A recent LivingSocial deal to Ruckus three Triangle-area restaurants attracted an impressive 3,600 buyers within three hours.
But if all those buyers redeemed the coupon, it would cost owner Ryan Pilz a whopping $110,000 in food and drinks. And Pilz said he doesnt expect many of those diners to visit the restaurant again.
Thats 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, its a free mobile application that lets them earn points and redeem offers at nearly 300 small businesses mostly restaurants, bars and entertainment venues in 20 Southeastern 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 thats taken and shared, helping to increase the business social media presence.
Weve found an interesting way to take a business 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.
Unlike Stealz, daily deal companies, including LivingSocial, Groupon and The News & Observers 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.
Businesses typically get huge increases in traffic following the deal, and earn back a small percentage of each sale.
The Stealz co-founders, after talking with dozens of business owners, wanted to offer another option that gave customers discounts but also helped the businesses make sense of social media.
The two deterrents keeping small-business owners from having a presence on social media is they dont have the time or the knowledge, Charlesworth said.
Stealz offers a way to handle both. With $200,000 in angel investment and college interns in cities and towns across the Southeast, Stealz hopes to grow quickly in existing and new markets.
Stealz lets Ruckus have fun with its customers, for example. They can use points for a chance to arm-wrestle Pilz and earn a beer or have the restaurants sushi chef prepare a dinner at the customers home. They can also redeem points for free food.
People are doing it more than you can imagine, Pilz said. In todays 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 its awesome, youre going to trust that more.
Laura Baverman is a journalist who spent eight years covering business for Cincinnati newspapers before moving to Raleigh.