LevelUp Looks to Change the Daily-Deal Format

Daily-deal sites are all the rage lately. And what's not to love? Email alerts show you that day's deal, you click, buy and save. The problem with daily-deal sites for merchants, however, is that while the promotion may bring in a ton of new business, it only does so once. This is where a new app launched yesterday comes in.

LevelUp is a new smartphone app that's focused on customer loyalty and driving repeated engagement. Launched by the same people that developed SCVNGR, and available on the iPhone and Android devices, LevelUp is trying to fix the "one-and-done problem" plaguing daily-deal sites.

“Anyone with an email list can get customers in the door," said Seth Priebatsch, chief ninja at SCVNGR, in a company press release. "The goal of this pilot is to prove that LevelUp can do what nothing else can — get those new customers to keep coming back.”

Upon sign-up, consumers receive a daily email alert from LevelUp notifying them of their local daily-deal, just as they would from a site like Groupon or Living Social. You can click on the deal, buy it, then have seven days to redeem it. Once the coupon is redeemed, you "level up," and the deals keep getting better and better as you come back.

"There are essentially three phases to this concept: try it, like it, love it," said Michael Hagan, chief rock star at SCVNGR, at LevelUp's press conference yesterday morning in Philadelphia. Instead of driving sales from just one deal, LevelUp takes those one-time customers and turn them into regulars — the best kind of customers.

Aside from engaging consumers using SCVNGR's gaming and check-in services, LevelUp offers merchants real-time analytics and promotional opportunities, as well as buzz on social media, email and the app itself. LevelUp also boasts a lower cost to entry for merchants, as its commission is less than half of what Groupon charges. LevelUp also pays the merchant's credit card fees, and a portion of their proceeds go to local nonprofits and charities.

LevelUp was launched only in Boston and Philadelphia, but with the success SCVNGR has enjoyed in the limited time since its release (SCVNGR launched in June 2010 and now counts 1 million users, as well as partnerships with American Eagle, Coca-Cola and GameStop), it might not be long until it expands even further.