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The Virtual Coupon Is The Penny Dropping

As SavingStar adds Buddy Media CEO Michael Lazerow to its board, are we seeing the evolution of a virtual currency for social networks? The Zynga IPO should provide another clue.

David
Rochon

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SavingStar CEO David
Rochon
says that his company is poised to disrupt the “arcane and
monolithic” grocery couponing industry with a national plan to link real world
shopping to social currencies.

Though not quite there, the innovation Rochon has in mind is one that links consumers to brands and lifestyle
choices they are passionate about by virtue of virtual currencies.

The strategy could involve the evolution of a Facebook
virtual currency, which would enable brands to discover the passionate interests of those consumers and link them to the right
offers.

According to Rochon, who formerly served as President of
U-Promise, the current plan is to use a national network of over 24,000 retail
outlets (not all of them in the same brand or chain) and distribute virtual
coupons to customers, using data gleaned from shopper loyalty cards to create
rewards exchangeable for accrued points.

Buddy
Media CEO Michael Lazerow just joined the company’s board
, so that should
signal a tight focus on strategy that relies on virtual communities and social
networks.

“We should be delivering coupons to consumers that are relevant
to their interests. It’s a step function change to what is currently available,”
Rochon says in a phone interview Friday.

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The news that Zynga is
filing an IPO
will make anyone sit up and take notice of this other story
that has happened in the coupon space.
The other shoe is just about to drop. If you want to know the future of
couponing, it’s in the link between shopping in real life, and the virtual
commerce markets that exist, or will begin to exist, within the social
networks.

Rochon says that delivering digital coupons to consumers
will eventually enable consumers to rack up digital points, or social / virtual
currency dollars, which consumers can then collect to use with other companies.
This kind of behavior works best when the social network of their choice
enables them to use virtual currencies to buy experiences, items, or other
virtual goods, something that the world’s largest social network platform,
Facebook, does not currently allow.

Says Rochon:

I can envision the opportunity.
It’s a digital currency and that’s for a consumer’s choice. it’s consumer
choice about where you want to shop. Today, we have a network of thousands of
stores, and you receive the value in the way that you want to receive it. I can
see us working with Facebook to allow members who want to buy a virtual pig or
use the currency that Facebook would potentially want to make available for
their consumers.

This makes even more sense if you consider that in 2009, grocery
outlets were responsible for spilling out into the world 360 billion paper
coupons. Most of them were thrown away. and 90% of them were distributed in
Sunday newspapers. We have seen the figures that show us where the print
newspaper industry is headed.

The
idea of having a model that allows for consumers to transfer shopping
experiences into branded relationships and then spending currencies meaningful
to those brands should entice retail owners. Zynga, anyone?

The Process

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So, how will SavingsStar implement this? According, to
Rochon, it’s a process of using an “aggregated” collection of supermarkets
around the country and collecting their data, and distributing to their
customers. Think of couponing being a publishing industry of its own, rather
than operating on the back of the newspaper industry.

“We have aggregated 24,000 supermarkets that provide us data
on UPCs being purchased in the stores, tracked by your supermarket loyalty
cards,” says Rochon. The stores then pass up that data to SavingsStar and “We
are then able to market to customers. We post the reward to your account, and
then you get to choose the value you want.”

The Reward

The rewards and value of this process has to do with
consumer interests and “passions,” says Rochon.

In the future, we are going to
offer more consumer options–like conversion to airline mileage programs, so
you can shop for groceries and save miles to go to a family trip, or Facebook
credits, if that store has the capability of doing that. Where everyone else is
just focused on discount element at point of sale, we create the national
network and deliver different options to consumers.

As time goes on, Rochon says, the company will be
distributing white label opportunities to “very large organizations.” Is he
thinking about Wal-Mart? American Airlines?

About the author

Douglas Crets is a Developer Evangelist and Editorial Lead at the Microsoft BizSpark program. He works to tell the story of thousands of startups hosted in the Azure cloud platform built by Microsoft.

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