Punchh, a startup leveraging machine learning and omnichannel integrations to create customer journeys, today revealed that it’s closed a $40 million series C round co-led by Adams Street Partners and Sapphire Ventures. AllianceBernstein also contributed to the tranche, which brings Punchh’s total raised to nearly $70 million following a $20 million series B in January 2018 and a $7.5 million series A in 2014.
According to CEO Shyam Rao, the bulk of the funding will be put toward augmenting Punchh’s AI capabilities as it expands into new verticals like convenience stores and other physical retail segments. “Consumers expect ubiquity of experiences online and off. In-store retail remains extremely popular and is one of the most powerful relationship building channels ever created,” said Rao, who cofounded Punchh in 2010 with Aditya Sanghi, Jitendra Gupta, and Sastry Penumarthy. “Our platform gives retailers an unparalleled understanding of how customers engage with their brand in the real world, along with the ability to use that understanding to create AI-powered experiences that keep customers coming back for more.”
Punchh’s products aim to supercharge same-store sales by integrating with existing point-of-sale and ecommerce systems, enabling them to collect in-store and online data that inform customer profiles. AI algorithms tap these profiles to generate targeted marketing campaigns and offers with the goal of promoting loyalty, which in turn incorporates a range of engagement channels including online forms, Wi-Fi marketing, and bounceback offers via email, SMS, or printed receipts.
Punchh ships with a wealth of tools that allow its customers to manage and maintain marketing lists, including message throttling (which sets the number and frequency of messages sent to their customers) and a detector that removes suspicious or fraudulent users. From a unified dashboard, they’re able to orchestrate campaigns and create promotion codes and coupons on the fly, or tap one of Punchh’s bespoke services for greater customization.
Speaking of those services, Punchh Loyalty lets brands build flexible, stackable loyalty programs with spend and visit-based rewards and tiered memberships, plus a machine learning component that captures reviews and converts their sentiment into quantifiable metrics. As for Punchh Offers, it taps AI-powered promotions and trackable coupons in real time, eligibility for which brands can determine based on predefined or custom criteria or segments.
Punchh says its clients experience an 85% uptick in offer redemption rates on average and an 84% boost in loyalty participation rates, as well as a 58% loyalty check lift. It claims to have reached over 125 million consumers across 200 corporations with 80,000 locations, including Focus Brands (which owns brands like Carvel, Cinnabon, and Auntie Anne’s), Yum (Taco Bell, KFC, Pizza Hut), TGI Fridays, and Casey’s General Stores, the last of which was announced today.
There’s no shortage of cloud-based management platforms that promise to unify and make actionable customer data, as evidenced by the customer journey analytics segment’s growth to nearly $25.93 billion. Boston-based customer data and engagement SessionM raised $23.8 million in July for its loyalty solutions, while Mountain View startup CleverTap nabbed $35 million for AI that tracks customer engagement. But despite the competition, Sapphire Ventures managing director Jai Das asserts that Punchh’s suite is more holistic than most.
“Analysts predict ecommerce will account for just 10 percent 1 of total retail sales in 2019, which means about 90% of transactions are still taking place in store,” said Das. “There’s tremendous opportunity in brick-and-mortar retail, and brands are looking for ways to better understand their customers and build data-driven relationships that translate into increased customer lifetime value. Punchh’s solutions allow retailers to do that in a highly scalable manner, which is why they’re trusted by so many leading brands, and why we’re so optimistic on their long-term growth.”
Adams Street Partners partner Robin Murray, who plans to join the company’s board of directors, added, “Punchh is the undisputed leader in this category. They work with the biggest brands, have the most sophisticated technology, and drive real results for their customers. While everyone else got distracted by maximizing ecommerce, Punchh took the best technologies and practices from that space and applied them to physical retail. Now the world is coming back around — just look at Amazon’s purchase of Whole Foods — and Punchh is already 10 steps ahead of the game.”
In addition to its Silicon Valley headquarters, Punchh has a second U.S. office in Austin, Texas and global offices across Canada, India, the U.K., and Singapore. Currently, its global workforce numbers north of 320 people.