LevelUp Joins the Deals Bandwagon with a Boost from Levi’s and American Express

5/10/11Follow @wroush

Boston-based SCVNGR started out in 2008 doing exactly what its name suggests—organizing mobile-based scavenger hunts. Since then, the startup has been downright Protean, morphing into a Foursquare-like system of location-based checkins and rewards and then introducing a Groupon-like spinoff called LevelUp. But while it still isn’t clear whether 22-year-old CEO Seth Priebatsch wants to be the next Dennis Crowley or the next Andrew Mason (or both), his company has at least unveiled some details of how LevelUp will work.

At a press event at Google’s San Francisco offices yesterday, Priebatsch announced a partnership with American Express and Levi’s stores that will demonstrate, in a preliminary way, how consumers can buy into LevelUp’s discount programs, which the startup is portraying as a more addictive alternative to daily deal programs like Groupon’s.

It works like this: If you have an American Express card and you live in Boston, San Francisco, or Philadelphia, you can go to the LevelUp website and use the card to buy a coupon that entitles you to $20 worth of jeans and accessories for just $10. The deal can be redeemed at one of three Levi’s retail locations—on Newbury Street in Boston, on Post Street in San Francisco, and at the King of Prussia Mall outside Philadelphia. When you go to the store, you just present your card to get the discount. And once that purchase is complete, LevelUp unlocks a second, steeper discount—$10 for $30 worth of Levi’s stuff. That’s followed by an even better offer, $10 for $50 worth of merchandise.

Priebatsch argues that this escalating reward, or “level up,” adds a game-like element to the standard Groupon-style deal and will therefore bring customers back to retailers more often. “Anyone with an e-mail list can get customers in the door,” the company said in its press materials today. “We can get them to come back.”

The company calls the AmEx-Levi’s program “the first true alternative” to the traditional daily deal. That may be stretching it a bit—the LevelUp program takes advantage of the same American Express “Smart Offers API” that Foursquare used at the South by Southwest Interactive Festival in Austin, TX, in March to demonstrate its own couponless discount system. But that pilot program did not include a system of escalating rewards like LevelUp’s.

Oddly, given SCVNGR’s heritage in mobile and location-based technology, there isn’t much that’s actually mobile about LevelUp’s discount system. You sign up for LevelUp’s discount offers via the Web. The company does offer iPhone and Android apps that let users browse its offers, and when a coupon is redeemed, a push notification is sent to the user’s phone, but that’s about it. The company acknowledged in its press materials today that redeeming a coupon is only “loosely location-based” and that its system incorporates “just a twist” of location-based, mobile, social, and gaming technologies.

Meanwhile, there are signs in today’s announcement that the new LevelUp brand may be pushing aside the old SCVNGR brand. “With 20MM in funding from Google Ventures, Highland Capital Partners and Balderton Capital, LevelUp is based in Boston, with satellite offices in each of the communities they serve,” the company said in a statement. “LevelUp is founded by the same folks who brought you SCVNGR.”

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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