Customer Service Evaluation News 1/15/12

Start-ups hope to see rewards in customer loyalty

By Steven Overly


Jeffrey MacMillan/Capital Business – Venga co-founders, from left, Winston Lord, Reg Stettinius and Sam von Pollaro. The start-up plans a loyalty program that allows restaurants to track patrons’ spending habits and offer perks to the most frequent visitors.


Venga came onto the market as the mobile equivalent of a restaurant’s sidewalk chalkboard — a place to advertise beer specials, signature entrées and music nights. Now, it wants to replace the rewards card in your pocket, too.

The District-based start-up, which debuted its smartphone app in April, plans to unfurl a loyalty program in the coming weeks that allows restaurants to track patrons’ spending habits and offer perks to the most frequent visitors.


It’s one in a growing number of young businesses tackling the issue of customer loyalty and retention, a need some have said has become more prominent now that daily deals are a popular way for merchants to attract new customers.

“The daily deals site is geared around acquisition, but many small businesses are much more interested in engagement and retention of their customers,” said Peter Krasilovsky, an analyst with Chantilly-based research firm BIA/Kelsey. “They want to drive customers back to their store more often.”


The nation’s largest daily deal providers have ballooned into multimillion dollar businesses by using online coupons to entice people through the doors of restaurants, salons and other establishments where they might not have ventured otherwise.

But do they come back? That question is key for the merchants, some of whom lose money on the deals and hope to recoup the loss when new customers pay full price on return visits.

Critics assert it doesn’t always work out that way. Instead, they say, the steep discounts often appeal to one-time deal hunters and regulars who would presumably spend full price otherwise.


But Jake Maas, senior vice president of LivingSocial’s consumer business, called such assumptions “unfair and false.” He added: “All of our research, including that from external sources, indicates that there is a very high level of customer satisfaction and repeat business for most merchants who run offers with us.”

A survey of 931 consumers conducted by professors at Cornell and Rice universities found few differences between customers who use daily deals and those who don’t. Both said they were just as likely to return to a restaurant and pay full price.


Read More