Belly is a Chicago-based startup backed by Lightbank and Andreessen Horowitz that is trying to take retail rewards programs down to the small business and the local level – while providing something much more sophisticated than the buy-10-get-one-free punch card. Belly users either use their Belly app or a QR code on a physical card to check in at a store’s iPad whenever they stop in at a participating business. That allows stores to track their customers’ purchases, award points and market more effectively to their most loyal customers.

The Belly Bites program adds a more active component to a normally passive rewards system. Instead of waiting on the customers, businesses can lure them in by offering a free tidbit, which is then highlighted in Belly’s app. In fact, customers can use the app as a sort of goodie radar, following the path of free treats and services around their neighborhoods. According to Belly, the free samples focus is much more manageable than a daily deal coupon campaign, while still introducing new customers to local businesses.

Belly also revealed today that it has revamped its Android app. The app is now compatible with all versions of the Google OS, but the biggest improvement is for frequent Belly users with the latest Android handset. The new Belly widget can be used to place a customer’s loyalty QR code on the home or lock screen of an Android 4.2 (Jelly Bean) device, turning it into a physical card.

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In time for Halloween and the presidential election, the TechStars-backed startup, which enables companies to track and reward consumers for their engagement across social, mobile and online platforms, mined millions of social data points (primarily from Facebook) to look for connections between brands of chocolate and political parties.

They found that people who like non-premium chocolates, such as Hersheys, Reese’s and M&Ms are more likely to identify themselves as Democrats than those who prefer premium chocolates, such as Nestle, Dove, Ghirardelli and Lindt.

For example, consumers with an expressed preference for Lindt chocolate are 40 percent more likely to be a Republican and those who say they like Hersheys are 70 percent more likely to be a Democrat, CrowdTwist says.

Clearly, this isn’t the kind of data with election-changing implications and the connection between chocolate preferences and political affiliation likely just reflects differences in age. Younger people tend to skew Democrat and CrowdTwist’s data shows that younger consumers seem to prefer less premium (cheaper) brands while older consumers gravitate toward more expensive brands.

But it still provides an amusing reminder for brands that seemingly unrelated streams of social data can be combined to generate potentially helpful insights.

“[We] aggregate data from various disparate sources and give clients the ability to look at the correlations in data that they have not thought of in the past that they can use to not only find new audiences but understand audiences better,” said Adam Trisk, CrowdTwist’s head of marketing.

For example, he said, this sort of information could help brands determine where and when to buy media: Lindt may think about buying spots on Fox News while Hershey may seek ad buys during the  Democratic National Convention.

CrowdTwist, which raised $6 million in Series A funding last September, said it’s doubled its headcount to 25 since the end of 2011 and surpassed its 2011 revenue by August of this year.  Its clients range from television networks, such as Fox (for a campaign for the “X Factor” show), to sports franchises, like the Miami Dolphins and the NFL, to top brands in consumer packaged goods, like Pepsi, to VPG, a maker of wheelchair-accessible vehicles.

While brands have long valued loyalty, CrowdTwist really takes advantage of new platforms, such as social and mobile, to help brands comprehensively track engagement and reward consumers with real experiences and tangible items.

The startup not only gives data-hungry companies a broad picture of their consumers, it helps brands present themselves as a unified whole to consumers who interact with them in physical locations, online, on television and through other mediums.

“Companies think of their various channels in potentially more siloed, cordoned off verticals,” said co-founder and CEO Irving Fain. “But when a customer looks at that brand it’s all the “X Factor,” the Dolphins, etc. We provide the ability to unify customer interactions back to an individual, which brands can use to build better relationships and experiences with customers and fans – that’s what leads to loyalty.”

Image by Kesu via Shutterstock.

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Marqeta works by giving consumers one pre-paid card that can hold offers from a variety of merchants. The offers come in the form of bonus cash applied when a user loads up money on to the card to be used at a specific merchant. For example, a user who puts $100 on their Marqeta card to be used at a local supermarket can get up to 7 percent in additional cash. A restaurant typically adds 10-15 percent when a users loads up cash for future meals.

