Sundrop Mobile Raises $900K, Offers Mobile Loyalty Solution To Daily Deal Merchants

In a recent post about Groupon’s multi-billion dollar valuation and revenue estimates, colleague Erick Schonfeld talked about how creating repeat, loyal customers (and not just deal-happy coupon clippers) is essential to the daily deal site’s long-term valuation — and success.

When Groupon offers 50 to 70 percent off a meal at a local pizza place, for example, the restaurant (and Groupon’s site) tend to get flooded with eager pizza lovers, but that traffic really just translates to lead-generation and marketing marketing for the business. Which is great, yes, but Groupon hasn’t yet figured out the key piece to the puzzle: creating a reliable way to measure how many of those customers end up returning to the pizzeria to pay full-price and offering the local business ways to keep ’em coming back.

Florida-based mobile loyalty solution Sundrop Mobile is hoping to address this very problem. Sundrop’s mobile service enables daily deal merchants like Groupon to capture data about their deal-redeeming customers and provides them with a way to create repeat, loyal customers.

Sundrop partners with point-of-sale software solutions like Micros to take those plastic loyalty cards out of day-to-day transactions by replacing them with your customers’ mobile phone number. This allows your business to more easily distribute rewards as customers reach milestones in your program, monitor email metrics and coupon redemption rates, and provide reporting capabilities — by going directly to their phone.

The key, though, is that Sundrop provides your small business with the tools to rapidly build a large, opt-in database of customer contact information and data. It also enables multi-channel outbound communication via text, email, and voice broadcast to make the point-of-sale (and beyond) more social. Combined with a scalable database, Sundrop’s communication channels makes it easy for your mom-and-pop shop to measure customer retention and keep them updated on new sales, deals, and offers.

Sundrop CEO Travis Priest says, for example, that the company’s database can capture 50 percent or more of a merchant’s regular customer base in 60 to 90 days. He cited the Smackers Self-Service Frozen Yogurt in Columbus, Mississippi as an illustration, which built a 6,673-member database with social media reach of 205,059 potential viewers in 5 weeks. The social media traffic generated $3,000+ for the small frozen yogurt business over that period.

To further complement Sundrop’s sales and marketing expansion efforts, the company today announced that it has closed a $900K series A funding round, led by Vocap Ventures. Vocap is a new private equity fund that invests between $500K and $2.5 million in early-stage companies.

Over the 9-month period since its launch, Sundrop has focused on expanding its direct and channel presence in the hospitality sector, but with its new funding round, Sundrop plans to bring its mobile loyalty program into retail, convenience, and grocery as well, Priest said.

As to a revenue model, Priest said that Sundrop charges businesses $99 a month to use its service, plus an additional 5 cents for text messages.

I think most of us aren’t exactly eager to increase the level of re-marketing endeavors that attempt to barrage our mobile phones, but Sundrop’s scalable database and measurement tools could be the key to Groupon and its many clones proving their long-term viability to those skeptics out there.

Update: On May 16, 2012, Mercury Payment Systems announced that it would be acquiring Sundrop Mobile for an undisclosed amount. Acquisition statement below:

Mercury Payment Systems(R) today announced the acquisition of Sundrop(R) Mobile, a pioneer in mobile and social loyalty marketing. It marks Mercury’s first acquisition since its founding in 2001, as well as the first card-less mobile loyalty program integrated with payment processing.

“Sundrop’s forward-thinking loyalty product is seamlessly integrated to point-of-sale (POS) systems, making it a perfect match for Mercury,” said Matt Taylor, Chief Executive Officer. “Mercury has been at the forefront of POS-integrated payments acceptance, and our technology is now built into more than 500 systems. With this acquisition, Mercury will leverage our extensive developer channel presence to lead the way in integrated POS mobile and social marketing.”

Following the integration of Sundrop’s operations and technology, Mercury’s POS partner network will begin offering their merchant customers an innovative mobile loyalty solution that is also integrated with Mercury’s secure payment processing platform.

“Most importantly, this technology blend will help merchants increase profitability with a mobile loyalty program that makes it easy to engage and reward their best customers,” Taylor said.