Does anyone out there remember S&H Green Stamps? Well, back in the day, people would earn these stamps from grocery stores and other local merchants every time they bought something, and paste them into books, and once you filled up a certain number of books, you could win a toaster, or other sorts of prizes. It was fun, it was easy, and it really made you want to buy your stuff from participating stores…
Derek Webster has applied modern technology to this classic idea to create a company he calls LocalBonus. It’s an easy-to-use consumer based loyalty program, designed to support commerce with local mom and pop merchants such as restaurants, bars, florists and wine stores. Consumers use their existing debit or credit cards to automatically earn rewards simply by shopping at local businesses. Sign up is quick, and once in the system, there’s nothing left to do but go shopping and accumulate rewards.
Inspired by his years of travel in his previous job, Webster wanted to develop a program similar to the frequent flyer programs and hotel loyalty programs that captured his attention. He has created an easy to use product that allows customers to search for stores by category or location. Shoppers can patronize as many different LocalBonus stores as they like, earning rewards in one single currency, known as “LocalBonus points,” in order to accumulate credit towards a cash bonus. Not bad, for merely going about your daily routine.
Derek’s business experience is rooted in the payments industry, with an early stint at E-Trade, launching and developing their credit card business and loyalty program. Then it was on to Stanford Business School and later, a position at Oliver Wyman, where he worked at online advertising and technology strategy. His focus on retail banking, payments and loyalty work led to the development of LocalBonus back in March of 2011. By July, he launched a public beta test in New York City to great response, and began working on a further expansion.
At heart, Webster is a consumer marketer. He loves good products that are easy to use and make people’s lives better. He’s also a strong believer in buying local and believes that LocalBonus offers a more sustainable model for merchants than the daily deal model that is currently extremely popular. “When you lead with a massive discount, it’s hard to get a consumer to come back and pay full price.”
In April of this year, LocalBonus relaunched with $500,000 of seed funding and four additional cities onboard – Denver, Seattle, Sacramento and Portland, Oregon. They currently have over 800 retailers participating, with plans for a mobile app as well as expansion to other cities currently in the works.
For Webster, the biggest challenge has been integrating into the credit card infrastructure, as a lot of the technology is older and not very user friendly. Fortunately, he has lots of industry experience, as well as an ace CTO with deep technical experience designing systems for retail banks, so they’ve been able to avoid a lot of traps. On the positive side, it is always rewarding to receive emails from customers who have been happily surprised by their experience in earning cash rewards or adding one of their favorite merchants to the network.
I asked Derek his thoughts about becoming an entrepreneur. His words have a familiar ring to them: “I work harder, I stress more, I work on weekends more and I sleep less than I ever did, even as a management consultant. I wouldn’t trade it for anything. I find it extremely rewarding and it’s been a fun experience to build a company, build a team and build a product. But that doesn’t make it easy; it’s still extremely challenging.
As founder and CEO of a company that supports local business development, I wouldn’t expect him to respond in any other way.
Listen to the full interview here:
Deborah Oster Pannell is a writer who specializes in the arts, culture, special events and creative projects of all kinds. As Director of Communications for the tech start-up eventwist, she also manages their blog. Some of her favorite work is featured on modernlifeblogs.com, lizkingevents.com, and her own blog, shesaysyes.wordpress.com. Currently she is launching Project Mavens, a literary, editorial design collective, with partner & writer Lillian Ann Slugocki. On Twitter @projectmaven.
Category: Entrepreneur Interviews