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Business Observer Friday, Jul. 29, 2011 10 years ago

Mobile Marketing

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An Orlando company has developed software that allows merchants to quickly build a large database of customers for effective marketing campaigns. All you need is a customer's mobile number.
by: Dan Ping Editor/Central Florida

Travis Priest is good at collecting phone numbers.

Priest is the founder and CEO of Sundrop Mobile, an Orlando company that has created a system that uses consumers' mobile number as their loyalty card. Dubbed loyalTXT, the system is quick to implement. At the point of sale, the cashier asks if the customer wants to join the loyalty program and inputs the customer's mobile phone number.

Customers instantly receive a text message informing them they have joined the loyalty program. There is also a link where he or she can provide more information like his or her birthday or email address.

When customers return to the store, instead of handing the cashier a plastic card or a punch card, they simply give the cashier their cell phone number to receive the discounts.

Sundrop is being tested in 15 restaurants across the country, and Priest says customers have been more than willing to share their mobile number.

“Traditional loyalty programs have an opt-in rate of 10% to 15%. The opt-in rate with Sundrop is 60% to 80%,” says Priest. “Certain demographics have an issue with giving their numbers, but overall it's not been a problem.”

For example, Priest says Smackers, a frozen yogurt shop in Columbus, Miss., was able to collect 10,000 mobile numbers in 90 days.

For merchants, the loyalTXT system is more than a chance to offer discounts to loyal customers. Using the database of customers, retailers can send targeted text messages, emails, voicemails, and social media communications.

In addition, Sundrop measures the response to those marketing messages and provides a return-on-investment report for every campaign. Merchants can learn, for example, the average number of days between customer visits.

“You're opening a two-way communication between the merchant and the customer,” says Priest.

Priest admits his system has the potential to be intrusive if not used properly. “I believe it can be done in a non-creepy way,” Priest says.

The key is limiting the number of marketing messages.

Customers always have the option to opt out of the Sundrop program by replying to a text message or clicking on an unsubscribe link in an email.

“Our typically opt-out rate is 0.8% to 1.2%,” says Priest. “We measure every message the merchant sends out. If the opt-out rate is higher than 2%, they're sending too many messages or the message is missing the mark.”

Typically a quick-service or quick-casual restaurant like pizzerias and ice creams shops should send no more than one message every nine to 14 days, Priest says. A fine dining restaurant will want to limit its messages to once a month.

Though the marketing may be infrequent, it can deliver results. Boban Abbate, a Little Caesar's Pizza franchisee in Vero Beach, used Sundrop's system to send out a text message with a coupon code. He followed up the next day with a pre-recorded voicemail. Abbate says the campaign resulted in his highest single-day sales.

The Sundrop system integrates into a retailer's existing point-of-sale (POS) system. There are more than 100 POS systems in use across the county, but Priest notes that the top 10 systems account for 70% of sales. So far, Priest has persuaded eight of the 10 systems to integrate Sundrop's software.

The cost to the merchant is $99 per month for the software licensee fee, and a per-message charge for each message sent out.

Sundrop is Priest's second startup company. He founded Unified Research Laboratories after he was furloughed from his job as a computer systems analyst for NASA during the government shutdown in 1996. The company developed and patented an Internet filtering technology and was sold in 1999 to Symantec Corporation for $42 million in cash.

Priest came up with the idea for Sundrop Mobile after realizing that retail loyalty programs were not using the mobile phones nearly everyone carries.

The company began in August 2010 on a $500,000 investment by Priest. Since then the company has received $1 million in venture capital from Vocap Ventures LLC and hopes to raise another $2 million to $3 million in the near future.

“We're not profitable, but that's not the focus right now,” says Priest. “We're concentrating on growth.”

The company's target customers are quick-service or quick-casual restaurants. Priest also believes independent grocery stores could be a potentially lucrative market.

“Grocery stores don't have a viable alternative to newspaper circulars. We could develop a digital marketing program using the store's analytical software to tailor digital circulars to individual customers,” says Priest.

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