The new model of group buying: The more rewards you get from repeat customers

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Recently, based on the user's location to provide services to buy the site has encountered a lot of problems, and Scvngr to find a way to make consumers become repeat customers.

The group-buying website has not been very well in recent months. Two years ago, companies such as social-networking sites Foursquare and Groupon, a group buying site, are now largely household names. With concern, there is also fierce criticism: Groupon has been hit by the creation of new accounting methods, and some consumers and small businesses have expressed dissatisfaction that the group buying service is not as good as boasting. It has been proved that to achieve a balance between the interests of the various parties to save money for businesses, so that consumers can benefit, the service provider also has a sustainable business model is a very complex problem. However, the smaller Scvngr company thinks it has found the answer.

The more you consume, the more you reward.

The company, based in Cambridge, Massachusetts, is aggressively promoting its new product levelup and increasing the user base. The product of group buying mode made a number of adjustments, the user in a certain business consumption, the more points and rewards are obtained. Its chief executive, Seiss Pribash, said the product was ready for greater development. After a summer test, LevelUp has worked with about 500 businesses in Boston and Philadelphia. Today, the site has entered New York and San Francisco, a mecca for well-informed, discount-loving users.

The concept of the service is simple: users register for free, and then link a credit card or debit card to the account. Then, users can scan for smart phones with specific codes when they shop in partnership. The first time a user uses the service, a discount of 10 dollars is available. What is the improvement over other group buying sites? If users return to the same business again, they will get more points, and in this process, they can check the integration status. The goal is to make users a repeat customer. This is a habitual big problem for Groupon, Foursquare users and related businesses.

The company said the model was "reverse-favorable" and "dynamic Progress". It is to a large extent to satisfy the business. Pribash said that during the LevelUp test, 45% of the users will return to a specific business in 30 days to spend, and pay the full price, the number is much higher than his estimate of the competitor. (Pribash claims Groupon has only 1% to 2% repeat customers). Since Groupon is in a quiet period before the IPO, it declined to comment. )

More important, Scvngr said, these repeat customers later increased their consumption by as much as 38% per cent, exceeding the amount required to win the award. The company also said that its users average 21% of the tip of the waiter, slightly above the 15%-18% general level. LevelUp believes that he has solved the problem that Groupon merchants often complain about, that is, users buy a discounted product and never patronize it.

Physical Store Check-in

LevelUp plans to launch a first-step service in 50 locations in New York City, where some 250 locations are now equipped with Android handsets to accept transactions. Compared with Groupon or Foursquare, this is a small size, with two group buying giants all in a fast-growing expansion. However, they also face serious challenges. Mason, founder and CEO of Groupon, recently leaked a memo to employees. He said in the paper that the company's huge marketing spending is to attract users, and then "turn these registered users into customers and ensure that customers are constantly shopping from us." "But this is easier said than done." A lot of reports point out that many of Groupon's 115 million registered users just keep chasing one new offer and there's no loyalty at all.

On the other hand, the problem facing Foursquare is that local advertisers and users are no longer enthusiastic. The data shows that the popularity of services based on "Check-in" has declined overall. According to a report by investment company Blair&co, the market, led by Foursquare and Gowalla, fell by half a day from May to November, using so-called location-based social services. This trend has forced Gowalla to move to other businesses, and Foursquare is also under threat. The latter's product director, Alex Reinoth, acknowledges that the company is looking for new forms of interaction that will try to go beyond the physical store-check-in model, providing photos, reviews and "explorations" (to the user's recommended location).

Reverse Offer

Pribash and his Scvngr/levelup team believe they have found a solution to retain users. Scvngr is a Foursquare competitor, with Coca-Cola, youth apparel brand FOREVER21 and game retailer GameStop and so on have a partnership. It offers a number of social mechanisms that allow users to get rewards through challenges or other game elements. For example, during the Dunkin "Donuts" campaign, the rewards include a free cup of coffee from the store. Pribash believes that LevelUp is a natural sister project for Scvngr in the trading field.

LevelUp's start didn't go well. Pribash admits that the company has gone through the process of releasing two of times before figuring out the crux of the problem. The service was initially operating in a similar way to Groupon's discount model. But businesses don't like it, and they think that continuing to offer discounts will affect their brand image. "It gives people an impression that the partnership brand seems to be going downhill," Pribash said. "The effect is obvious when we launch the original service," he said. Because of this, we have created the concept of reverse preference. "This concept is based on the customer's participation in obtaining rewards and credits, rather than discounts, to avoid the problem of the discount model."

Some people, however, are not buying it. Rajat Paharia, the founder of Bunchball, a gaming platform provider, was quite blunt. "I think it's time to go back online and it means Scvngr is a failed company," Paharia said. "I don't understand why they rushed into group buying." "Obviously, LevelUp disagree with this view. Scvngr claimed that its September revenue exceeded the sum of the first 6 months of last year if the company could continue to maintain the habit of LevelUp users to spend two times a week, Pribash might be right. He said: "Give us 6-9 months, and then see the effect of our two services promoting each other." ”