Loyalzoo

Idea

Introduction

Loyalzoo offers independent retailers a loyalty app to replace traditional loyalty cards (cardboard and plastic). It allows any merchant to run their own loyalty programme on their customers’ smartphones, and gives them the tools currently only available to the big brands and retail chains, such as customer analytics, push promotions and social marketing.

The main objective of the product is to get the merchant's new (and existing) customers to become regulars and to encourage the trend to “shop local”.

The idea came to the founders by looking at their wallet full of (often unused) loyalty cards, and seeing how most big retail chains are promoting their own branded loyalty apps to replace traditional loyalty cards. The immediate question was: What about the independents?

The challenge was to create a loyalty app for independent shops and restaurants that is affordable, easy to use, and that gives them the technology they need to compete in this increasingly mobile society.

One of our current customers explains why it works so well for them, in the below video:

Intended impact

The effects of this app are very simple, and therefore very profound. At a practical level, it changes the shape of people's wallets! They don't need to carry all those plastic and paper loyalty cards, at least not those of the independents. For merchants, it gives them the means to establish a permanent connection with everyone that comes into their shop.

Almost every large retail chain has launched loyalty apps, either in parallel to traditional loyalty cards (Costa, Nando's, Tesco), or as their only loyalty system (Starbucks, GBK, Giraffe, etc). This gives them the tools to better understand their customers and get more competitive, whilst the smaller independent merchants are left behind.

Local merchants are the lifeblood of an area, but they'll never be able to compete against the large brands with all their technology and marketing investments.

The Loyalzoo app is therefore a social product, a) because it heightens the levels of personal contact between merchant and customer, b) because it brings together all independent shops into a single social unit while preserving the integrity of each, c) because it cultivates the habit of shopping locally and so draws consumers back towards neighbourhood shops. Once shoppers start to use the app for multiple shops, its social implications start to show because the overall impact is greater than the sum of individual loyalty schemes. In effect, the more shops that join the app the more dense the network becomes: it becomes intensive as well as extensive.

So the power of the app, when fully deployed, would go far beyond its usefulness as a means of giving loyalty points. It uses the latest mobile technology to invigorate a very old feature of everyday life, one to which many people have a strong sentimental attachment.

Substantial accomplishments to date

We have developed: 1) iOS app, Android app, with Blackberry and Nokia on the way; 2) Merchant apps and control panel; 3) Supporting back-end system (database).

We have over 70 shops/eateries using Loyalzoo throughout the UK. Furthermore, we have businesses in California, South Africa and Japan. So we are already a global brand, in its infancy.

We have seen significant growth in merchant signups since January, with an average of 4 new signups per week from the website alone. And our user base (consumers) has now reached 1,900 users, with a growth of more than 100 new users every week.

Feedback is extremely positive. Both customers and merchants love it for its simplicity and elegance.

And the whole system sits on a technology infrastructure that has been designed to be 100% scalable.

On the 25th February we were chosen by Future 50 to be among Britain’s 50 most disruptive startups.

Finally, we have attracted interest from the press, with articles about us published by London's Evening Standard, The Guardian and ChiswickW4, and we have a strong 7,000+ community of followers on Twitter.

Monetisation strategy

Our pricing is based on a monthly subscription charge to the merchant, with the possibility of subscribing to a free plan. It is important to bear in mind that there is an intrinsic value to having a merchant on the app even if they are not actively using it and therefore not paying. It increases the coverage of the app and therefore, as the number of customers using the app increases, it increases the likelihood that customers will 'force' the merchant to start actively engaging.

There are three pricing plans:

1) Free plan. This plan allows merchants to test the app for free for as long as they have fewer than 30 customers. It is very important to give merchants the feeling that they are getting value out of the app before billing them. We believe it also reduces, almost to nil, the possibility of a merchant coming off the app.

2) Starter plan. £37/month with two free "push" promotions per month. This plan allows up to 100 customers to use the app at a store. It is targeted mainly at smaller outlets, such as hair salons, smaller coffee shops, delis etc.

3) Unlimited plan. £57/month with four free "push" promotions per month. There is no upper limit on the number of customers on this plan. It is aimed at larger outlets such as restaurants and pubs.

As we are at the early stages of deployment, we have set up these simple plans for clarity and simplicity. However it is important to remember that the monetisation possibilities in an app such as this are immense. Extra "push" promotions, for example, are charged £10 each. And in future there are many monetisation opportunities with payments, business acquisition, advertisement, analytics, etc.

Use of proceeds

About one third of the investments will go into customer acquisition (sales and marketing). This is performed via 4 different channels: organic and social media, paid search and advertising, email campaigns and direct sales agents. We also plan to hire a marketing specialist.

Another third of the investments will go into software development. We need to develop an API so that third-party services can connect to our back-end, but we also need to keep evolving the app to support more smartphones and new features that merchants require.

The rest will be spent in taking office space and sustaining operations.