From Dot Bomb to Great Recession to $30M Acquisition: The Eversave Story
By some counts, the Boston area is home to two of the top four local deals sites in the U.S. I’m talking about BuyWithMe (based in Boston and New York) and Eversave, which is based in Wakefield, MA. The big boys in the field, Groupon and LivingSocial, certainly have a strong presence in Boston, but they are based in Chicago and Washington, DC, respectively. Another frontrunner is Tippr, based in Seattle.
Observers have been predicting consolidation in the sector. So far, that has taken the form of these top players scooping up smaller players. Until last week, that is—when Eversave’s parent company, Prospectiv Direct, was snapped up by Connecticut-based marketing firm Affinion Group for $30 million plus earnouts.
But who the heck is Eversave (and Prospectiv), and what can it teach us about the deals sector?
“We’re a marketing company, not a daily deal company,” says Jere Doyle, Prospectiv’s founder and CEO. That gives him immediate credibility in my book, because it means he’s thinking much bigger than your typical Groupon clone.
Let’s back up a bit. In the mid-1980s, Doyle founded a European company in the travel sector with the nondescript name of Global Marketing. That company went on to get bought by an English firm, LSI, in 1998, also for tens of millions of dollars. In 1999, Doyle started Prospectiv with the idea of providing coupons for local businesses that consumers could print from the Web. Just one problem: There weren’t enough people printing stuff online. Also, the dot-com bust was upon them, and “people were saying Internet was over,” Doyle says. “We started at the worst possible time.”
So Prospectiv made a key switch to focus on national brands and coupons, rather than local, and play to its core strengths in customer acquisition for big businesses. After some tough slogging, the company started to build a national following. “It was nasty in the Internet world back then,” he says. “We didn’t have a lot of prospects, but we never lost hope.”
Fast forward to 2008-09, and the recession hit the company hard. It was time for another strategy shift, and Doyle found it by going back to his original idea: serving local merchants and consumers. In the meantime, of course, Groupon had paved the way with daily deals in local markets, and local was hot. So in early 2010, Prospectiv rolled out Eversave, a local deals site targeted at affluent women aged 25 to 55. Instead of group buying, Eversave “revolves around a retention and loyalty program,” Doyle says.
Indeed, the big question around deals sites is how to get customers to return to the store, rather than just take a one-off deal and never come back. (BuyWithMe has addressed this in part by acquiring Edhance, a Cambridge, MA-based loyalty firm, as it announced yesterday.)
Eversave’s approach is a product of its decade-long experience in customer acquisition and retention. The site, which is active in 20 cities, sends out follow-up e-mails to customers through the merchants. Three months after buying a deal (which the company calls a “save”), consumers will get a message updating them on the restaurant’s new menu, say, or new content on a store’s Facebook page. Eversave also rewards consumers for spending a certain amount of money and for rebooking. What’s more, the company runs surveys for its big-company clients to help them improve their products and marketing campaigns. It’s all about helping merchants “maximize the initial visit, and get [customers] to come back,” Doyle says.
Prospectiv had been working with Affinion for a few years, so Doyle says the acquisition was “a perfect fit” and was the option that “made the most sense.” He adds, “We think this will allow us to grow faster and offer more merchant services.” (It should also pay out handsomely, as Prospectiv only raised a small amount of money through strategic partnerships and angel investors when it first started, Doyle says.)
Prospectiv has 135 employees, all in Wakefield. Doyle is staying on as president of Prospectiv and Eversave, and he will report to Affinion president Rick Fernandes. Doyle didn’t say much about his plans to expand the business under the new ownership; rather, he focused on his firm’s core competency. “The key is to take care of your customers,” he says. “Not just consumers, also the local businesses.”
He also stressed the importance of staying ahead of the competition in areas like mobile marketing and location-based deals. “The company that innovates the most will be the long-term winner,” he says. “Coupons have been around 100 years, they’re not going away. The Internet is the most efficient way to distribute them. The winner is the one who can do that the best.”