For laptops, Samsung and Apple were tied, according to the Brand Keys’ 2013 Consumer Loyalty Engagement Index, released today. But Samsung led in flat screen TVs, and, in perhaps the biggest shocker, beat out Apple for consumer loyalty in smartphones.

“This is the first year that Samsung beat out Apple in smartphones,” Brand Keys president Robert Passikoff told me this afternoon. “When Apple was number one, everyone said, ‘Well sure, it’s Apple.’ But the fact is that Samsung always had a larger share of the marketplace.”

Source: Brand Keys

Customer loyalty – smartphones

If you’re wondering whether this is just some dinky little no-name survey, think again. The Brand Keys customer loyalty index surveys 39,000 people, making it generalizable to the entire United States population with 95 percent confidence. And if you’re also wondering how big the delta between number one and number two actually is, Passikoff says there’s a “significant difference.”

“It’s not terrible to be number two,” Passikof said. “But in both cases I think consumers are looking for higher degrees of innovation. It was only after Samsung and other companies came out with smaller tablets that Apple brought out the iPad mini. It was only in reaction.”

Asus followed Samsung and Apple as the laptop vendor with the third-most-loyal customers, with Toshiba and Sony right on its heels. In smartphones, LG took third place after Samsung and Apple, followed by Nokia and Sony, who were tied for fourth. Motorola, HTC, and BlackBerry rounded out the top eight.

Amazon handed Apple some more bad news in the e-reader category, leading the field with its Kindle tablet. Barnes & Noble’s Nook took second, with Apple, Kobo, and Sony following. One big caveat here: it’s likely consumers don’t think of the iPad as an e-reader first and foremost, but rather as a general-purpose tablet, which may have affected these rankings.

I asked Passikoff about exactly that:

Source: Brand Keys

Customer loyalty – laptops

“That’s absolutely so. When we initially added the category, iPad never showed up. And then later it did … its primary product value is not as an e-reader. But we don’t define what products go in which categories: consumers do.”

But, adding injury to insult, Amazon beat out Apple in the dedicated tablets category as well. Apple and Samsung tied for second in that category, followed by Barnes & Noble in a tie for third, and Acer, Lenovo, and Toshiba in a tie for fourth. Google showed up in the tablets category, also in a tie, in fifth place with Sony.

Clearly, consumers are a little confused about what is a tablet and what is an e-reader — a rapidly disappearing difference — and that confusion played a role in Apple’s rankings. But just as clearly, Samsung’s products, innovation, and advertising are helping that company shape an extremely positive reputation.

Image credit: Dean Takahashi

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Mobile payments startup Square has added new loyalty features to its Square Register and Pay-with-Square apps to get more people to keep coming back to Square merchants, the company announced this morning.

Last week, Square announced that it now has 2 million merchants accepting payments through its service. On top of this core payments business, the company is working on other ways to change how consumers and businesses deal with transactions. The Register app for iPad helps companies ditch their cash registers and the Pay with Square app on iOS and Android makes it possible for consumers to pay at Square merchants without pulling their wallets (or phones) out of their pockets.

Now those apps will include new ways to (hopefully) keep consumers coming back for more at their favorite Square merchants. The company has also tweaked the look of its Pay with Square app to give more info on Square merchants.

The company details the following changes:

• Tools to attract new customers and reward regulars, including first-visit specials and customizable punch cards
• Pay-with-Square users collect merchant cards from their favorite places and track rewards from purchases on an in-app punch card
• In-app reporting that provides quick access to sales trends in real-time and easy reporting, including x and z reports
• Intuitive inventory library to create categories of items for easy access and sorting
• Customizable percentage and dollar discounts for any item or sale
• Newly designed Pay-with-Square interface for discovering new businesses

Square says that since Register’s launch in March, Square Register merchants are “five times more active on a weekly basis” than merchants simply using the Square Card Reader and that Register users process approximately twice as much revenue.

You can see the new Square rewards in action in the video below:

Square Register photo: Square/Vimeo

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What started as a quirky loyalty program at one Chicago comic hideaway has spread to 1,400 locations in nine months, and can now count on the loyalty of one of Silicon Valley’s hottest venture capital firms.

