Daily deal offerings get customers in the door, but that doesn’t always translate into repeat business, which is bad news for small businesses.
Start up PunchTab is trying to change the daily deal mold with its Internet-based customer loyalty program.
“The big battlefield for any business is retaining customers,” said Ranjith Kumaran, founder of PunchTab.”What we’ve learned is the lifetime value of a customer.”
A recent study conducted by Rice University Associate Professor of Management Utpal Dholakia showed that close to 80% of daily deal users were new customers, but significantly fewer spent beyond the deal’s value or returned to purchase a product or service at full price. The lack of repeat business has made many small businesses shy away from the daily-deal model.
PunchTab is an online service geared toward businesses that have a strong online presence and want to reward customers for engaging with them via a social media tool. To date, the company has raised $850,000 in seed funding.
PunchTab allows a company to reward costumers with points for doing things like reading its blog, posting a comment on its Facebook page or following it on Twitter.
Customers can cash in points for discounts or freebies from the company. For instance, a fitness company may give customers a free month membership or a free exercise class when they earn enough points from engaging in social media.
While companies can create loyalty programs on their own, Kumaran argues that it can be time consuming and not a main focus of many companies, especially small businesses. “You wouldn’t build your own server to host a Web site if it’s not core to your business,” said Kumaran, who also founded YouSendIt, a digital file delivery company.
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