It’s an app that knows exactly when you’ve walked into a store, and rewards you simply for doing so. ShopGuru, a customer loyalty mobile app, has that omnipresent quality that’s straight out of science fiction, though the technology is surprisingly simple.
The trick is in an inconspicuous device placed at the entrance of shopfronts which emits an inaudible sound. Once ShopGuru users walk past the emitter, their smartphones detects the sound pattern through the microphone, which then signals to the app to dish out reward points.
Developed by Singapore startup Rainmaker Labs, ShopGuru launched in May this year in 60 stores, but has since more than doubled to 160 retailers in Singapore. It signed up Apple reseller EpiCentre and VGO Corporation, an international fashion and sports apparel distributor which represents brands like World of Sports as well as Bread and Butter.
Andrew Wong, co-founder of Rainmaker Labs, says that the grand plan for ShopGuru is to reward consumers for any sort of behavior. For example, users could earn points just for viewing online ads or browsing certain sections of a store. They could also get rewarded for watching video ads, since the ShopGuru platform can be engineered recognize different sounds.
ShopGuru knows that while most consumers are honest, a small minority might try to game the system. To prevent this, the app has common sense mechanisms in place. For instance, it will raise a red flag if a user checks in at one location and then appears at another store that’s far away at Superman-like speed.
With video ads, ShopGuru can work with advertisers to restrict points redemption to moments when the ads appear, in case anyone tries to record the audio and scan it indiscriminately.
ShopGuru could eventually become an ubiquitous shopping companion for users. Andrew says:
We want to be a part of consumers’ everyday spending habits. Rewards for buying petrol and groceries are stuff we could look at. We’re also exploring travel and e-commerce.
Businesses must buy in too
While easy points redemption appeals to consumers, implementing such a novel program isn’t a trivial matter for businesses.
To smoothen integration and overcome a highly-fragmented POS market, ShopGuru has a platform that is agnostic to any POS system and doesn’t require integration.
The system lets merchants scan the barcodes displayed by the ShopGuru consumer app so that users can redeem points for purchases. To make it useful for businesses, the company sends a monthly report with data on sales conversion, demographics of shoppers, as well as their behavior and preferences.
To lower the barrier to entry, the system is free-to-use and comes only with transaction fees. A cost-per-impression model is currently being introduced. Retailers don’t have to pay for the sound emitter too.
Besides expanding vertically, ShopGuru also wants to grow horizontally into other countries, potentially Malaysia and Indonesia.
While Malaysia and Singapore host many large retail conglomerates — Singapore has seven to eight big players — Indonesia is only dominated by three or four companies, and one of them has around 2,000 retail and food and beverage outlets across the country.
So to enter Malaysia, an ideal partner would be existing loyalty providers with a reach across a fragmented retail environment, while in Indonesia it’s better to seek a large retail chain with a presence in many shopping malls.
Like many startups, Rainmaker Labs’ journey has been marked by fits and starts since its establishment in May 2011. Before signing up its first major retailer in January this year, they’ve spent nine months on R&D and another six to nine months getting customer feedback.
The founding team, consisting of Andrew, Alex Leong, and Neo Zhi Zhong, have a mixture of investment banking and app development experience. But that meant that they needed to build up an understanding of the retail environment and the merchants’ pain points. Andrew says:
Now at least they know what the hell we’re talking about. We understand their metrics, and they know how we can improve those metrics.
Fortunately, they’ve been able to secure S$590,000 ($478,000) from Incuvest Asia, a Singapore-based incubator under the NRF’s Technology Incubation Scheme, in addition to about $80,000 of their own money and some cash from undisclosed angel investors.
A sound plan is not enough
Neo says that they’ve learnt one lesson the hard way — field test your product as quickly as you can:
Initially, we only tested our sound detection technology in a closed environment. It worked perfectly in the office. But once we brought it into the field, we realized that the retail environment killed our sound system.
Neo estimates that the team could have saved three to four months of research time if they had tested their product in a live environment earlier.
Fortunately, the team, which including the co-founders has seven people, has the benefit of looking at what has or has not worked for similar companies abroad.
In terms of aspirations, ShopGuru is very similar to UK company Nectar, which offers rewards for a whole range of offline and online activities.
But as far as technology goes, right down to the sound emitter system, it echoes Shopkick, a California-based company founded in 2009 that has funding from prominent venture capitalists. That company is already profitable, and has reached three million users and generated $200 million in revenue for partners.
ShopGuru may be two years behind in bragging rights, but that doesn’t matter in the up-and-coming Asian market. The startup, with its access to local markets, may be in a prime position to profit.
(Edited by Josh Horwitz)