Local Loyalty: Klosebuy Plans to Bring Powerful Marketing to Main Street

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I’ve never really taken advantage of loyalty programs — at least not those that require me to do more than verbally communicate a number, like I do at my grocery store. Cards, coupons and their ilk (even when digitized) seem to slip into a clutter of potential savings that I have never seemed to tidy.

But that’s me, and that was then. New entrants are looking to make life simpler for the thrifty with suites of services that stretch from the marketer all the way to a consumer’s wallet. And some of those are focusing local — targeting the SMB by giving them the power over loyalty programs once reserved for the big guys.

When I first asked Frank Fennell, head of a soon-to-launch (September) loyalty platform called Klosebuy, Fennell admitted that he could be verbose — especially when “talking about my baby!” He was right:

A comprehensive, easy to use, self-administered business-building platform designed for small to medium companies. Through web and mobile technologies, Klosebuy is an affordable digital marketing and closed-looped loyalty platform that allows users to easily create their digital promotions, offer a points-based loyalty program, utilize push notifications to instantly reach nearby consumers, and participate in scheduled email notifications directed at their unique client base. Simultaneously, Klosebuy develops a customer database, as well as tracks the progress of promotions through detailed analytics.


But seriously, that’s reaching for the loyalty heavens. So how is this currently-beta product going to pull that off? I spoke to Fennell recently about the product’s coming launch, and why he has such high expectations for the SMB loyalty space.

Tell me about how Klosebuy got its start. What drove your desire to launch a new loyalty platform and service?
Helping small to medium-sized businesses compete effectively against large retailers was paramount. There are millions of these businesses that need help and no one has been able to solve this issue, at least at a price all businesses could afford. The SMBs need a business-building platform that is easy to use, provides no barriers to entry, and by all means is affordable. We recognized that there were no dominant players in this space, so we developed Klosebuy to be the answer for any business, no matter their sophistication level, profile, or industry.

Why does the market need this now?
The market is quite fragmented and a lot of what I see simply doesn’t work, isn’t effective, offers limited features or is just too expensive. These businesses need an effortless way to digitally market their business to consumers, incorporate social media, use mobile technology, receive analytics, and have access to a loyalty program. They should be able to change their marketing and promotional messages as often as they want, and not have to pay additional fees based upon the success of their promotions.

And what will Klosebuy’s core components be?
The core components are digital web and mobile marketing, and an optional points-based loyalty program where consumers can track their points and redeem them from a catalog of thousands of items. However, there is an extremely important aspect of Klosebuy that is at the forefront. It’s the ability to create consumer data for the SMBs. More than 85% of all SMBs don’t have a database of their own customers. One way Klosebuy helps is by incorporating a strategy I used successfully in the past when it comes to bringing in millions of consumers. If you make it easy for a consumer to join, make the process quick, provide an easy-to-use mobile app, and reward the consumer immediately with “points,” they’ll come in droves.

All the business has to do is tell their customers “I’m a Klosebuy merchant — signing up is free, you’ll get points for joining, and you get to see my member-only offers.”  Klosebuy funds both the sign up points and the points awarded to customers for “favoring” these businesses. Each time a customer favors a business, they become part of that business’s database of customers. Our strategy is to help these SMBs build their customer databases. We encourage customers to follow these businesses by rewarding them with points we pay for.

Another very cool feature that we developed is the “super merchant” profile. Many SMBs have multiple locations, so this profile includes all the features provided to a single location, but can be accomplished instantly across a region or an entire chain. Along with having the ability to upload a number of locations, Klosebuy provides franchisors with the option to either centrally manage Klosebuy, or provide each franchisee with the ability to market their individual locations.


So to be clear there is a consumer app, an SMB back-end tool, and a paper component?
With consumers, Klosebuy is definitely a mobile-first solution. Consumers can download the app, sign up, immediately earn welcome points, and begin “favoring” businesses and earn additional points. They can save deals, share deals socially, track their points, and redeem those points — all through the mobile app.

We have also included a web platform as well for the consumers.  Many companies opt solely to focus their efforts on a mobile app, but we have invested heavily in both of the consumer applications.  For our Klosebuy businesses, our main focus was ease of use. SMBs don’t have the time or energy to have to learn or manage complicated marketing and loyalty tools.  We embed our tutorial videos directly on our website so that business owners know exactly what to expect, and can see how easy it is to use before signing up.

A business can sign up and schedule their promotions and advertisements within five minutes.  Businesses can create promotions, coupons, advertisements, and offers; send push notifications, track analytics, link their social media sites, and easily manage their optional points-based loyalty program. Klosebuy’s loyalty program incorporates both digital points and points certificates [that paper component] as a means to deliver rewards to customers. All points are tracked by the platform, and can include one-time use points codes, especially for e-commerce clients.

What differentiates Klosebuy from all the others out there?
We are not a digital punchcard. These [other] card platforms are quite expensive and puts the undue burden on the business to create and fulfill their own rewards. In our experience, customers want immediate gratification from their loyalty programs. Allowing a consumer to pool their points from a variety of businesses they frequent, allows them to quickly build value.

The worst loyalty programs I’ve seen in my career are the ones where a consumer has to spend such an unrealistic amount of money from a single location that they never receive an award of value. Our model allows Klosebuy businesses to “opt in” to our points-based loyalty program where they can buy both points certificates and digital points on an ‘as needed’ basis.  They can automatically award their customers points on their birthdays, and give digital points and points certificates for a variety of reasons.

They can use points instead of discounts, as an instant reward, a “gift with purchase,” as a way to say “I’m sorry,” or for just visiting their store. For businesses, points are far less expensive than discounts, and we differentiate ourselves from others by allowing our businesses to use points in a variety of ways to drive traffic and sales.

Klosebuy enables SMBs to offer push notifications and email marketing?  
Our subscribers can schedule as many promotions in the future as they wish, allowing them to plan out their marketing strategy months in advance.  Businesses can also schedule two push notifications per month in order to deliver direct mobile app messages to their customer base.

Klosebuy automates email communications by delivering two emails per month to each consumer; each email will include an aggregate of select promotions from each of the customer’s favorite businesses.

Reaching critical mass for small businesses and their customers can be very difficult. What is your plan to market this program to SMBs? 
This has been an issue with most of the companies that have entered this market. We are partnering with merchant service providers who recognize the significant value Klosebuy offers to SMBs.  Having partners bring our platform to their audience gives immediate credibility to Klosebuy. More importantly though to our partners, our platform tightens the relationship between the MSP and their business customers.

We can easily customize Klosebuy for their customer base, and considering the platform requires no integration, no hardware, and no training, we make the decision easy for our partners to come on board.

Speaking of cost, what is the structure for SMBs?
Our pricing will be $19.95 per month which includes unlimited digital promotions, with three active at one-time, and two push notifications. There is no long-term contract required. With flexibility in mind, businesses can always purchase points to begin using the loyalty program at a cost of $.01 per point. Businesses can select from a variety of upgrades that include additional active digital promotions per month, digital points, points certificates, and marketing materials. With Klosebuy offered through our MSP partners, we are currently negotiating special pricing in advance of our launch in order to provide exclusive rates for their customers only.

RickRRick Robinson is SVP of Product for on-demand roadside assistance startup Urgent.ly. He is also an advisor to Street Fight. Follow him at @itsrickrobinson

This interview has been edited for length and clarity.