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Discussing Customer Loyalty Programs with Tiago Soromenho of StickyStreet

Tiago is a sticky kind of guy.  He got his start as a designer and his background and interests were in technology and design. He went to Art Center College of Design in Pasadena, CA and he got into digital advertising at its earliest incubation in 1995. He worked at the famous Chiat/Day ad agency on the Nissan, Sony PlayStation and Energizer campaigns. He worked at other agencies growing his portfolio and experience. He then moved into heading the creative department at a Web design shop called Zentropy in Los Angeles and grew with the DotCom era. As one of the early proponents of user-centric design and non-traditional advertising, Tiago advocated that his Fortune 500 clients use the web to create useful “Tools” for their customers (instead of “adding scroll bars” to print and TV campaigns.)   When Zentropy was acquired by a large ad agency network that “didn’t get it”, he sold his stock, the house in LA, and took some time off.

I was able to spend some time with him recently and here is a transcript of our interview:

Steve: How did you get the idea for StickyStreet?
Tiago: After the time off traveling, we settled in the Washington D.C. area because the schools here are excellent and my wife loves the international culture. We bought a salon for her and in helping her computerize it, met Anthony Angell who had an amazing concept: Salon Geeks, which is a creative and consulting firm for salons and spas around the world.  The beauty industry was (and still is) years behind in using technology to make their marketing smarter, and I saw this great opportunity to work with Anthony to create something really useful through Salon Geeks. One of the first things we noticed was that most Salons and Spas could not afford to create any sort of sticky factor for their customers because the loyalty programs out there were way too expensive, complex, or very rigid in their structure.  Because retaining customers was one of Anthony’s prime directives to Salon Geeks clients, I thought, “Hey, why not write a few lines of code to store customers’ points on a database!” More than 40,000 lines of code and three years later, we have a new company called StickyStreet.com and a growing and ever broader world-wide customer base.  It’s really taking off from cafés in Australia, to salons in Singapore, wine stores in Texas and work-at-home-mom operations everywhere. One of our users tracks over 1 million teenagers on our program.

Steve: You seem to be the only Customer Loyalty system that is sold in the Software as a Service (SaaS) model. That is extremely unique. How else would you compare and contrast against the competition?
Tiago: Most of what could be considered competition are either credit card processing companies that rely on their physical equipment and charge thousands of dollars and per-transaction fees, or gift card printers who focus on selling plastic cards and have some Dilbert-engineer ugly interface and very basic program to support the plastic business. We focus on creating a platform that allows small business owners to implement the loyalty, membership or gift card programs they want to implement. Also, unlike other competitors, our “launch” time for most programs is a matter of minutes - not weeks or months so a small or large business can get started almost instantly.

Steve: You utilize a “Freemium” model that has an entry point where a small business can join for free and grow into a paid model. Do you use templates for standard customer loyalty programs that customers can “snap-in” to their web site?
Tiago: Our “Web Loyalty Link” feature is a few lines of code that a business can add to their web site that allows their customers to find out their loyalty program or gift card balances in real time. This creates a reason for customers to continually re-visit a business’ Web site and we also call that “The Sticky Factor”, because it allows a business to re-market to this customer usually more cost effectively than print, mailing or other media forms.  From the “admin” side of the application, a business can create any number of campaigns based on a few basic loyalty and gift card program templates that they then customize to their needs.

Steve: Is there the ability to do custom development and configuration?
Tiago: Yes, for some of our larger clients, we have a custom batch-input that interfaces with their weekly database activity reports. For another, we have customized the “visits” template to “stars”, and there is always the ability to customize the Loyalty Link output through a combination of coding on our side, and CSS on the client side.  Mainly, though, the program is supposed to be flexible enough that little customization is needed.

Steve: How do you handle integration with Point-of-Sale systems?
Tiago: Even the large credit card processors must rely on the separate action of using their hardware, separate from the POS transaction.  Because of security issues and the wide assortment of POS manufacturers and software, it’s practically impossible to convince the manufacturer to allow some sort of API that would let their software communicate that a transaction occurred. Of course, we’re all ready to accept such integration, but I haven’t seen much interest due to the understandable security fears and walled garden mentality.  But for all our customers, it’s not really much of an issue, since in almost all cases, StickyStreet is already loaded in a browser and it’s only one “alt-tab” away.

Steve: What is your philosophy on building customer loyalty?
Tiago: We start from the principle all else being equal, a customer will come back, more often, and be less likely to leave, if they have some sort of potential worth invested in the business. What’s key is to understand how much of your business can profit from increased loyalty.  We had a client who implemented this great loyalty program only to realize that over 90% of their customers were already regulars. In this case, a loyalty program was the wrong marketing program to implement. We sometimes help our clients and advise them, but StickyStreet was created to be very do-it-yourself, so in most cases, we don’t really even know what businesses are doing with their campaigns. We focus on providing the tools a small business needs to do what they want to do. We’re amazed at just how smartly busineeses are using StickyStreet.com

Steve: What kind of customer loyalty programs can a small business run that would help them grow their business?
Tiago: Our web site gives you the starting list that any small business can choose from and run multiple programs. Check this list out:

• Reward client referrals.
• Sell & track gift cards any time of the year.
• Implement a Points Reward program for products or services.
• Keep track of, and reward good ideas or behavior.
• Create Gate Keeper campaigns to penetrate hard-to-reach markets.
• Reward employees that bring new business or customers.
• Launch a “Buy X, get one free” promotion.

Mainly, though, I would advise a business to first decide what their goal is: Is it to acquire new customers by rewarding those that bring them to you? Is it to retain more of your existing customers?  Is it to increase their frequency of visits/purchases?  Based on a well-defined goal, then you can be more creative in thinking of a program to implement.

For example, one of my favorite uses of StickyStreet (other than the free account teachers can have to reward their student’s good behavior) is the “Gate Keeper” campaign where you reward a receptionist, hotel concierge, etc. who have access to an audience you may not have had access to otherwise, for sending people to your business.

Steve: What would you like to see happen over the next 18 months for StickyStreet.com?
Tiago: A greater integration with the other SaaS services out there through a shared API structure.  I think it would be great if when a common Freshbooks and StickStreet client’s customer pays their invoice, their points, visits, or whatever get automatically recorded on StickyStreet.  I think the SaaS industry has a killer app for the Enterprise market if some sort of meta-API structure can be created to easily link all these amazing functionalities together.  More realistically, I look forward to completing our first round of venture capital funding, so we can quickly implement some really cool enhancements, new features, a solid API, and especially, and internationalization.  There’s a lot more coming from StickyStreet!

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