Silicon Valley company Mowingo is one of many startups making it easier for retailers to form ongoing relationships with their customers to offer rewards, incentives, and deals. The company offers a free iPhone and Android app that allows consumers to create a virtual mall of their favorite businesses, while giving merchants a dashboard to offer deals, promotions and event invitations. The company launched with its first merchant partner, a San Francisco McDonald’s, in October 2011, and has since added additional franchisees and small businesses. It will also be launching in hundreds of McDonald’s locations in the U.S. this summer, along with a variety of small business customers.
Mowingo co-founders Ehud Grunfeld, a former VP at Quattro Wireless (acquired by Apple), and Daniel Dreymann, the former founder of email certification startup Goodmail, started working on the company in March 2011. “We started developing the idea for Mowingo because we both shared the same strong conviction that unless brick-and-mortar businesses embrace some kind of mobile solution, they’re doomed,” Dreymann said in an interview. This led them to create virtual mall apps that allow consumers to customize the tenants, saving merchants from developing apps, and saving consumers from downloading an app for each business they frequent. “At small places, they don’t have the resources to develop an app, maintain it, and even if they did, as a consumer you don’t want to download 50 different apps to interact with the 50 places that you patronize,” he said.
Once a user downloads the app, they can create their own virtual mall composed of stores they like, or businesses they visit often. Once they follow a physical location, they get access to promotions and seasonal specials, everything from event invitations, to special shopping events, and coupons.
Merchants get access to a dashboard, where they can update their product catalogs, create promotions, and view analytics about customers who are using the app. Once a merchant signs up for Mowingo and creates their promotions in the app, they can download hard copy promotions including banners, flyers and letter-sized signs to promote in-store. The signs include a location-specific QR code and unique URL that customers can follow to download the app. Based on the business that leads a user to download Mowingo, they’ll see a co-branded app – for example, if a customer downloads Mowingo after scanning a QR code at a McDonald’s, the app will be branded “Mowingo, brought to you by McDonald’s.” Merchants often provide incentives to download Mowingo, for example offering a free coffee upon downaload.
Mowingo also has a patent pending feature that allows merchants to detect fraudulent coupons without integrating the app into their POS system (by assigning unique bar codes or numbers to each coupon). To prevent customers from taking a screenshot of a coupon and using it several times, when a coupon is redeemed on Mowingo a two-minute countdown begins in big white numbers on the screen. Cashiers are taught to look for that dynamic countdown, and if it’s not present they know the coupon is a fake.
Originally the company was going to charge merchants based on performance, but they’ve now moved to a subscription model. The monthly fee depends on the number of consumers who follow the business, starting at $19.95 per month per location, and go up to $200 per month per location depending on follow volume.
While originally Dreymann said their target market was small businesses, shortly after developing the apps they met with a McDonald’s franchisee who wanted to implement it at his location. They did a pilot in that San Francisco McDonald’s in October 2011, and that location now has over 1,100 followers on Mowingo. That led them to expand to other franchisee locations, and they’re currently live with 24 McDonald’s locations, and have formed a relationship with the McDonald’s corporate team to launch in several hundred in the Midwest and California this summer.
While the company will continue to target small businesses, they’ve also added functionality to the merchant platform to support national brands and franchises. The dashboard now allows single franchisees the ability to send out a deal to one location; owners of multiple locations to send out deals to all of their locations; and national brands to send out deals to their full list of locations across the country.
Though any business can implement Mowingo, Dreyman said the most successful customers are ones with high foot traffic and repeat customers. Right now Dreyman said merchants who use Mowingo in a high foot traffic location can add a couple hundred customers per month. “Regardless of whether it’s retail, food or services, as long as this is a service you’re going to visit multiple times during the year, then it lends itself well to Mowingo deployment,” Dreymann said.
Mowingo raised seed funding in June 2011, and plans to raise a Series A round in the fall. Though the site is currently only available to U.S. businesses and consumers, Dreymann said he wants to launch it internationally, and has already had requests from international merchants.
There are no shortage of solutions for merchants looking to connect with their customers using mobile apps and SMS. Daily deal sites like Groupon have mobile apps and just launched their Rewards program nationally yesterday, and SMS-based tools like Seconds and SendHub allow businesses to send out text message updates about offers. Not to mention the recent influx of rewards and loyalty startups, and mobile apps for shopping malls that allow stores to offer discounts. While Mowingo ties much of that functionality into one application, it will have to convince users that it’s worth downloading yet another app, and merchants that it’s worth the price of a subscription and in-store promotion. But having a national brand like McDonald’s on board is a vote of confidence that could get other national retailers and mom-and-pop shops signed up.