Offers Purveyor Bloomspot Differentiates with Analytics, Performance Guarantees

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.

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8 Responses to “Offers Purveyor Bloomspot Differentiates with Analytics, Performance Guarantees”

  1. Groupon: 1H Revs $1.5B, 135K Merchants says at

    […] Groupon will have to evolve the way it does business to make its offers more merchant friendly. I wrote yesterday about some of Bloomspot’s innovations that are pushing it into more of a CRM […]

  2. Deal of The Day ROI | chuckmahoney says at

    […] is on the right track by providing a CRM-like experience for customers using their service. review This entry was posted in CRM, Marketing. Bookmark the permalink. ← New Models for […]

  3. Todd Leiser says at

    Jasper and team are spot on. Combining acquisition Incentives, retention, loyalty and visibility to ROI, have been the holy grail for the 12 years I’ve been in this business. While it won’t be easy to scale, with the incredible noise the Groupon-clone army of salespeople are creating in the marketplace, those who can provide the CLEAR & simple answer to the “did it work long-term” question, win the day, the battle and the war.

  4. Greg says at

    I agree it’s a thoughtful approach and a preview of one version of the future of the segment. 

  5. Products to Loom Larger in Future Daily Deals says at

    […] Ultimately Groupon will expand in several directions, beyond pure marketing and new customer acquisition into more CRM-like functions (as Bloomspot as done). […]

  6. Yelp CEO: 50 Percent Deal Margins Unsustainable says at

    […] policies will inevitably come about. Indeed its already happening as some deals programs begin to focus more on loyalty than new customer […]

  7. Mike Frey says at

    It’s always been more affordable to promote loyalty and retain customers than to attract new customers.  The Groupons/Living Socials etc. of the world are making loyalty more difficult today… I’ll look forward to any successful program that helps with creating loyalty vs price, price, price…

  8. Greg Sterling says at


    An interesting question is how many consumers will choose price over other variables in a given scenario. It depends of course and there are often multiple considerations operating (availability, category, size of job, etc.) My guess — I don’t have any research to back this up — is that when a consumer has a preferred provider it will take a great deal to dislodge that loyalty. If the object of the transaction is a pure commodity or low-value service (e.g., smog check your car) then it’s different.

    However, on the other side, there are studies showing that general consumer brand loyalty (mostly around CPG) has gone down over the past few years. It may be that the recession has made everyone super price sensitive.

  9. Daily deal sites teach your customers to undervalue your business | Brand Failure says at

    […] I recommend checking out a service that focuses on merchant success, such as Whereas Groupon and LivingSocial focus on consumers. Related Posts:HOW TO: Build a Voice of […]

  10. Robert Barone says at

    I commend Bloomspot for launching a strategy that is more favorable to small busiinesses as compared to Groupon, Living Social and the other dozens of deal-of-the -day start-ups that are focused more on themselves and the consumer than the businesses themselves. Bloomsport is definitely on the right track; however, what most are ignoring is the main issue which is this business model is inherently inefficient. It is extremely difficult and few if any companies have been able to operate profitably solely servicing local business. Groupon has its own issues but they spent an significant amount of capital to grow to critical mass ($12 per member acquisition costs and an average revenue per member of $20). After you factor in operating costs, losses can be quite high. They have other issues but the fact that Facebook which has an installed user base in the tens of millions (a near zero user acquisition cost) found this model to be unprofitable. While a company like Bloomspot has temporarily separated itself from the pack by driving actual value and ROI for small businesses (I say temporary as it is very easy to copy) for a company to drive long-term investor value and profitability they’ll have to develop a platform that enables them to grow their merchant client base efficiently.
    I found Greg’s comment interesting. He poses a good question of how long will consumers choose price over more qualitative characteristics of merchants. In the short-term, consumers will be price sensitive but in the long-run that will change. My question is; How many yoga and hair removal offers can we consume in a lifetime, with the occasional whale watching trip?

  11. Greg says at

    Robert you may be indirectly addressing the challenge of relevance for daily deals. This is a point that is made repeatedly by people within the industry. In order to overcome consumer fatigue, they say, deals much become more relevant. The interesting question is how best to do that. Wantsa has a very interesting approach to that question. 

  12. Robert says at

    Thanks Greg, it is my belief through history and current events that these companies are going to have a very tough time scaling profitably. The success of deal-of-the-day is that it’s driven by deep discounts sent primarily via email and when someone sees the offer it’s a click and buy very simple. There are questions surrounding the efficacy of the model including relevance, and long-term ROI for local merchants. Bloomspot inspiring loyalty is an answer to providing longer term value for merchants. The Wantsa approach is unique and compelling as it captures the true essence of social media which is placing the power in the consumer’s hands. My business partner and I reviewed the idea of a requested sale two years ago but realized that it needed to be applied at much greater scale; we did conclude that it has legs however. Wantsa empowering the consumer to get offers in their area through a request model is compelling but to expect offers to compile quickly enough for various merchants and offers to materialize is a tall order. The results will likely lead to most requests to be unfulfilled, leading to a high attrition rate of unfulfilled consumers. No matter the spin that one puts on a model, at the end of the day it has to achieve scale efficiently and profitably.

  13. Greg Sterling says at

    There’s a longer conversation about Wantsa and its model. The request a deal is one aspect of the business.

  14. Savored: Another Interesting Flavor of Daily Deals says at

    […] a final note there’s a totally closed loop here, online to offline. This does Bloomspot one better in terms of customer data and […]

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