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Customer Loyalty Startup Front Flip Raises $3.75 Million For Its Digital Scratch Cards Platform

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Although a number of mobile customer loyalty and rewards companies have debuted over the years, a good many of these new efforts have been focused on taking the offline concept of the 10-hole punch card and transitioning it to mobile. Another startup called Front Flip, which today is announcing $3.75 million in Series B funding, has a different take on loyalty – it wants to make these programs more fun, and more like a game you play than a task to complete.

This latest round of funding comes from Peter Brown (former chairman and CEO of AMC Entertainment), Gary Fish (CEO of FishNet Security), Lance Melber (sold eSmartLoan.com to Capital One for $155 million), and the Brandmeyer Family (founded and sold Enturia to Cardinal Health for $490 million).

FF_Unopened_GiftThe year-old company was started by brothers Sean (CEO) and Matt Becker (head of product), the former a serial entrepreneur and the latter previously involved in the telecom space. The idea for Front Flip, which uses QR Codes to simulate scratch-off tickets, came to Matt one day while waiting in line to buy coffee, his brother tells me.

“He’s an avid coffee drinker,” says Sean, “and he was standing in line and realized: ‘they have no idea who I am. I come in here every day, I’m one of their best customers, and they don’t ever say ‘hey Matt, thanks for being a great customer, how about a free pastry today?'” Sean explains. Matt, upon realizing this, walked out the door and went down the road to Starbucks. (Of course, Starbucks staff wouldn’t necessarily know your name either, if they didn’t ask you at point-of-sale, but at least they have institutionalized a rewards program.)

This frustration, though, led to the idea that later became Front Flip. Essentially, it’s a digital scratch card. With apps for both iOS and Android now available, customers can scan a QR code provided by the business for a chance to win a discount or freebie, or even a “grand prize” like a free burger each week for the rest of the year. These QR codes can be printed on anything the business likes – in store signage, to-go bags or cups, cards, receipts, etc. For drive-thru restaurants, the code can be printed on a sticker for ease-of-use.

Customers scan the codes, then “scratch off” the ticket to see their prize by rubbing their finger on the screen. (See the video here for an example.) They can also post their win to social networks, to spread the promotion even further.

By default, the in-store scans are time sensitive, offering customers 30 minutes to redeem their prize, like a free or discounted appetizer, drink, dessert, etc. The drive-thru codes, meanwhile, give users around four days to redeem their code. Sean tells me that the company is now working to bring its QR codes to Facebook as well, where they can be used directly on businesses’ Facebook timelines or pages. And yes, that means users would have to scan their computer screens with their phones in these cases.

The apps, which have been downloaded half a million times, either tap into Facebook through the initial sign-up process (around half of users sign up via Facebook), or they walk the users through a few short Q&A’s before getting started. This helps to identify customers as male or female and their age, allowing businesses to better target them with offers. The app also tracks frequency of visits based on users’ scans, to help determine their loyalty.

Today, the company is working with a number of franchises and local businesses in its home base of Kansas City, and has a sales team of sixteen establishing its base in Denver, Dallas, Atlanta, Minneapolis, and Houston. The company also has some agreements in place with national chains, but can’t announce anything at this time.

To date, Front Flip has signed McDonald’s, Wendy’s, KFC, Burger King, Hooters, Dickey’s BBQ, Firehouse Subs, Cici’s Pizza, and Hungry Howie’s franchises, as well as other local restaurants across its current markets. Its business customers pay a flat rate of $100 per month per location for full access to its platform, which includes not just the rewards platform itself, but also training and the ability to target lapsed customers through gifts and discounts. Sean says that in comparison with email promotions, which sometimes don’t even bring in a single customer per day, Front Flip averages five to 10 people daily.

Based in Kansas City, and now a team of 42 total, Front Flip has raised $7.7 million to date from its current investors, other angels and more, including the Archer Foundation.

The company competes with a hefty lineup of mobile loyalty apps including, but not limited to, the likes of BellyPunchTabLocalBonusFiveStars, LevelUpFlockTagCardStarPerkaPerkville, and many more.