Belly, a digital loyalty program for small businesses, today announced a $10 million round of funding, financed entirely by rapidly-rising Valley heavyweight Andreessen Horowitz.

Belly is the maker of a small business- and consumer-friendly rewards system and universal loyalty card. For a monthly subscription fee, the Chicago-based startup tailors programs around store culture to create rewards. To simplify management, it issues each location an in-store iPad display. Customers can use their Belly card or the Belly mobile app to “scan-in” to locations, earn points for each visit, and view rewards.

The rewards can sometimes be a bit unusual. For instance, at AllyCat Comics, the Chicago comic store where Belly got its start last August, a Belly customer who makes 50 purchases earns the opportunity to punch the owner in the gut.

With a growing but still small presence in eight major markets, including the just-added metros of Boston and New York, Belly needs money for expansion. The extremely young company will use its new funding to expand to new cities, form new partnerships, and hire top-notch engineering talent, founder and CEO Logan LaHive told VentureBeat.

Belly’s premise seems promising enough. Who actually wants to carry around loyalty cards? And aren’t rewards more fun when they encapsulate everything you love about a locale? The problem is trickier to solve in practice, however, and Belly’s current strength is less in its ability to be a universal loyalty card — support at 1,400 locations does not a universal system make — and more in its novelty. There’s something to be said for walking into your favorite boutique, scanning a barcode at an in-store iPad display, and finding out that you’re eligible for something fun.

To date, Belly has attracted 200,000 active users who have checked-in via scan more than 800,000 times. The startup now sees roughly 10,000 store check-ins per day, LaHive said. But competition abounds, so Belly’s biggest challenge will be differentiating itself and finding mainstream audiences.

Belly, which employs a team of 50, previously raised $2.87 million in funding, mostly from Lightbank. Jeff Jordan, general partner at Andreessen Horowitz, former chairman and CEO of OpenTable, and former president of PayPal, is joining Belly’s board.

In the video below, the owner of an Austin, Texas-based frozen yogurt store talks about how Belly has helped her business.

Daily deal providers such as Groupon and LivingSocial are often criticized for driving low-quality business to merchants, but these young companies may, in fact, be purveyors of loyal customers.

Ninety-one percent of web shoppers who redeemed a deal said they have gone on to — or plan to go on to — buy again with the merchant in question, according to customer experience analytics firm ForeSee.

ForSee fielded an online survey between November and December 2011 as a follow-up to its spring 2011 study. The study, which includes survey responses from nearly 10,000 visitors to top retail websites, found that deal buyers are far more likely than expected to turn into repeat customers — a mere 3 percent said they don’t plan to make a repeat purchase from the merchant deal provider.

The findings should come as good news for the newly public Groupon, which continues to face criticism around its business model.

Groupon, according to ForeSee’s data, is also showing a slight upward trend in its purchase rate. Fifty percent of respondents said they purchased an offer from Groupon in the previous 90 days, a 3 percent bump from spring 2011. The deals juggernaut also has the largest share of subscribers who exclusively subscribe to deals from Groupon. Forty-four percent of Groupon subscribers only use Groupon services, while just 12 percent of LivingSocial subscribers are exclusive to its site.

The ForeSee study did uncover one troubling tidbit for the entire industry: daily deals subscriptions are down. The research company found that 60 percent of visitors to top retail websites enrolled in at least one daily deal email program during the holiday season, which represents a five percent dip in subscribers from the spring.

Photo credit: Groupon/Flickr

With the majority of top grossing apps, such as Tap Zoo and Smurfs Village, now based on a freemium model, the Localytics study points out that in-App purchases are the lifeblood for many developers. While it may be tempting for developers to rush users to make their first in-app purchase, this research shows that building a relationship is more important in fostering long term usage, and maximizing sales revenue over time.

The study, of nearly 30 million App-users, found that of all users who made an in-app purchase, 44 percent did not do this until they had used an app at least ten times. On average, a user who is going to make an in-app purchase will do so 12 days after first launching the app. This suggests that engaging a user for a good length of time is often going to be necessary before they start to make in-app purchases.

