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Small Café Gets Rewards Right

SMB Retail by Angela Diffly
bdc-outside-webSimplifying Loyalty

Dave Ung grew up helping his parents run family-owned bakeries in northern California. Little did he know, someday he and his wife would be the proud owners of their own small business. Black Diamond Café has become quite a hot spot for delicious coffee, salads, sandwiches and pastries in its sole location near San Francisco in Emeryville, California. For a small coffee shop, Black Diamond is using some pretty big technology. “I’m not a very technical guy, but when I saw that this loyalty program didn’t require a physical card, and we didn’t have to bother customers to get them to use it, that got my attention,” Ung told us.

Spendgo is a personalized customer engagement platform that builds loyalty for chains like Jamba Juice, Dickey’s and Cold Stone Creamery. The company is setting itself apart from a myriad of loyalty programs in many ways, with user-facing, customized hardware stands, small video screens and automatic rewards tied to spending. And the results speak for themselves. With more than 5 million people on the platform (a rate of approximately 2 million joining per year), Spendgo boasts a 30 percent opt-in rate for SMS text messaging, and a whopping 92 percent of its rewards get redeemed.

“With some loyalty marketing, operators actually don’t want the rewards to be used. But we think the opposite is better,” commented Ivan Matkovic, CEO and founder of Spendgo. “If 92 percent of your customers are coming in to use rewards within 30 days instead of the average 60 days, you’ve increased frequency.” With Black Diamond Café, the owner “got” the concept right away. “He had plenty of competition all around, but didn’t need a branded app like Starbucks. He understood the value proposition around customer loyalty, and was looking for something easy and frictionless for his business.”

black-diamondCustomers In Control

Ung told us he wanted something smart, but he also wanted it to be easy and non-intrusive to the customer experience. That was one appeal of Spendgo’s customer-facing solution. “We didn’t want to hassle customers to sign up for a loyalty card. They’re in control, and when they see the rewards and experience how easy it is to use them, they love it,” he said. Customers simply enter their phone number into Spendgo’s sleek, 8-inch tablet on a stand at the register and rewards are added to the user profile. The platform also allows them to play a 10-second video or show photos, which Black Diamond offers to its roasting company partners. Matkovic told us it’s easy to brand the customized screen with logos, which is nice for SMBs since brand customization usually comes with a hefty price tag.

Flexible SMB Solution

The Spendgo platform is ideal for SMB retailers, since it can be added to any POS system via a printer upgrade. Using Epson’s OmniLink Merchant Services platform, transaction data flows through the POS to the smart printer and up to the cloud, where Spendgo’s platform splices and dices transaction history and data to provide meaningful offers, rewards and promotions. “Even though we started with Black Diamond’s legacy system, when they decided to upgrade it was easy to move with them because of the Epson cloud functionality,” Matkovic said. (Since Spendgo started out as a digital receipt platform leveraging transactional data to build meaningful offers, the marriage to Epson is a solid fit. Incidentally, Spendgo still offers digital receipts within its platform.) “We upgraded to Dime POS, which is a great system for us, and that’s when we realized we’re not tied to any system,” commented Ung. “Everything goes on the Epson cloud, so I can see everything wherever I am, in real time. If I decide to upgrade to another system, it’s okay because the systems will talk to each other. We love that part.”

Rewards For Every Dollar Spent

With Spendgo, customers earn offers for the dollars they spend, rather than just per visit. Since no manual entry by the cashier is required, it minimizes fraudulent or ‘sweetheart’ rewards – which are difficult to track and audit. By taking the complexity and guesswork out of the rewards process, Black Diamond can move lines faster, safeguard against fraud and reward customers well (and fairly). Another cool feature? If you’re already signed up at one Spendgo brand location (say, Jamba Juice) when you go to Black Diamond Café, your profile data is shared so you don’t have to sign up again. “We can have like brands on the platform because we don’t allow one brand access to market to the other. It’s not about sharing customers; it’s about smarter marketing so that they’re less hassled when it comes to execution,” Matkovic told us.

“We’re in the San Francisco Bay area, so this is a techie town,” commented Ung. “It’s a no-brainer to have something like this for us to compete with Pete’s and Starbucks. Why would they come to us over them? Because they happen to have a $5.00 redemption reward waiting for them to use anytime they’d like. We have a loyalty program that allows them to feel rewarded without hassle and it just works consistently without issues. That builds loyalty in itself.”

It’s All About The Customer

Luckily, Black Diamond installed Spendgo from the onset of its business, so they’ve had over five years to see results, and they’re thrilled with what they see. Ung admits he’s not a techie, and likes that Spendgo sends him detailed reports monthly to track how they’re doing with the program. But most of all, Ung prioritizes customer service. At the end of each day, he likes to see his customers happy. “I’m not an absentee owner; I’m here six days a week, working a lot of hours,” he said. “I oversee all the operations from front to back, and I really love seeing customers get excited about using their rewards. I see top-earning professionals coming in with co-workers and use rewards to treat them to a pastry. It’s not about if they can or can’t pay for something, it’s about feeling valued for their business. Everyone wants to feel appreciated, and that’s what this platform allows us to do – one customer at a time.”