Editor’s Note: Watch the full video of Priebatsch launching LevelUp here.
Loyalty 2.0. This morning at SCVNGR‘s press conference, and following Foursquare’s recent 3.0 launch, a barefooted Seth Priebatsch laid out the company’s newest strategy as he preps to leave Boston to deliver the keynote speech at SXSW in Texas.
As we guessed, the company has made a foray into the daily deals space (with their own gameified spin, of course) dubbed “LevelUp.” The idea is to morph the benefits of location based gaming and daily deals, to help turn and drive new customers into loyal regulars. In doing so, LevelUp blends check in, challenge and reward into one small, bite sized unit — one that’s both easily digestible and meaningful to small businesses.
After Cambridge’s Mayor Maher discussed the city’s development from manufacturing to life sciences and technology, Priebatsch ensured that SCVNGR plans to stay here in Boston to build “a big, meaningful, consumer facing tech company.” He then dove right into LevelUp.
Launching today in Boston and Philadelphia via web app, iPhone and Android apps, LevelUp works with merchants to create not just great daily deals — but three levels of deals: good, better and best. As a consumer, when you purchase and use a deal on LevelUp, you’ll then get access to the next deal level at that business.
“The first new alternative to the daily deal,” LevelUp answers cries from and merchant questions about the ability to track how meaningful daily deal sales are. Mainly, does offering a daily deal do more than just drive new customers — does it drive loyalty and repeat customers, not the one and done customers just looking for the deal?
Here’s an example of how LevelUp works to deliver value to both consumers and merchants, using a local rock climbing company: Level 1 is “learn to rock climb”; Level 2 is “come climb again with a friend”; and Level 3 is a “here’s a great deal on a membership.”
SCVNGR is targetting small and medium sized businesses in the area, who will pay $0 for the Level 1 deal and only pay a 25 percent cut to SCVNGR for Level 2 and 3 deals (this is compared to a 50 cut taken by Groupon). This means SCVNGR only makes money on repeat customers they drive to the participating business. With regard to business model, SCVNGR’s prior main source of revenue came from big brands paying for Treks (a series of challenges) across multiple locations — some which reportedly cost $250,000 a pop. The new LevelUp app and offering means SCVNGR will now be capturing revenue from an entirely new segment of smaller businesses. It also makes skeptics hush a bit about the company’s most recent $15 million round and $100 million valuation.
As for businesses, SCVNGR is providing a dashboard showing user data like demographics, geographies, social graph (think: which users are bringing in even more new customers by broadcasting the LevelUp experience), and the fraction who continue to level up. SCVNGR wants to ensure that checkins and daily deals not only have a social media impact for small businesses, but has measurable impact on the register, too.
What are some of the deals launched in Boston? Today’s featured deal is $5 for $10 worth of burritos and milkshakes at our beloved Boston Local Company, Boloco. In fact, all the proceeds from the sales today at Level 1 will go to Teach for America. Check out others in Boston below:
According to Priebatsch, LevelUp is the result of the company placing $15M into R&D for “the game layer.” SCVNGR recently passed the 1 million user mark in February, and based on our account number tracking, it looks like they’re adding around 5,100 more users each day. One thing was for certain at this morning’s press conference in Cambridge: SCVNGR plans to take a leading role in making location based services — currently used by just 4 percent here in the States — mainstream.
From the press release, “When you break it down, it makes a lot of sense. Local deals drive new customer acquisition and LBS has always been about engaging with places and driving loyalty. Two halves of the same (very, very, very large) coin.”
We have been following SCVNGR since it was across the river in Boston working out of a small space in the South End. Check out the company’s evolution and growth on their BostInno page.
What do you think? Has SCVNGR cracked the science of loyalty with LevelUp?
