Swipely Expands Card-Linked Customer Loyalty Program to Boston

12/15/11Follow @xconomy

Providence, RI-based Swipely is kicking off a discount program in Boston that it says will give shoppers discounts and earn local merchants a more loyal, consistent customer base.

Swipely first got started as a platform that enabled consumers to broadcast and review purchases they made on their debit and credit cards, but switched its focus in February to card-linked discounts for local businesses, starting with a pilot program across Rhode Island. Boston is Swipely’s first stop in its national expansion, with New York and San Francisco as the next targets.

Boston already has a few players developing technology for discounts tied to purchases on credit and debit cards, including Linkable Networks and Cartera Commerce. Swipely founder and CEO Angus Davis says his company stands out in that its focus is entirely on local shops.

“We’re taking the tools and the technology that the big brands have been using a long time, and we’re empowering Main Street businesses,” he says. He’ll have to keep an eye on Cartera, though, which has said that local merchants are the fastest-growing piece of its business.

Consumers start by registering their card with Swipely to get cash-back discounts at area restaurants, liquor stores, nail salons, and the like. But the Swipely platform offers analytics and insight to consumer shopping behavior that Davis says enable merchants to better tailor their offers to nab and retain loyal patrons.

Using Swipely, a merchant could offer an initial discount, like $10 off your first purchase, to attract new shoppers. But it can also offer loyalty discount programs, where customers rack up points each time they spend at a business. Those loyalty points could ultimately be traded in for dollars at that same business, Davis explains. “It encourages loyalty to the merchant rather than to the network,” says Davis.

That’s in contrast to group buying and daily deals services, says Davis, which have taken quite a bit of flak for giving consumers huge, one-off discounts without necessarily incentivizing them to return to businesses.

“They solve problem of customer acquisition, but not the problem of customer retention and loyalty,” he says. “The consumer is trained not to be loyal to the merchant but loyal to the deal.”

The Swipely platform offers information and analytics on shopper behavior that enables businesses to better tailor discounts to achieve their goals. For example, if a restaurant notices that a customer has only visited at lunchtime, they can offer discounts that only apply at dinnertime.

One last thing about Swipely: the company says physical credit and debit cards aren’t going to go away anytime soon. (I wonder what players like LevelUp, which allows consumers to pay using their smartphones, would have to say about that.)

“From our perspective the way people pay isn’t broken,” Davis says. “We think the problem is that the payment network doesn’t add much value to the market. We’re trying to transform that sleepy boring commodity business that is the credit card network into a valuable direct marketing platform.”

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