January 18, 2012
The millions of cafe loyalty cards used by Aussies each month – which if stacked flat on top of one another would extend some 2.5 times the height of Sydney Tower – are heading for extinction.
And it’s all courtesy of the smartphone revolution.
Patrick Schilling designed the Wealie iPhone app as a replacement for some of the estimated 18 to 20 million loyalty cards that get printed, stamped, punctured and discarded each year. It uses Quick Response (QR) codes to tally purchases so that when a specific number is reached the customer is rewarded with a freebie.
“The idea originally came from a friend who came over and had 15 paper loyalty cards in his wallet,” said Mr Schilling, 38, who currently works as a stock broker. “And he was loyal to none.”
He estimates that about half of Australia’s 15,000 restaurants and cafes use some sort of loyalty card and that, on average, each venue prints and distributes some 2500 cards per annum. “In reality, however, the number is much higher,” he said. “Firstly, most venues would go through over 5000 cards.”
He claims that if a year’s worth of the loyalty cards used by Australians were stacked flat on top of one another they would extend some 9 kilometres into the sky. “[That is] effectively 2.5 times Sydney Tower every month.”
That’s where Wealie comes in. It is now being used by about 45 to 50 Sydney merchants – about 80 to 85 per cent of which had been referred to it by customers, he said.
“We have got everyone from cafes to restaurants to barbers to bike shops to car washes to delis [using it].”
Customers use the app by scanning a special QR code each time they make a purchase at a shop. When they have enough digital scans, or stamps, they can then redeem a reward which is determined by the merchant using the Wealie service – usually a coffee at a coffee shop. It’s similar to what Facebook was trialling in Australia with a number of retailers in August last year. Foursquare also has similar functionality.
One such merchant in Redfern, Coffee Tea & Me, has had great success with the Wealie app, with about 550 of its iPhone-wielding customers using it regularly instead of paper loyalty cards, offering obvious environmental benefits.
According to the shop’s owner, Noam Katzir, not only did the app decrease the number of paper loyalty cards handed out but also increased profits by about 20 per cent a month since he began using it about five months ago. “I would say every third customer probably uses it at the moment,” Mr Katzir said.
Wealie was keeping “loyal” those customers who didn’t use loyalty cards or forgot to bring them, Mr Katzir added.
“[The app is] growing more and more popular as . . . customers come in and see another person use it.”
He said the sound customers heard when it was time for a free coffee was a novelty for some.
“The best thing is that after we do every five coffees you get the sixth one for free . . . and when it gets to the freebie it does this ‘ca-ching’ sound and everybody just loves it.”
Wealie’s Mr Schilling added that “for a tiny hole in the wall out in Redfern” it gave the coffee shop immense marketing power, allowing them, if they wanted, to send push notifications (similar to text messages) to customers when there were specials.
“If it’s raining and foot traffic has been bad and they are stuck with a lot of pastries or sandwiches they can send something out at like 3.30pm and say ‘If you come in for a coffee in the next half an hour . . . grab a coffee and cake for four bucks’. The idea [behind] that is to just drive a bit of cash flow for business as well as minimise the wastage that they would otherwise just throw out.”
He conceded customers could abuse the system, for instance by taking a picture of a QR code and scanning it at home to redeem a free coffee, but said he had systems in place to track that and block users from using the app. Coffee Tea & Me’s Mr Katzir noted that it was just as easy to rort paper systems but said it would be obvious for his staff to spot someone who was abusing the system.
The app is free for customers but costs between $10 and $20 a month for retailers to use.
It joins another, The Specials Board, made by London-born Jon Williams, 34, who now lives in North Bondi.
His app, currently used by about 400 merchants in both Sydney and Melbourne, makes use of a smartphone’s GPS location to find and redeem the latest offers, promotions and deals from local hospitality venues. It works on Apple’s iOS, Google’s Android, all Nokia platforms and, this month, will launch on Windows Phone 7.
His app had generated more than 10,000 reward redemptions for customers to date, he said.
Venues having success with it in Sydney include the Arthouse Hotel, Helm Bar and Two Black Sheep, a coffee shop. The Arthouse Hotel has had more than 100 table bookings through the app and “hundreds” of repeat customers being sent to their bar for cocktail offers, Mr Williams said. The same applied to Helm Bar, which has had 90 table bookings for discounted food and “hundreds” of repeat customers for their drinks promotions.
Mr Williams said both Nokia and Microsoft appoached him late last year. Both have financed development of his app and are using The Specials Board to showcase the app capabilities of their new mobile platforms. To use The Specials Board customers pay nothing whilst merchants pay $675 a year to be listed.