Andreessen Horowitz backed Belly, reinvents customer loyalty rewards through gamification and digital check-ins

A month back in SFO, I went to an Indian restaurant downtown called (I think) Cafe Masala. I saw a cute little Belly Card on the payment counter along with an ipad POS. I am not sure how the restaurant pushes or markets it to its customers but the guy at the counter did explain me how it works on asking. I was reading on a blog that most restaurants in downtown SFO are being approached by loyalty and payments start ups every now and then and it requires to have a clear, strong USP to get in. Belly marketing folks call it ' World's Best Loyalty Program '. That we will let the consumers to decide but we wanted to have a look at this system in a tad more detail.

Since location-based deals first appeared on the horizon, a new wave of e-commerce companies have been making a play for small business’s operation. The likes of Groupon and LivingSocial (and the endless amount of clones) have been leveraging their assets to convince local retailers that they have what it takes not only to increase sales but to add a little social flare to the companies in question.

One such startup which is creating a lot of buzz is BELLY; winners of Best B2B Startup in Moxie Awards 2013. Belly was found in 2011 by Logan LaHive, debuting with an investment from Lightbank, the venture firm founded by Groupon co-founders Eric Lefkofsky and Brad Keywell. As a notable achievement, it has recently picked up funding of $10 million from Andreessen Horowitz. Belly has nearly $28 million in total funding from Andreessen Horowitz, 7-Ventures, Lightbank, and others.

Belly wants to reinvent customer loyalty rewards through gamification and digital check-ins. Here’s how Belly works. Belly offers a quick-setup, plug-and-play rewards platform to merchants. Part of this is an in-store iPad (which Belly gives) that is used to validate paying customers’ right at the point of sale, and serves as a check-in point.

On the consumer side, to check in, customers can scan the belly card (QR code) or use belly smartphone app at an in-store iPad POS and with each check-in they accumulate reward points that can later be redeemed for unique rewards tailored specifically for the business in question.

Merchants pay a monthly subscription ($79-$149 per month) for unlimited Belly cards to hand out to customers, in-store marketing materials and secure access to customer data that reveals sales, points and redemption data, as well as insights into foot traffic and card usage patterns. Businesses can even use Belly data to send out push-notifications about exclusive promotions and other rewards to Belly customers.

On the Belly mobile app itself, one can simply open the app and see a list of merchants that are Belly equipped in that location. The app completely replaces the merchant card at all of these businesses. With the Belly card, consumers have one universal rewards card (that is attached to your email) which can be used at all participating Belly merchants.

The Chicago-based startup, driven by 50 plus person team, has now grown to over 4,000 merchants across the U.S. including recently added markets of New York and Boston, Austin, Madison, Milwaukee, D.C., Phoenix and Miami. According to TechCrunch, Belly is growing at a rate of about 100 locations per week.

Belly’s business model is such that it competes with LevelUp, Perka, PerkVille, PunchTab and others. To differentiate its offering, Belly allows merchants to tailor their reward programs.

We’re moving beyond the buy ten get one free program to work closely with each merchant to try to uniquely appeal to their customers. We want to create personal relationship, and take what is offline and put it online. Analytics on how to manage customer behaviour, communications tool, email and social media allows our business to have an ongoing relationship with customers. Says Logan LaHive CEO, Belly.

LaHive is also focused on product development and will be looking to transition all the apps to HTML5. Recently Belly has announced its first product outside of loyalty, the Belly Bites, a sampling program designed to attract new customers to a local business.

Here is a video of Belly Card in action.

Source: BellyCard

LTP View: The start-up has potential to revolutionize loyalty for businesses. Now customer loyalty programs can be digitized with the web, data analytics, and smartphone. This used to be an inefficient system but Belly makes it highly efficient and gives merchants great information on who their best customers are. However there are still several limitations with Belly. It does not capture point of sale data; therefore, Belly does not know how much money was spent or what was purchased. A customer that buys a soft drink will receive as many reward points as a customer that buys an entire burger meal. The only information that a merchant has about a customer is when and how often the customer comes in. If Belly does plan to modify its current business model and introduce better ways to capture customer engagement metric it would be interesting to note how effective this change would work in their favor.