Discount Aggregation App Larky Forms Partnership With Blue Cross

9/5/13Follow @XconomyDET

When the Ann Arbor, MI-based startup Larky launched its mobile app and website in April, its mission was to aggregate the many discounts offered by alumni associations, stores like Costco, organizations like AAA and AARP, and other groups looking to add value to their memberships.

The problem, says co-founder Andrew Bank, was that Larky’s research found that 175 million people were members of at least three organizations offering member discounts, but 72 percent didn’t know what their discounts were or how to get them. Merchants also weren’t asking customers if they qualify for a discount at the point of sale.

Larky’s app gives users a consolidated view of all their memberships and, using GPS coordinates, sends a push notification to users’ phones when they’re near a member discount. The app functions as a mobile wallet for discount cards, and Bank says it’s “silly simple” to sign up—users indicate which organizations they belong to on a checklist. No membership numbers are required, he adds. According to Blank, the average Larky user has seven memberships and can save up to $1,000 per year using Larky.

On Wednesday, Larky announced a new partnership with the health insurance giant Blue Cross Blue Shield of Michigan in an effort to increase BCBSM members’ participation in the Healthy Blue Xtras program, which offers discounts from Michigan merchants centered around a healthy lifestyle. Bank and his wife have been BCBSM members for about 10 years, he says, and yet they had no idea the program existed. Once they discovered it, Bank says he contacted Blue Cross to offer Larky’s services, and the two entities teamed up for a yearlong project to promote Larky’s services and get members signed up to Healthy Blue Xtras.

“Blue Cross recognized that healthcare is not everyone’s favorite commodity to buy,” Bank points out. “It benefits them to add value to its members by offering discounts on everyday purchases. The program is very successful for people who know about it, but almost nobody does.”

So far, Bank says Larky has “not quite 50,000” users, though he expects to see that number rise, thanks to the new partnership with BCBS, which has 4 million total members—500,000 of whom have opted in to receive e-mails about Healthy Blue Xtras.

As Larky continues its efforts to spread the word about its services, it has received praise from Good Housekeeping and Lifehacker. Bank says the company, which raised a $400,000 seed round from North Coast Technology Investors and the First Step Fund in the spring, is still in fundraising mode and expects to close a $2 million round in the next 60 days from investors in the Midwest, New York, and Silicon Valley.

Though Larky’s app—available on iOS and coming soon for Android—is free for users, membership organizations pay to be included. So far, Bank says, the feedback from them has been good. After all, he points out, what’s the point of offering member discounts as a value-add if nobody is using them?

“We want to embed discounts into daily routines,” Bank explains. “These are not Groupons, these are discounts people are entitled to by paying membership premiums. We wanted to raise awareness of those discounts without trying to change consumer behavior.”

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

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