Localytics also found that users who wait and interact with an app before making their first purchase make more valuable customers in the long run. Such users were found to make 25 percent more in-app purchases over their lifetime as a customer. Users making an in-app purchase during their first session with an app, went on to make an average of 2.8 purchases in total, compared to the average of 3.5 purchases made by users who waited before purchasing.

Further analysis also rejects the idea that getting customers to make a purchase as quickly as possible is the ideal scenario. The study showed that only 16 percent of users who made a purchase during their first app session then went on to interact with that app 10 or more times. The overall percentage of users interacting to this level was much higher, at 26 percent.

While these differences in in-app purchasing behavior may look small, they are exactly the type of margins that could mean the difference between the success and failure of an app.

In summary, the Localytics study states that, “By building your app’s engagement and your brand’s presence in a user’s mind, you can generate better overall revenue based on a loyal base of repeat users. Given the 12 day average time between downloading an app and making a purchase, driving loyalty across a period of weeks will often generate greater revenue.”

Given last year’s finding that 26 percent of apps are used only once after being downloaded, it seems imperative that developers of freemium apps make a strong connection with users from the start. How this is accomplished is, of course, the $64M question.

With $5.6 billion worth of in-app purchases expected by 2015 though, the question of how developers best maximise in-app revenue generation has perhaps never been more pertinent.

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July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Mobile payments startup Square has updated its popular iOS and Android apps to include loyalty tracking and discounts for regular customers and further hardware support for brick-and-mortar stores, the company revealed today.

“We’re enabling merchants to recognize regulars that use the Card Case application,” Megan Quinn, Square’s director of products, told VentureBeat. “With this update, there’s no need for coupons, punch cards or third-party apps.”

Square’s mobile payments service has seen incredible growth since its debut in late 2009. Quinn said the company has signed up more than 800,000 customers in the past year, and we heard recently that it is aiming to go more mainstream by selling its credit card readers at Walmart. Additionally, Square raised $100 million back in June on a $1 billion valuation.

With the update to version 2.2 for iOS and Android, Square’s biggest new feature concerns loyalty functions. We’ve already seen the updated Card Case application, which came out two weeks ago and makes it possible to pay Square retailers without touching your mobile device. Now, when Square retailers actively serve loyal Card-Case-using customers, they can automate the process of giving those customers a discount based on number of visits or the total amount spent.

“We want to help businesses of all sizes to grow using Square,” Quinn said. “By providing a seamless discount to loyal customers, both retailers and customers win.”

The update looks almost identical to the previous version, but it adds a “regular ribbon” (as seen in the above photo) that identifies loyal customers, and there are a few extra buttons too. There are also advanced features retailers can take advantage of such as better sales tracking, new tipping support, resending of receipts and providing refunds from the point-of-sale system.

Square also told us it has added support for some commonly used brick-and-mortar hardware devices like printers and cash drawers. When a Square merchant taps the “tender” icon, the cash drawer pops open and they can print out receipts that have personalized info. For printers, the app works with Star Micronics receipt printers and Square recommends the Star TSP143LAN or Star TSP650. For cash drawers, it works with the APG cash drawer Vasario Series equipped with a MultiPRO interface, and Square recommends the Vasario 1416 or Vasario 1616.

Looping, which provides businesses with a phone-based loyal customer tracking program, launched today at the DEMO Fall 2011 conference.

Most of a business’ revenue comes from repeat customers. So it is typically in a business’s best interest to create a loyalty program that generates repeat customers. But instead of issuing a punch card or some other physical loyalty program, customers just have to dial a number and then record a sound generated by a business to register as a “loyal customer.”

A customer just has to dial a number given by Looping and then hold a phone up to a businesses’ microphone. That business then has a unique “sound token” that fires off through the phone back to Looping’s servers. The servers validate that sound and register the customer — like punching a loyalty card, but customers don’t have to carry around those physical cards.

