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With Mobile App Cardify, The Founder Of Ad.ly Takes On His Next Challenge: Improving Customer Loyalty

Cardify logo

Earlier today, David Lee of SV Angel said that one of the hottest areas to watch in tech right now is the area of mobile commerce and companies that can “close the loop” between online and offline transactions. Today sees the launch of Cardify, a mobile app and merchant dashboard that aim to solve that challenge from the direction of customer loyalty.

The idea behind Cardify, a contestant in the TC Disrupt Startup Battlefield, is this: the need to identify and engage customers is a priority all businesses, but existing loyalty solutions are not delivering the goods. Traditional punch cards are messy and don’t add much value for either the business or customer. Solutions with more technology to them, such as QR codes, can be tedious.

Moreover, loyalty services that give money back to users, or daily deal services like Groupon that do not help with return business do not help build a consumer relationship.

Cardify (not to be confused with the e-card app Cardify) aims to solve this by way of a mobile app, currently in iOS only (with Android to come) in which consumers get instant points towards perks and rewards at their favorite local merchants when they pay with their credit cards. (For now, these get entered once, manually, although in future, founder Sean Rad says that users will be able to photograph them and enter the details in other ways, too.)

Unlike other loyalty programs that often take at least a day for the reward to be processed, these points are earned in real time right after their purchase and don’t require consumers to “check in”, punch a card, or do any work.

On the merchant side, businesses get a simple dashboard that they use to create their loyalty rewards and monitor how they are used, and to track individual consumers. There are some nice touches to this, such as the fact that businesses are able to use the dashboard to identify when consumers come in to the premises: since users sign in with Facebook to the app, their pictures appear on the dashboard and can be used by a business to develop a more personal relationship.

Cardify’s business model is based around charging merchants a monthly fee for every location that uses Cardify, which works on a sliding scale based on the number of businesses in the deal.

There is some potential for how Cardify might grow as a business: because the app works by way of credit card details, there is potential future transactional element for Cardify. On the other hand, Cardify could also link up with other services, like Square or PayPal’s Here or one of the various other players in this space, that want to add more stickiness to their payment apps. There will be an API coming soon to integrate into other apps — whether they are payment apps or those created by businesses for other purposes, such as in-app shopping, to add more of a physical-store experience to the app.

“When we look at the market we feel there are so many who have figured out mobile payments. We are looking how we can lower other kinds of commercial friction,” says Rad. He notes that his company is already in advanced talks with one of the big players in mobile payments.

Now, we all know there are a million loyalty plays out there right now. Among them are the credit-card-based loyalty program Swipely; Foursquare and Groupon getting involved in this space; Facebooks recent acquisition Tagtile; Google’s Punchd — and that’s before counting all those retailers that have built their own loyalty apps already. Still, no single player has yet to make significant inroads in a service that aggregates all of this in a critical mass, and that leaves Cardify (and the rest) with a lot of opportunity.

But Cardify has some very significant cards up its sleeve that could give this loyalty play a winning hand.

For starters, Rad was also the founder of Ad.ly, the social media/celebrity endorsement company: that gives him some experience and knowledge of how to take a tech idea and make it go viral with consumers.

Perhaps more significantly, consider Cardify’s backer, media giant IAC’s Hatch Labs, which Rad calls “a home for people who want to swing to the fences, with the backing of IAC.” Through IAC, Cardify has picked up $750,000 in seed funding, but it also has access to a network of 300 million consumers via IAC’s properties and some 1 million local merchants through IAC’s search portals UrbanSpoon and CityGrid — connections it will be using to scale up.

Apart from the fact that no single player has cornered the loyalty market yet, there is an existing business gap in the market that also gives Cardify a strong case for winning business. A study from the Kellogg School at Northwestern found that half of a local merchant’s revenue is generated from only 15 percent of its customer base. That means if you can find ways of further tapping those most loyal users — or creating services that can boost that average 15 percent figure — a retailer can be on its way to growing revenues significantly.


With Mobile App Cardify, The Founder Of Ad.ly Takes On His Next Challenge: Improving Customer Loyalty