September 10, 2013
Tpumps is a tea shop opened in San Mateo in June 2011 by Alex Su, a resident of Redwood City. The tea shop serves its customers tea, smoothies and fruit juice.
There was clearly a need felt for loyalty programs and it initially started off with a mobile only loyalty program called Chatterfly. The successful venture has garnered many customers from San Francisco to San Jose primarily due to word of mouth and the use of real tea leaves for brewing.
Chatterfly however fell far below Su’s expectations. After two years of experience, I realized probably half of my customers have a smartphone. [The other half] keep their regular phones. There’s no Internet connection, but they want the [loyalty] points, he says. I don’t want to bother to have two different systems. The number of users that Tpumps had after a few weeks with the app was lesser than 20.
Disappointed with the figures, Alex Su switched to a universal loyalty program called FiveStars in September, 2011. FiveStars uses cloud technology and software which can be added onto the payment system so the business can monitor how their customers spend. They offer a FiveStars card to customers who are encouraged to swipe it for every transaction which earns them points that can be redeemed for rewards at any of the outlets part of the FiveStars program. Connecting their cards to facebook and its sharing feature also generates extra points for customers. Rewards include drinks, tea, stuffed animals , wristbands etc.
The results after 3 weeks were impressive Tpumps had signed up over 300 people who were interested in the rewards offered by the FiveStars card. Under the rewards program for Tpumps 1700 sign ups were made in 3 months and 3000 drinks were sold. There was an 35% increase in visits per month since Tpumps switched its loyalty programs provider. .
Loyalty program solutions like FiveStars have leveraged cloud and mobile technology to let small businesses offer sophisticated customer loyalty programs. The FiveStars rewards swipe cards have made it easy for customers to keep track of when they are up for gifts, free drinks or other products. Integration of loyalty program and social media sites like Facebook and Twitter sharing features have let customers talk about Tpumps online, this is helping lesser known and small businesses to get recognized and grow.
LTP View: Loyalty programs may not be a one stop solution to increase revenue. Tpumps recognized this early and made the switch by understanding the customer purchase pattern and in-store behavior. The customer preference included not to collect loyalty points through mobile as the users had to have internet connection and smartphones with them. Tpumps made a switch to a customized loyalty program through which non smartphone users could use a loyalty card to collect and redeem rewards. Social sharing features integrated with the loyalty card helped create the word of mouth effect, increasing footfalls and spreading awareness of Tpumps.
Primary market research (understanding customer purchase pattern and in-store behavior) and customized customer loyalty programs integrated with mobile technology may help small businesses like Tpump to witness increase in user base leading to increase in revenue.