500friends, the startup behind a social loyalty program for retailers called LoyaltyPlus, announced today that it has closed a $5 million Series B financing round led by Fung Capital and existing investor Intel Capital, with additional participation from Crosslink Capital. Previously the startup had raised a $4.5 million in Series A funding in March 2012, and the company has raised almost $11 million in total funding. The Y Combinator alum’s software is used by online retailers including Hotels.com, Shoebuy.com, and brands like L’Oreal and Yves Saint Laurent.
BetaKit spoke with 500friends COO Matt Gilbert about the startup’s traction to date and the latest funding round. “It’s an end-to-end solution for retailers looking to deploy a next-generation loyalty program or upgrade from an existing one. Historically, loyalty programs have been ‘spend-get’ type of programs,” said Gilbert in an interview. “With the adoption of the smartphone and proliferation of social networks, there’s a significant opportunity for retailers to be in a position to recognize, reward, and measure all the behaviors that matter to their brands as opposed to simply focusing on the transactional data.”
Built on the premise that people show their loyalty to brands in a variety of ways, not just by buying their product, the LoyaltyPlus systems lets retailers reward customers for almost anything they do on the web, whether it’s writing reviews, status updates on Facebook, blog posts, tweeting, checking in on Foursquare, and referring friends. In return brands can offer personalized deals, and gamify the experience by offering points for specific actions and setting up different badges and leaderboards.
The SaaS-based platform starts off at $2,000 per month for its core functionality and has an additional tier for larger multi-channel retailers. For the enterprise account, the company offers more customization, strategic consultation, and a mobile software development kit (SDK) among other features.
Loyalty is a space that has seen a lot of activity in the past year, with several startups trying to increase the lifetime value of a customer. There’s Extole and its social advocacy platform, Belly’s approach, which looks to replace traditional punchcards, all the way to Swipely tying credit card transactions with a retailers CRM. 500friends is targeting online shoppers, as opposed to companies like Shopkick and Shopular that reward customers primarily for their offline shopping behavior. Though Gilbert said he believes they’re the most comprehensive solution on the market, they’re certainly not the only one, and will have to fight to win over retailers who are presented with a variety of loyalty options.
The startup will leverage the new round of funding to add talent to its engineering and sales team, while continuing to add features to its platform. Gilbert said the company wants to get to a point where it can help deliver its data and insights into the hands of sales associates on the floor to let them know who their most loyal customers are. With companies like Google, Square, MasterCard, and Visa looking to tie loyalty programs into the point-of-sale, the company will need to stand out in a space that will increasingly be tied into the transaction process. The new round of funding should help, and with a roster of ecommerce clients already using the solution, it should be able to learn from their use.
