Bloomspot is seeking to rise above the noise of the daily deal market by using sophisticated analytics and deeper data, together with a focus on merchants and customer loyalty. The company believes its model is also much more aligned with merchants than most other deal providers.
This morning the company announced that it had raised $40 million as well as introducing a more performance-oriented model for merchants. I just got off the phone with CEO Jasper Malcolmson, who was an executive at Yahoo for a number of years.
While many other blogs are obsessed with VC financing I rarely write about it because it’s usually not terribly interesting to me. However Malcolmson made the valid point that Bloomspot wouldn’t have been able to raise this kind of money, given how crowded the market is, without showing impressive growth and a strategy of differentiation.
The company’s differentiation strategy is based on heavy use of analytics that enables it to offer impressive merchant guarantees. The crux of the merchant proposition is: if deal buyers don’t spend at least certain amounts then Bloomspot gives up its commission. Below is example spending data that Bloomspot collects by matching consumer credit cards and merchant credit card records.
This gives the company visibility into how much each customer is spending and whether that is above the value of the voucher. It also creates aggregate spending data by category and city.
In the graphic above a merchant can see the individual customer identity (blacked out here), number of visits, the spend per visit and total consumer spend. In the aggregate, this allows Bloomspot to sell in a very different way from other deal sites.
Bloomspot can talk to merchants about average spend or customer value based on its data and make spending predictions accordingly — in the same way SEM firms predict traffic for keywords by market and vertical. Again, the company will guarantee a certain level of customer spending (based on this data analysis) or it takes no commission. The spending projection is based on a quarterly review of the data.
This data also provides ROI transparency in a way that seems unique among deal sites and local offer purveyors. Bloomspot doesn’t capture 100% of the spend because consumers may pay cash or use a different credit card at the merchant location than they did to purchase the deal originally. But Malcolmson said Bloomspot is working on several ways to capture that additional data as well.
Bloomspot also offers rewards and incentives intended to create loyalty and repeat visits. After I visit a particular merchant (and spend more than the face value of the deal) I get a reward from Bloomspot (Bloombucks). The amount of that reward is directly tied to how much I spend over the face value of the deal. Malcolmson told me that Bloomspot users understand these rules so the Bloombucks aren’t purely a serendipitous gift; they operate as an incentive to spend more.
Finally the company is enabling private offers to top customers. This is similar to what Perry Evans’ Closely is doing with SocialSelect. LocalResponse, the social analytics and marketing platform, also tries to identify “best customers” to enable merchants to market directly to them. Bloomspot’s approach is the most fully realized version of this idea because it’s based on actual spending data.
Accordingly top customers get access to exclusive, private offers that are not made publicly available. The company is going further in the this direction — the direction of a CRM platform — in future releases. I was asked not to talk about those coming features.
I spoke yesterday with ReachLocal’s CEO Zorik Gordon who made the point that local businesses are now participating in online transactions (via deals and appointments) in ways that were not possible a few years ago. He sees things moving much more in the direction of “transactions” going forward as well.
I generally agree and spoke about what Demandforce is doing with scheduling and CRM as a model: getting into the heart of an SMB’s daily operations rather than simply providing marketing services at the periphery. Yell wants to do something similar with its recently announced eMarketplace strategy.
Bloomspot represents one version of the future of deals: more merchant friendly policies and tools, a greater focus on loyalty and movement toward becoming a true CRM platform.
They’re one to watch.