“With this simple dial and tap action we can identify the customerʼs presence, authenticate the transaction and instantly close the loop between both channels,” Looping spokesperson Dani Alyamour told VentureBeat. “Operating through audio coupling, with just a phone call, a secure channel is established between the customer and our processing platform.”

Looping has four employees and was founded earlier this year. It is based in San Francisco, Calif., and is self-funded by the founders.

Looping is one of 80 companies chosen by VentureBeat to launch at the DEMO Fall 2011 event taking place this week in Silicon Valley. After our selection, the companies pay a fee to present. Our coverage of them remains objective.

There’s an old business maxim that goes “Where performance is measured, performance improves.  Where performance is measured and reported, performance improves dramatically.” And pretty much every manager has observed the truth in it.

Humans, though, can only focus on so many things at once.  So, measuring the right things is the key to effectiveness.

When you’re running a software company, there are seemingly hundreds of things to measure. It can be difficult to identify and keep your eye on what really matters.  Over the years, and through the various stages of our growth, I’ve found the things we measure at Infusionsoft change as our business matures and evolves.  Of course, we’re always measuring revenue, profit and cash, but other things are less obvious and can easily get lost in the mix.

Here are five important metrics I believe every software CEO should focus on, regardless of their business stage.

Cost per acquisition - CPA is measured in various ways, but the best way is to roll up all sales and marketing costs for the month and divide by the number of customers acquired that month.  If your sales cycle is 6 months, then use the sales and marketing expense from six months ago as the numerator and use this month’s unit sales as the denominator.  Whatever model you have, pick a mathematical method and stick to it so you have stable comparative data.  When you know CPA, you can make sound decisions about whether and how to invest to acquire more customers.

Revenue per employee – Early-stage companies typically have very low revenue/employee.  Once you get to about $200k per employee, you’ve generally got a pretty exciting business.

We measure revenue per employee on a monthly basis, dividing total revenue by the number of employees and then multiplying by 12 months to get an annualized number.  Tracking this figure each month has enabled us to make sound hiring decisions, manage our expenses, and be accountable to the labor investments we make.

Note: It is important to recognize that a software company’s primary investment mechanism is in human capital.  Therefore, the revenue per employee number should be used wisely, depending on the stage of the business.  For example, if you manage an early-stage software company to a $200k+ revenue per employee figure, you’ll never grow the company.  I have found that it is wise to chart a path toward $200k+ revenue per employee and measure progress along that path.

Customer loyalty – What you want to know here is how referable your business is.  When you’re likely to be referred, you get leverage on those marketing and sales dollars spent each month.  Therefore, the higher the referability, the more you can invest in CPA.

There are many ways to measure customer loyalty, but Net Promoter Score is gaining momentum as the preferred method for software companies to measure loyalty.

Lifetime customer value - When you know how much a customer is worth to you over the life of the customer, your decision-making improves significantly.  You also know how profitable and healthy your business model is, how effective tweaks in your model are and how to adjust as you grow.

This metric is a super-metric because it is comprised of two critically important drivers of the business model.  LCV = Average Revenue Per User / Churn.  So, you can increase your LCV by increasing the ARPU or by decreasing the churn.  Play with this equation and it doesn’t take long to realize that churn rate is what makes or breaks a business model.  Furthermore, slight reductions in churn can make massive improvements in LCV.

Usage.  Every software company needs to know how its customers are using and adopting the software.  There are those who feel otherwise, but I feel that any software company wanting to drive long-term value for its shareholders needs to drive usage.  Usage is king.  Everything else falls in line nicely when customers use the company’s software.

Therefore a CEO needs to know how to measure and drive usage.  We’ve found that our customers need to launch multiple marketing campaigns to become “addicted” to our software.  Therefore, the critical usage metric for us is “percentage of new customers that have launched at least two campaigns within their first 60 days” or “60-day multiple-launch rate.”

As a software CEO, it’s easy to find yourself swimming in metrics, wondering what data really matters.  Over the years, I haven’t always stayed as focused on each of these five metrics as I should.  And every time I’ve strayed, it’s come back to haunt me.

