- Rewards are a long-standing strategy for brands to get consumers to buy. But consumers can lose track of the various loyalty and rewards programs across brands.
- A group of startups have arrived on the scene offering one-stop-shops for rewards, hoping to prove more effective than traditional advertising.
- Rewards range from cash back and points you can spend with brands like Amazon and Delta, to experiences like video chats with celebrities.
- Here are 4 startups that are changing the way consumers can rack up rewards.
- Click here for more BI Prime stories.
For brands, reaching Gen Z and millennial customers is an ever-moving target.
As consumer attention splits across various streaming and social media platforms, it can be hard to know where to reach the right audiences.
But a few startups are offering brands a way to boost traditional advertising — rewards.
To be sure, rewards aren’t new. Retailers, airlines, restaurants, and credit card companies have long enticed consumers with memberships, points, and cash back. But consumers have to keep track of all those loyalty programs.
So it can be hard for individual brands to get consumers’ attention, with rewards and offers often buried in inboxes filled with countless promotional emails.
Honey is a browser plug-in that checks for discount codes when shopping online across thousands of brands. And if Honey’s discount drives a sale, it charges merchants a commission.
And Honey’s value proposition was clear — it was acquired by PayPal last year for $4 billion.
With a similar strategy to Honey, these startups are bringing retailers, airlines, and restaurants together onto single platforms to offer consumers one-stop-shops for rewards as a way to reach new customers and boost sales.
Dosh, for one, promises to “close the gap” between digital ads and sales. And Drop offers a platform for brands to “acquire and engage customers in one place.”
These apps are free for consumers, instead charging partner brands fees or commissions on sales.
From cash-back offers to social media-linked perks, these four startups and their VC backers are betting that rewards-made-easy is the best way to get you to buy.
Dosh
Headquarters: Austin, Texas
Founded: 2016
Total raised: $87 million
Last round: $20 million Series B (and $20 million in debt financing) in January 2019
Key investors: Anthem Venture Partners (Abra, Bird, DailyPay), Goodwater Capital (Monzo, Stash, TikTok), PayPal Ventures (Acorns, Ellevest, Tala)
Dosh is a cash back startup that aims to close the gap between digital ads and in-store purchases.
Dosh partners with brands like Dunkin’ Donuts, Sephora, and Walmart to offer consumers cash back rewards for shopping in-store and online. Users link their credit cards and Dosh applies cash back on relevant transactions. Dosh offers both in-app deals and automatic cash back with certain merchants.
The startup is free for consumers, and charges retailers a percentage of each transaction. Accumulated cash can be transferred to a user’s PayPal or bank account, applied to future purchases, or donated to charities.
Dosh increases average order values (AOV) by 40% and increases frequency of purchases by 29% on average, according to its website.
Last year, PayPal announced it would offer rewards on its Venmo debit cards. Dosh, backed by PayPal Ventures, powers Venmo rewards.
Drop
Headquarters: Toronto, Canada
Founded: 2015
Total raised: $75 million
Last round: $44 million Series B in March 2019
Key investors: ff Ventures (Clarity Money, Indiegogo, Socure), New Enterprise Associates (Coursera, Robinhood, Letgo), White Star Capital (Butternut Box, Freshly, Tier Mobility)
Drop is a rewards startup where users can shop within its app to earn points, or link their credit and debit cards to earn points on other purchases. It works with companies like Boxed, Capital One, and Casper to offer points-based rewards to Drop users in an effort to acquire new customers and increase the amount they spend. Drop also provides its partner companies access to transaction and spend data.
When users accumulate enough points, they can be cashed in at retailers like Amazon, Starbucks, and Uber.
Drop also has a Chrome plug in, similar to Honey, so shoppers can earn points when online shopping.
Crystal Cox/Business Insider
Seated
Headquarters: New York, NY
Founded: 2017
Total raised: Not disclosed
Last round: Not disclosed
Key investors: Not disclosed
Seated, an app-based restaurant rewards startup, gives diners up to 30% cash back for dining out at its partner restaurants. Take-out orders don’t apply, as the startup’s main selling point is filling seats in its participating restaurants.
Users book reservations through the app, send in a picture of the receipt, and receive cash back rewards that can be used at brands like Delta, Nordstrom, and Uber.
Seated is available in New York, Chicago, Boston, Philadelphia, and Atlanta.
Sweet
Headquarters: New York, NY
Founded: 2016
Total raised: $7.2 million
Last round: $5.8 million Series A in January 2018
Key investors: Not disclosed
Sweet connects merchants, musicians, and influencers with users who want to be rewarded for liking, sharing, posting, and commenting on social media.
Reward tokens, called “sugar,” are given to Sweet’s users who take specified actions on social media channels. Many of Sweet’s clients are musicians and performers, and rewards range from experiences like video chats with musicians to brand merchandise.
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