Privy Puts New Spin on Old Marketing Problem for Local Businesses

4/3/12Follow @gthuang

Daily deals are dead. Long live daily deals.

But out of the ashes of all the Groupon clones—and a few niche deals sites notwithstanding—who will rise up and actually solve the online marketing problem for small businesses?

“That’s our goal,” says Ben Jabbawy, the founder and CEO of Boston-based Privy (and formerly with GreatPoint Ventures and Oasys Water).

Privy is emerging from beta trials today, with Web software that looks to help local business owners attract and retain customers who are “living in a deal-savvy, coupon-crazy world,” Jabbawy says. The company started in 2010 and was a finalist in the MassChallenge accelerator program last summer. It has raised $330,000 in seed funding from angel investors and Genie Bottle Ventures.

Here’s the idea. Whether you’re a restaurant, salon, or even an accounting firm, Privy provides a place for you to run targeted promotions and track how they’re working. That sounds simple, but given all the noise in the market, small business owners’ heads are spinning from all their options, and they don’t necessarily know who to believe. Privy tries to make it easy for businesses to fill in templates for the kinds of promotions that will work for them, and then send those promotions out via their website, Facebook site, Twitter feed, or e-mail list. There’s a mobile tech component too: Privy lets consumers redeem their coupons in-store using their smartphone.

The type of promotion depends on the business, but in general they are not the big two-for-one deals you might see on Groupon, say. A local pizza place (Crazy Doughs) ran a modest Facebook promotion for a month that brought in new and existing customers, Jabbawy says. A salon in the South End ran an e-mail promotion that asked existing customers to forward the offer (pay $40 for a $50 value) to friends who hadn’t been there before. “It worked like magic,” says Jabbawy (see photo, left). “It doesn’t have to be this huge discount.”

In turn, Privy takes a smaller cut of the proceeds than Groupon or other daily deal sites (12 percent after credit card fees), and there are no upfront costs to merchants. The company says it has helped sell more than $40,000 in promotions for about 30 businesses so far.

Of course these are early days for Privy, which faces a crowded and competitive field. The company has four full-time employees and says it is actively hiring. One key for Privy will be working with what it calls “merchant channel partners”—larger businesses that sell advertising or build websites for small businesses. If that goes well, the effort should put Privy in front of 500-plus small businesses by later this year, Jabbawy says.

Looking more broadly at the local marketing sector, Jabbawy sees two key areas winning in the long run. One is mobile-based loyalty apps and services—a sector that is moving so fast that he sees big demand and few merchants able to handle it on their own. The second is “consistency of content,” he says—which means giving merchants a central place to manage offers, transactions, and other information across all the various digital platforms.

If all goes well, more businesses will be coming to Privy for all of the above. We’ll be watching to see if this little company can get some more traction.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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