A recent LivingSocial deal to Ruckus’s three Triangle-area restaurants attracted an impressive 3,600 buyers within three hours.
But if all those buyers redeemed the coupon, it would cost co-owner Ryan Pilz a whopping $110,000 in food and drinks. And many of those diners likely won’t ever visit the restaurant again.
That’s the scenario four founders of the Raleigh startup Stealz are trying to avoid as they work to revolutionize the way small businesses market themselves and create incentives for their most loyal customers.
Launched 10 months ago, Stealz is part loyalty program, part advertising platform. For consumers, it’s a free mobile application that lets them earn points and redeem offers at any of nearly 300 small businesses – mostly restaurants, bars and entertainment venues – in 20 Southeast cities.
But for businesses, its a $30 per month (or $300 annual) subscription fee to an app that lets them offer any sort of deal or incentive in return for customers visiting and then sharing photos of their experience on Twitter or Facebook.
The app automatically tags the venue in every photo taken and shared, helping to increase the business’s social media presence.
“We’ve found an interesting way to take a business’s customers and turn them into marketers and brand ambassadors for the business,” said co-founder John Charlesworth, a 2010 Elon University graduate who along with the other Stealz partners started and sold Community Corkboard in 2012.
Daily deal companies, including LivingSocial, Groupon and The News & Observer’s Dealsaver, offer services, food, travel or activities, typically at 50 percent discounts, and collect a percentage of the sale from the business offering the deal. The businesses get huge increases in traffic following the deal, and earn back a small percentage of each sale.
The Stealz co-founders are learning from the daily deal business model and other business owners who, like Pilz, were shelling out thousands of dollars in free stuff. Also, many daily deal sites didn’t help owners make sense of social media.
“The two deterrents keeping small-business owners from having a presence on social media is they don’t have the time or the knowledge,” Charlesworth said.
Stealz wants to grow quickly in existing and new markets. The startup has $200,000 in angel investment and college interns in cities and towns across the Southeast.
For Pilz, Stealz lets Ruckus have fun with its customers. They can use points for a chance to arm-wrestle him and earn a beer or have the restaurant’s sushi chef prepare a dinner at the customer’s home. They can also redeem points for free food.
“People are doing it more than you can imagine,” he said. “In today’s reality with marketing, business-to-consumer is very much less trusted than consumer-to-consumer. I can tell you all day how great my restaurant is, but if your friends say it’s awesome, you’re going to trust that more.”
Laura Baverman is a journalist who spent eight years covering business for Cincinnati newspapers before moving to Raleigh.