#SFS11 Company Profile: SCVNGR/LevelUp

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At a time when the first generation of location-based applications are retooling their products to lay the groundwork for monetization, the relevancy of game mechanics — tools that helped companies in the space to gain traction early on — are in question. Gowalla made news recently when it abandoned its virtual currency in September, while Foursquare has focused on adding real value through the launch of a handful of products this past summer. SCVNGR, however, appears to be holding on.

SCVNGR is a mobile marketing platform that uses location-based game mechanics to improve engagement with brands. Since 2010, the Boston-based company has partnered up with Dunkin’ Donuts, crystal manufacturer Swarovski, and numerous universities to build custom marketing campaigns on top of its mobile application.

At the same time, the company has seen solid engagement with its rewards product aimed at small and medium size merchants. In the Spring, the company quietly rolled out a new mobile application called LevelUp in Philadelphia and Boston. The app allows users to pay at local businesses through their mobile device while seamlessly participating in rewards programs.

“We’ve taken the end goal [of rewards programs] — customer loyalty — and built in game mechanics, which are actually pretty familiar to local merchants,” SCVNGR’s “dynamo” (real company title) John Valentine told Street Fight in an interview. “I tend not to use the terms ‘gamification’ or ‘game mechanics’ because it’s just too ethereal,” he explains. “But merchants everywhere are using game mechanics: I was just in coffee shop which uses punch cards to give a free coffee to customers after their tenth purchase – that’s regression dynamic in action.”

Unlike most of the current mobile wallet programs, LevelUp does not use NFC-technology to power its transactions. Users scan a custom QR code generated within the application through the merchant’s Android-based reader to complete a transaction — a work-around solution that has become popular in the absence of NFC at scale. LevelUp merchants currently pay $55 a month to participate in the program.

SCVNGR Rewards has been around for over a year, but the launch of LevelUp marks a substantial expansion for the company. Mobile wallets are a big business, with major players like Google poised to launch their products by the end of the year. The distribution and sales/service networks required to scale a mobile payment system far outweighs the infrastructure needed to manage a rewards/marketing product like SCVNGR. While Valentine says the company is drawing from merchant data to generate leads, servicing these merchant relationships will be far more intensive than the company’s traditionally platform-oriented business.

Valentine says the company has plans to expand Level-Up beyond the Philadelphia and Boston markets, but does not want to get too loud, too fast: “We’re holding off on much of the national press because we’re seeing some really interesting statistics with word-of-mouth marketing but, we’ll certainty have a lot more to talk about once the [Street Fight] Summit rolls around.”

SCVNGR’s John Valentine will be appearing on a panel about the evolution of the check-in at the Street Fight Summit alongside Foursquare’s Evan Cohen and goby’s Mark Watkins. There are only two weeks remaining — buy your ticket today!