[Homepage photo: blyzz]

Odds are a large percentage of your company’s attention and budget goes toward customer acquisition.  That makes sense if your customer lifetime value is high – but if you aren’t driving repeat business, it’s ultimately a waste of resources. Securing the second transaction is a key step to generating a good return on your investment.

A 10 percent increase in the number of new customers who buy a second time results in a 15-25 percent revenue improvement (depending on your level of repeat business today).  That directly impacts your break-even cost for customer acquisition and makes more acquisition options feasible.

The trick is figuring out how to do this.  The easiest way is with an opt-in program or program registration during the first purchase. Customers are most engaged at the time of purchase.  Your ability to opt them into anything is vastly lower once they leave, so the time to engage is while they are on the site or at your location for the first time.

I cannot stress this enough.  Any time a customer walks or clicks out without opting into something is a sales and marketing failure.  (In this example, ‘something’ is anything that promises structured benefits in exchange for customer data or loyalty, such as a loyalty program, a free content subscription, access to white papers, etc.)

If you’re able to secure some sort of structured program opt-in during the first transaction, there are three tactics you can follow to lock in the second sale.

Expiring accrued value - Something expiring is a very powerful motivator.  When the customer first bought and opted-in to a program, they accrued some value.  A message sequence starting a month before expiration is often very successful.

Distance to threshold or tier - If your program is designed well, a first purchase will put customers within striking distance of their first benefit.  Messaging around the small commitment needed to reach that first benefit will be effective.

Bonuses to reach threshold or tier - One smart approach is to structure bonuses for the second purchase that push customers over the first benefit threshold.  That way, they hit the benefit on their second purchase and get something to drive them towards purchase number three.

If you managed to secure email opt-in during the first transaction, there are four additional tactics at your disposal.

Increased communication cadence in first 15 or 30 days - There is a direct relationship between recency and activity.  If you look at the recency of your repeat purchasers, it follows a power law (starts high, decays quickly, then evens out).  So while you risk unsubscribes, your frequency of mailings should be higher in the first 2-4 weeks after a first purchase.

What you’re doing with this is searching for the right message – and unless you have collected good profile data, you’re guessing at what will motivate a second purchase.  It’s best to get your most effective offers in front of your new customer within these first four weeks. Otherwise, you risk losing them.

If you are going to do one thing on this list, this is the one.  Script and (hopefully) automate your remarketing cadence for the first 4 weeks after a first purchase, then let customers migrate into your standard communication cadence. And remember, email subject lines are like tweets now, so tell your story there.

Discounted complementary product - Your marketing cost on the second product or service is virtually zero, so pass that savings on.  Find an appropriate product or service that complements the purchase and price it so low that your new customer would be (ahem) unintelligent not to buy it.

Branding communications in first 15 days - New customers are unlikely to be familiar with your brand and everything it stands for.  One way to increase frequency during the crucial first few days after a purchase is to include brand-centric communications, such as a personal thank you, a guide to services, any social or community options available or reiteration of your brand promise.  By complementing your hard sell emails with softer, brand-oriented email, you stand a higher chance of finding the right message to appeal to any given customer.

Invitations to connect/review – This can be via Facebook, Twitter, MySpace or any other forum.  If you didn’t connect during the first transaction, use some of your initial communications to connect your new customer to one of your community or social network options.  Product or service reviews are particularly effective here, so consider partnering with BazaarVoice or Yelp.

Of course, you’re not going to be able to secure an opt-in with every customers during the first transaction.  Since commercial email risks violating CAN-SPAM, your communication methods are limited, but you do have option:

Order confirmation/Ship notification/Thank you offer - This is the no-brainer.  These messages are exempted from CAN-SPAM as long as they are clearly transactional in nature, but adding relevant offers to the bottom or sidebar will be the best performing tactic you have.  Ideally these are related to the product or service purchases (such as “next best item”) or profile data you collected during the first purchase.

Enhanced or bonus service or support in first 30-90 days - New customers need to be treated very differently than existing customers.

They may not be as familiar with your extended assortment or services.  They may be less capable of installing, assembling or navigating your product or service.  Enhancing your typical support for the first 30 days will increase satisfaction, advocacy and referrals and demand for accessories or ancillary services.

