Case Study: Sandwich Chain Becomes a Believer in the End of the Wallet

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When Mike Conley was tapped to become the director of marketing at LPM Holding Company, a Massachusetts-based hospitality management business, he was tasked with finding a loyalty program for the company’s chain of six salad and sandwich shops, Sebastians. The challenge? Sebastians was using an old register system and integration was a pain. Then LevelUp came along. The mobile payments and loyalty program works seamlessly at Sebastians and provides Conley with far more customer information — like return rates and lifetime spending histories — than he could have ever gotten from a punch card system. More than 2,200 customers are now using LevelUp to pay at Sebastians — up from 500 just four months ago — and Conley says customers who use the platform spend more per visit than those who do not.

How did you get started using LevelUp?
We needed a loyalty program. As the story goes: I came into the company and I was told we [couldn’t] get a loyalty program because of the register systems we have. They do not integrate with anybody. They don’t even integrate with Paytronix, like the Panera Bread Company’s loyalty program. So I said, “All right, you are asking me to find something that cannot be found?,” and they essentially said, “Yes.” After looking around a little bit, I got a call from LevelUp and they said, “Would you be interested in talking to us?” I said to them, “I’m not interested in the Groupon-type deals,” and they were like, “We’re actually not. If you give us a few minutes, hear us out.” They sent somebody to me and we went through all the specs about it. [LevelUp] told us that all we needed was a button — kind of like a house account — on our registers. From then on, we were sold. This was the quickest way of integrating something with our system. We just had to add a custom button that says “LevelUp” on it. Since the day we started at Sebastians, our customers have been asking for a loyalty program. And because the previous company had these registers that we inherited, we weren’t able to provide that for them. Now we are and everybody is happy.

How have you seen usage pick up since you started using LevelUp in August?
We started with Kendall Square as a test location. We’re right next to MIT at that location. As soon as we started it, [LevelUp] had a street team to promote the program. They handed out flyers and showed people how to use it — it was an instant hit. I think our first week’s sales were probably about $500, which is not bad considering this was the first time anybody had been paying with their phone. So that’s a pretty good start. From there on, everybody started grabbing on to it. At one point, four months ago, we were at 500 unique users. Right now we are at 2,200 unique customers. Those are specific people who are using LevelUp when they come in at our locations.

Did you have any challenges in teaching your staff to accept mobile payments?
The terminal that you pay with is essentially a phone. The customer comes up, [our staff] scan their QR code through the camera of the LevelUp phone [we were given], and the [cashier] rings up the register just like they would normally do. Instead of pressing the “cash out” button or “pay with credit card,” they press the LevelUp button, and then they type in [the price]. If it’s $7.33 for the sandwich, they type into the phone $7.33, they press enter, and the customer instantly gets a receipt. That’s all that has to happen.

As far as training goes, it was very easy. LevelUp came to us. The thing about Sebastians is we have a lot of dialects and countries represented, so the language barrier is hard to get around. One of my main concerns was how we were going to teach our staff, but a lot of them already had phones that were touch screens anyway. They are a younger group of people, so they picked up on it pretty quickly. Even if there is a coupon or something that LevelUp puts out for people, it’s built into the app. We don’t have to do anything. We just continue to type in their purchase and they’re on their way. The program itself takes care of all the discounts and rewards.

Is LevelUp creating the customer loyalty you were originally hoping for?
Yes. We’re able to track people. We’re able to retain customers. It actually provides us with a lot of statistics that we couldn’t get a hold of beforehand, like return rates within so many days. That is available to us. Lifetime spending of a customer; average sales of a customer. It actually turns out that customers are spending more with the loyalty program than they would on an average check because they know they’re getting something back. As far as loyalty goes, I think that speaks to it. Putting a loyalty program in place like this gives them a little bit of fun. They’re paying with their phone. It’s a new idea, but I also know I’m getting something back.

Have you learned anything about using the platform now that you wish you would have known at the beginning?
I wish I was more forward thinking, as far as what the future of payments would be. Obviously this company is looking five and 10 years into the future. The wallet is eventually going to go away. You’re going to have your driver’s license, your credit card, and your bankcard all in your phone. That’s the way it’s going. I didn’t necessarily think this was going to be the future of payments until three or four months into it. If [I knew that], I would have started up initially as soon as we had those talks with [LevelUp]. Even though we only waited a month, it would have opened up a lot of things for us.

When you say three or four months into it, what changed at that point?
I just saw how many people were jumping on board. I mean, LevelUp is all over Boston now. I can go into any bar in Faneuil Hall and I can pay with LevelUp. There are some restaurants that are doing the same. There’s some grab-and-go places. There’s even some shoe stores that are picking up on it. It’s just an easier, great way to pay. I forgot my wallet one day, going into a meeting, and I was like: “Oh, crap. I can’t pay for food. Oh, wait a minute. I have my phone. I have LevelUp.” It’s interesting that everyone is starting to realize how this is a very usable tool for payments.

For businesses that are thinking about using LevelUp, do you have any tips for maximizing the effectiveness of the program?
Yeah. I said to LevelUp at first, “I don’t want to deal with this if it’s Groupon.” I see LevelUp as being something that’s going to save you money — this is from a business perspective — if you are doing it right with marketing it, putting it on your fliers, putting it in your emails, putting it on your website, and just making sure it’s seen that you have it. The program will pay for itself. With something like Groupon, the only time Groupon works is if you are a brand new business and you are utilizing an initial marketing cost. So, for example: Wahlburgers. They are a new burger company by the Wahlberg brothers. If they open up their new store and they want to attract new people, Groupon is seen by millions of customers. Put a $5-for-$10 in there — that’s part of an initial cost. It will bring people in. But if I decide to do Groupon right now, I won’t make any money. If people are looking at both Groupon-type companies and LevelUp, I would strongly urge them to consider LevelUp over Groupon — unless they are a brand new startup company coming out of the gates.

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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.