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Let’s say you’re a mom-and-pop coffee shop.

Some of your customers are regulars, but most don’t return for a second visit.

Small business marketing platform FiveStars has targeted businesses with 100 locations or less that want to build their customer loyalty. Today, the San Francisco-based company is expanding its repertoire, announcing a new tool that enables wider campaigns for small-to-medium-size businesses (SMBs).

Called Promotions, the new offering is designed to offer incentives via email, SMS, or push notifications to anyone who has visited the local store and signed up with their phone number or email address.

Victor Ho, CEO and cofounder of FiveStars, told me that Promotions is more useful to small businesses than a Groupon coupon.

Most Groupon users never return after their first, discounted visit, he said, largely because of its indiscriminate offering of coupons. By contrast, Promotions is targeted toward people who have made a purchase in the store at least once.

“Why would you run a Groupon if you can just target people who haven’t been back to your store in a year?” he asked.

Promotions knows who has purchased and when, because it has access to the store’s point-of-sale (POS) system — the modern electronic cash register. This means that, when a customer buys a cup of coffee and a muffin and agrees to provide a phone number or email address to get offers, there’s a sales history to help define the customer.

A screen from FiveStars' new Promotions.

Above: A screen from FiveStars’ new Promotions.

Image Credit: FiveStars

This small store can populate what Ho describes as its “super simple, super lightweight CRM” with sales behavior, separating regulars from one-timers or occasional customers.

“To celebrate the addition of bagels to our morning lineup of muffins,” a message to customers who haven’t been back in a month might read, “you can now get one bagel free with any purchase.” There are no limits on the number of messages a retailer can send.

Ho said that beta testing of Promotions showed response rates of about 10 percent, a high rate due to the targeted nature of the message to existing customers.

While Promotions is designed for discretionary campaigns — product launches, holidays, or slow days — for large groups of customers who have made a purchase at the retailer at least once, FiveStars’ main marketing automation platform, AutoPilot, is tailored for regulars and set up for automatic marketing.

Launched in September 2013, AutoPilot conducts behavior-based campaigns, automatically sending out incentives to the most regular customers without the merchant having to manage them. At signup, merchants decide what kinds of campaigns they’re most interested in.

Ho noted that there a number of competitors in the customer loyalty space, Belly and LevelUp among them. But, he added, “other loyalty programs don’t integrate with POS systems,” a differentiator that allows FiveStars to build on customer sales history.

“We’re the only ones that can track your customers’ in-store behavior and [build] on top of that,” Ho said.

FiveStars, he said, is now the “largest loyalty and marketing automation program for SMBs in the country,” with over five million customers and 6,000 merchants.

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