You could also have a new user service that is undocumented – or you could extend the new user service by 30 extra days when it is about to expire.  Chances are this is very inexpensive and generates a high return.  And since the message relates to support of the first purchase, it conforms to CAN-SPAM.

Outbound phone campaign - These can be expensive, so they should be part of the mix only if it makes economic sense.  Since robocalls are now essentially illegal, you will need to have your staff or call center make the call.  If your average transaction is high enough, this is likely to be a very productive activity.  For B2B companies, this is a no-brainer, since you almost certainly have additional products or services to sell to a business customer.

Chances are you can afford to add most, if not all, of the tactics listed here to your marketing mix.  Few are expensive, and most just take discipline and execution.  With the right person or team in place executing these ideas, your repurchase rate will increase, your revenue will grow and your stakeholders will be happy.

Come see the most promising new technologies unveiled for the first very time at DEMOfall 09 this September 21-23 in San Diego. VentureBeat readers may register to attend the conference at a special 20% discount off our regular rate. Register now at: http://www.demo.com/f9vb2

Loyalty problems tend not to be on the forefront of entrepreneurs’ minds. But an aggressive retention marketing program, even in early stages of a company’s history, can pay big dividends.

The relevance of such programs depends on your business model. Your customer value can be the deciding factor in how useful these programs can be for you.

In businesses where a typical customer spends large amounts per interaction or tends to stay for a long time (this is typical in consulting, wholesale, professional, B2B and long-term subscriptions), losing just one can have a big impact.

Service levels at these sorts of high customer value companies tend to be high and individualized.  Loyalty programs will focus on enhancing the relationship through recognition, special benefits, private events and volume based discounts.

A structured, formal loyalty program might make sense if you’re already doing this and want to organize your efforts into more logical and automated systems. Loyalty programs can also help augment account management and reduce the labor cost.

In general, though, they don’t make a lot of sense for these sorts of businesses unless there is a lot of competition with low switching costs.

Businesses such as retail and certain consumer software or consumer goods companies have a couple more options. Their customers have more modest values, with a small group of highly valuable customers accounting for a large percentage of sales (and an even higher percentage of earnings). There are two approaches that work for this sort of company.

Best Customer Focus – In this model, the value comes from three areas: increased retention and reduced downward migration of an existing ‘best customer’ and increased ‘next best’ customer upward migration.

Best customers lose value through leaving or reducing their spending. Loyalty programs can help ensure there is little splitting behavior, reducing or eliminating the problem. Any loss of value with these customers is then limited to changes in their lifestyle or some other factor beyond your control.

Meanwhile, your next best customers are presented with a path that rewards them for consolidating their spending with your company.  If they have the potential to be best customers, they’ll increase frequency and average order value.

New Customer Focus – When customers have a tendency to buy once, a frequency-based approach can be very productive. Reward thresholds are set low. Rewards expire quickly. Published benefits are augmented with other promotions. And, in general, the program has just one objective – the second sale.

For new and growing businesses this can be an excellent choice, since you don’t really know the long term value of customers and just want repeat business of any type.

Subscription-based businesses, including traditional media, telecom and certain services, have customer bases that have stable values by month. Unfortunately, the customers can leave at any moment – and they often do.

The problem is: No one likes to be reminded they are spending money every month. Loyalty programs for these sorts of companies should focus on engagement, usage, referrals and word of mouth – activities that correlate with retention, but aren’t tied directly to the monthly or annual bill.

If you’re in advertising, lead generation or any other high volume/low-revenue-per-customer businesses, you know there just isn’t enough money to go around.

You can’t give $3 back to the customer who only generates $4 or $5 a year.  However, if you can figure out an extremely low cost benefit (content, extended term, etc.), it might make sense. These benefits will help you differentiate from competing firms since they will be unexpected, valued, and difficult to replicate.

Above all, never take existing customers for granted. In many cases, a structured program can improve retention, leading to improved revenue growth, lower marketing costs and a great story for that next round of investors.