Through his LocalBonus nationwide customer loyalty program, founder/CEO Derek Webster hopes to revive that all but forgotten era when people saved and redeemed S&H Green Stamps to buy products.
“I'm personally addicted to loyalty programs, so I have seen their ability to change consumer behavior first-hand,” Webster told Loyalty 360. “However, most of the marketing secret sauce of loyalty programs is concentrated in large companies. Local businesses typically don't have the resources or expertise to design and manage a loyalty program, so we set out to build LocalBonus as a platform to make it easy for a local merchant to get the same benefits.”
With LocalBonus, consumers sign up once on the LocalBonus website (https://localbonus.com/) or mobile app and connect their existing credit and debit cards. After that whenever consumers shop at LocalBonus merchants and pay with their registered card, they earn LocalBonus points. Members save up their points and redeem for cash back rewards. Because LocalBonus is a loyalty program, members combine their points across all the merchants in national network so they can receive rewards faster.
“We're live at over 1,200 merchants from coast to coast,” Webster said. “We have a few strong markets with hundreds of merchants, but others where we're just getting started. Our focus now is to go deeper into some of the newer markets and build out others.”
Webster said he launched the company’s first beta product with a handful of merchants in New York City in the summer of 2011, then added four cities in April 2012, and expanded nationally last September. So what is unique about LocalBonus?
“We're different in a few ways,” Webster explained. “First, we let consumers use their existing credit and debit cards. There's no special card to carry and you don't have to pull out a mobile phone to check in. Also, LocalBonus points are a universal currency - think of them as modern day S&H Green Stamps - which helps consumers get to meaningful rewards quickly, and gives them an incentive to try new merchants in our network. One of the big problems with all of those ‘buy 10, get 1 free cards’ is that you never actually fill them up and get any rewards.’’’
Webster said the program operates on a pay-for-performance model whereby “merchants pay us whenever LocalBonus members shop at their respective business to cover the cost of the reward and a marketing fee to us.”
Webster currently has a team of five employees based in New York City. “Most of our merchants are sourced through partner relationships, so we're able to keep our team small,” he said.
Webster believes local businesses are gaining a foothold among loyalty programs.
“The rapid rise -- and subsequent fall -- of the daily deal industry raised awareness about the opportunity to create marketing solutions for local businesses,” Webster said. “The decades-old playbook of yellow pages ads and traditional media like print, radio and TV doesn't work anymore for local merchants, and there's an opportunity to use technology to help those businesses more efficiently and effectively. Loyalty programs are a huge part of that.”
Webster said he didn’t expect to expand the LocalBonus program nationally “as quickly as we have, so that's been a pleasant surprise. Like any new venture, we've had to adapt the model as we've grown, but we're proud of our progress thus far. As a tech startup, we've been focused on building the key infrastructure and growth, not short-term profitability.”