Groupon drives disloyalty, says Geoff Lewis, CEO of TopGuest. “Deep discounting is not a sustainable customer retention strategy for the long term,” he explains. With his company’s new program TopGuest Apex, the goal is to do the opposite of Groupon: instead driving large groups of new customers to a merchant, create personalized loyalty programs that reward customers for repeat visits to their favorite merchants.
Until now, TopGuest’s business model involved awarding points (e.g. hotel points and other travel rewards) for checking in at one of the company’s 15,000 partner places, mainly hotels and airports. But TopGuest Apex will reward users with points for checking in to their favorite local businesses.
Hilton HHonors points for going to the gym and Starbucks? Exactly.
TopGuest: Get Travel Rewards Points for Your Check-Ins
To use TopGuest, you just connect the service with your account on Facebook, Foursquare or Gowalla, all of which allow users to “check-in” (register their location) at a venue. You can also announce your location by posting a geo-tagged photo using the iPhone app Instagram or posting a location-tagged tweet to Twitter.
The genius of the system is its simplicity – beyond the initial setup, which also involves associating your current travel rewards programs with your TopGuest account, there’s nothing more to do. You don’t have to use a separate app, you don’t have to use hashtags on Twitter or follow a particular account, you don’t have to “like” anything on Facebook…you don’t have to do much of anything, really, besides sharing your location using your preferred service, whether Facebook, Foursquare, Gowalla, Twitter or Instagram.
TopGuest Apex: A Loyalty Program for Local Merchants
The new program, TopGuest Apex, now doles out those same loyalty points to users who visit their favorite local merchants, instead of just hotels and airports as before. For each check-in, points are awarded and automatically deposited in a user’s account. For example, as a new Apex member, I’m now receiving 50 HHonors points every time I buy diapers at Babies R Us, go for a run at my local gym or do my grocery shopping. (Yes, I’m boring.) Your top check-in spots, of course, would vary.
The end result is a completely personalized rewards program for each user. And unlike with Groupon, there’s nothing for merchants to do – the points come from TopGuest’s partnerships and integrations with many of the largest loyalty points programs in the world, with a reach of now 170 million program members.
The Groupon Model is Not for Everyone
“Driving loyalty is a huge pain-point for local merchants,” says Lewis, noting that many startups are now trying to offer small to medium-sized merchants similar programs. One such startup, Punchd, makers of a digital version of customer loyalty punch cards (buy 10, get 1 free, e.g.) was just acquired by Google this past week. Others, like FiveStarCard and Perkville are still operating independently.
But the problem with these programs is that mom-and-pop shops often don’t see the value in loyalty programs until after they see the results, which takes time. That’s one reason why Groupon has an edge – businesses get immediate results, as a herd of discount shoppers descend on their business. But there has been much debate about how many of those Groupon-wielding customers will ever return to the business afterwards. In fact, a study released in June found that less than 15% of customers came back a second time after the Groupon was over. That’s even lower than the findings reported last October in The Wall St. Journal, which cited Groupon’s own research pointing to 22% of users becoming repeat customers.
Private Beta Invites
TopGuest Apex has just launched into a private beta, with Hilton HHonors as the only participating loyalty program for now, but the company is in talks with other partners, who are “excited” about the service. Over time, TopGuest will grow beyond just travel rewards, to sign deals with other types of merchants, like restaurants, shops and banks.
With the wealth of social data the company has on its members from their social networking connections, a future iteration of Apex may allow paying merchants more customization options, like the ability to precisely target more influential customers, encourage new behavior patterns and more. Other features are planned, too, which Lewis can’t talk much about, only saying that it’s a much bigger vision they have for Apex than what we see today.