Shred the Punchcards: Belly Updates Customer Loyalty Programs

Customer loyalty program Belly gives independent merchants a sleek solution to keep customers coming back.

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Jake Dickson, owner of Dickson’s Farmstand Meats wanted to create a loyalty plan for customers who come to his New York City butcher shops for everything from housemade hot dogs to locally-sourced artisanal meat. “For my business, it didn’t make sense to have a classic punchcard,” says Dickson, who runs two stores, one in the Chelsea Market and one in Tribeca.

So when a representative from customer loyalty program Belly came into the store about six months ago, Dickson was all ears. “I usually kick out sales people when they walk in,” he says. “This time I jumped on it.”

Launched in August 2011, Belly is a rewards program that lets small merchants customize their frequent-shopper perks and, perhaps more importantly, get better insight into when and what their customers are buying. After a free 30-day trial, merchants pay $50 to $100 for the program, which includes a dedicated iPad for tracking customer visits and rewards.

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Customers carry a single card that works at all participating merchants, or they can simply download the Belly app and swipe their smartphone. At Dickson’s, customers get five points for every purchase, whether it’s a $5 hot dog or a $50 cut of meat. When they get to 30 points they earn a free hot dog. At 120 points they get all the beef jerky they can grab with one hand. Customers who manage to accumulate 1,500 points will have a cut of steak named in their honor.

Until recently, ma and pa shops didn’t have a whole lot of options when it came to bringing traffic into stores, tracking consumer behavior, or enticing people to keep coming back. That’s changed dramatically in the past couple of years as startups and established players alike vie to bring offline merchants into the digital space. Belly is hardly alone in its campaign to reinvent the old paper punchcard. Google has brought its own customer-loyalty program, Punchd, into the fold, and last June mobile-payment company Square also launched a digital loyalty program.

Yet, Belly has managed to grow quickly. Backed by $12.5 million in funding from the likes of Chicago venture firm Lightbank and industry powerhouse Andreessen Horowitz, the company now employs 100 people – roughly half of them in sales and account management – and is in 3,500 businesses in about 10 primary markets. More than 600,000 customers are active Belly users, collectively logging more than a million swipes per month in everything from cupcake shops and high-end restaurants to doggy day care. In the last month Belly expanded into Atlanta, Philadelphia, and San Francisco. It’s now making inroads in Denver, Portland, and Seattle.

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Founder Logan LaHive admits that Belly wasn’t born out of some great “ah-ha” moment. Rather, “it was much more about identifying a problem and working through a long process of pitching and testing,” says LaHive. Having worked as director of new business at DVD-rental company RedBox Automated Retail, LaHive says he had a pretty good understanding of “how to use hardware to disrupt the retail experience.” He’d been working on an idea to use mobile games to promote local businesses and pitched it to Lightbank, whose co-founders, Eric Lefkofsky and Brad Keywell, launched Groupon. Turns out, they were working on a related idea, which they called Bellyflop.

“They didn’t like my idea, and I didn’t like theirs,” says LaHive of their first meeting. “But we liked each other.” Lightbank hired LaHive as a founder in residence, and together they came up with what is now Belly. “We dropped the flop for obvious reasons,” says LaHive.

At the same time Belly has a sales force knocking on doors in key markets, its own happy customers are helping spread the word. “We’ve given them quite a few leads,” says Rey Garza, co-owner of Sweetcakes, a cupcake shop and bakery in Redwood City, Calif. The program, he says, is much cleaner than a punchcard.

Although Belly was designed for independent merchants, the company is piloting its program with some large franchises, including Ben & Jerry’s, McDonald’s, Subway, and Chick Fil-A. It’s also working on tapping its growing network of merchants to cross promote businesses with what it calls Belly Bites. Now in private beta in Chicago, it will offer freebies to Belly cardholders to get them to try new spots.

While most Belly merchants stick with pretty standard rewards, some have gotten creative with such high-point perks as shaving the barber’s beard or giving the comic book seller a punch in the stomach. At Nature’s Pet Market in Portland, just 10 points earns a free belly rub for your dog or cat.

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At Sweetcakes, Garza is keeping it simple. No frosting in the face or all the cupcakes you can grab. Instead, repeat customers get one free mini cupcake for every four visits. Most seem to think it’s a pretty sweet deal.

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