Loyalty, shaken up
New West Loop startup looks to take deal industry by the horns
02/22/2012 10:00 PM
A new player is entering the field of tech startups trying to help local businesses sell their wares and attract new customers, and they’re calling the West Loop home.
But whatever you do, don’t call them a daily deal site.
Dubbed Ox & Pen, the new company is hoping to shake up the crowded industry by offering a list of promotions that its users can access any time, rather than having to snap them up only on the day they’re available.
“The genesis was the daily deal model, but I think it’s really evolved into something that has more differences than similarities to the daily deal,” said the company’s founder, Andrew Gluck. “We talk to businesses, and they see that we’re not a direct competitor — they really view us as something different.”
By providing a consistent list of promotions that people can browse every day, it creates much less pressure for customers to snap things up immediately, perhaps buying something they’ll never use. Instead, they use the discount when they’re actually at the shop, not paying anything up front beforehand.
“One of the limitations to the daily deal is you get one deal a day, and that’s it. We’re creating hundreds of promotions that our members can access every single day,” Gluck said. “If you want a massage, don’t just wait for one to come into your inbox from a daily deal — you can search for that at your leisure.”
But perhaps most interestingly, they’re creating a new way to rack up loyalty points. Instead of drinking 10 cups of coffee and getting the 11th free, Ox & Pen users can buy stuff anywhere in the network — coffee, sandwiches, even eyeglasses or dental work — and redeem their points anywhere in the system.
The idea is that while the discounts will get people in the door at Ox & Pen’s business partners, the loyalty point system will keep them coming back.
“If someone lives on the other side of town, and they know they’re not going to get to a coffee shop 10 times, if that coffee shop has its own loyalty program, it doesn’t provide much incentive to come back,” Gluck said. “With our platform, you know you’re going to get points that you can redeem elsewhere, so it gives that business an incremental customer. Even if it’s just a couple stop-ins, it’s a sale that they maybe wouldn’t have made otherwise.”
The Ox & Pen iPhone app is currently being vetted by Apple before heading to the App Store, but Gluck said they’re planning on launching the service soon after their app is approved, once they work out the launch’s final kinks. They have an Android version, as well, that’s ready to go.
Once it’s up and running, Ox & Pen’s users will be able to browse promotions on the company’s website, but to actually use them, they’ll need a smartphone. That’s because to use the deals, they’ll actually need their phone to cash in on them. They scan a QR code at the register to prove they’re actually at the shop, which then registers on the shop’s computer.
By scanning the same QR code, they can earn loyalty points by checking in — and even more if they share their check-in on Twitter or Facebook. Once they’ve checked in, they can also earn more points by writing a review of the business.
They’re still adding more businesses, but they’ve already got about 50 shops on board with the service — including several near their home base in the West Loop. In a demonstration Tuesday afternoon, Gluck showed off a $40 for $20 promotion at Randolph Street’s Porkchop and a free cannoli with the purchase of a sandwich at nearby J.P. Graziano. Ora Dental, Vision Optical Boutique and HM Day Spa are also on board.
While the idea was originally Gluck’s, he’s partnered with Peter Huften to play out the idea, and they’ve brought on a staff of seven employees to flesh out the business before launching it.
Huften and Gluck both came from finance before starting Ox & Pen, and they both invested $1 million of their own cash to start it up. That should carry them through the next 18 months without having to seek outside cash, Gluck said, but once they get moving, they hope to attract more funding.
Eventually, they’re aiming to expand outside Chicago, but for now they’re aiming to differentiate themselves from the pack.
“The first thing is, it’s heavy lifting right now. We need to roll out, and we need to distinguish ourselves, and we don’t need to displace anyone — it’s not us or them,” he said. “It’s ‘Can we carve out a niche that speaks to people, speaks to members and speaks to merchants, and provides a comprehensive alternative to what’s out there.’ I’ll know we’re succeeding when that’s very clear.”