I can access reports for both online. SCVNGR is about five per month in redeemed rewards, probably many more participating in collecting points. Though it just started in July, we’re seeing 15 to 20 guests per week paying with LevelUp. LevelUp seems to have kicked off with much greater traction. It has increased in momentum, and seems like it has much greater long-term potential than the original SCVNGR game. Customers who are used to using mobile phone apps have taken to it easily.

Certainly the overall amount [of people paying with LevelUp] still pales in comparison to [customers] paying with traditional credit cards, but I believe there is potential for it to grow. SCVNGR is certainly less so. But I did not have preconceived goals with either program. They were presented in a fashion that there was very little downside, so both are on a trial basis. Continuing with SCVNGR will be somewhat based upon what the SCVNGR company decides. Where are they going to put their support? It is evident now that their support is with LevelUp. Either of the programs has to have the ability to drive sales, as well as to accommodate them.

How about in terms of education your own staff. Have you had any challenges with that?
With SCVNGR there was an issue initially where people were showing pieces of paper with a bar code on it and we were uninformed as to whether to accept the paper. We thought it was completely a mobile phone platform, so there were a couple of mishaps with that. But after the education got better, we haven’t had any problems.

As far as Foursquare and other check-ins are concerned, there is a company out of Manhattan called LocalResponse that picks up all those check-ins on social media apparently—except Facebook, because they can’t reach those customers directly—and they contact those customers and offer them to come back with three friends to get a free order of chicken tequila wings. So that’s a very interesting thing that they have just started doing that was very intriguing. They’re offering those services for free right now.

How does LocalResponse contact the customers to give them the coupons?
Customers check-in and they get this reply tweet through Twitter, and when they come in there is a button that they can hit in front of the staff, or the staff can hit it themselves, that says “Redeemed.” Then the offer gets redeemed.

What kind of value do all these location-based platforms bring to your restaurant?
I think they encourage word-of-mouth through social media. If you can do it social media-wise, word-of-mouth spreads a lot more quickly. Second, it offers more customer loyalty, as opposed to all the Groupon-type sites that offer a one-time deal. These things can be done without any deep discounting. Again, that is as opposed to LivingSocial or Groupon or stuff like that, which offer discounts that just don’t make economic sense. For us, $10 off after $100 is better than 50 percent off of their first meal.

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This interview has been edited for length and clarity.

Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.