Users can find participating merchants and load up their card from Marqeta’s website or through a mobile app, which also keeps track of spending. For first time users, the card takes up to a week to arrive in the mail. Loading cash can be done through a bank account or existing debit or credit cards, so users can still take advantage of credit card miles and points.

The system differs from other loyalty services that require users to visit or spend repeatedly to get a reward. And unlike other offer systems that connect specific offers to buy a product or spend a certain amount to an existing payment card, Marqeta’s offers can be applied to any purchase with no time limit. Marqeta merchants, can also, push out limited time offers adding cash to a user’s account if they act within a certain time.

Marqeta is just getting underway in the Bay Area with 250 businesses signed up, covering more than 700 locations. The advantages of Marqeta are that employees don’t have to be trained to use the system and a business doesn’t have to buy any new hardware, something some loyalty startups require. And since Marqeta is based on a card, user’s don’t have to have a smartphone or a device outfitted with technology like near field communication. For consumers, as long as they don’t mind one more card, they can continue to work in a way that’s natural to them while instantly earning back significant savings.

Jason Gardner, Marqeta’s CEO, said the system works because consumers, once they’ve committed to pre-paying some amount, are loyal to their money and will use it, something Starbucks has proven. And that appeals to merchants, who are willing to spend a little to attract new and loyal users.

Omri Dahan, Marqeta’s chief revenue officer said consumers typically spend more than the amount pre-loaded to their card. And many sign up for automatic reloading on their card to replenish funds. He said the most popular automatic reload case is for people who put $500 toward a supermarket to get $35 in extra cash.

Marqeta, which was founded in 2010, has raised $7.3 million from Greylock, Granite Ventures and angel investors. It has also partnered with Discover to connect to its payment network. The company makes its money by charging merchants 5-10 percent of the transactions depending on volume.

Marqeta is looking to not just appeal to consumers and merchants but also to enterprise customers and member organization, who would like to offer Marqeta as part of their benefit program. That can also help spur on adoption for Marqeta as employees sign-up through their employers. In the future, Marqeta is also looking to get into the gift card market, which could pit it against companies like Wrapp, which launched in the U.S. in the spring.

I think Marqeta will face challenges as it tries to go national. There are all kinds of startups and larger companies playing in the loyalty and payments games, everything from Foursquare, LevelUp and Square to smaller loyalty plays like Belly and card-synced offer systems like Cardify, LocalBonus, and Mirth. Consumers also have to be comfortable with pre-paying, sometimes large sums, through a new startup. And some merchants might not be ready to ditch their own loyalty programs in favor of a new system.

But Marqeta is appealing in that once you get past the actual shipping of the card, it’s a pretty simple and familiar way to handle loyalty. I like that it can be a good win for both consumers and merchants. For consumers willing to commit some cash up front, they can earn some real tangible savings up front. And merchants can feel good about offering some cash incentives because consumers are opening up their wallets first. Also, this fits into my larger feeling that loyalty works best when closely tied to payments.

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Foursquare works in the background to identify which users are loyal to a business, either through their check-ins or explicit actions like “likes”, which became available in the latest update to Foursquare. Then, when a merchant wants to send out a local update for their entire chain or just specific locations, Foursquare routes those messages to people who are already loyal and are also nearby those places. It can be a timely special about happy hour drink prices or it can alert people to an upcoming event. Or it can pass on fresh information about menu items or products. The local updates, which can include pictures, will appear in three places:

• In a user’s newsfeed. But only if they’re in the same city as the business
• On a merchant’s venue page
• After a user checks into a place

Merchants can send out updates from their Foursquare dashboard. This can be a great way to move some product at the end of the day or raise awareness about something coming up on the calendar. Foursquare isn’t allowing merchants to segment their customers at this time. So business owners will just need to trust that Foursquare will send the right messages to people who are close enough to take advantage.

Local Update augments Foursquare’s existing specials, which merchants were able to offer to users. Those included newbie specials for first-time visitors and other rewards for people who came back repeatedly to a location or visited with friends. Users are able to see the specials when they check-in or in their news stream. But the local updates serve a broader purpose in communicating more than just special offers.

This is another good tool for Foursquare, which is facing a lot more competition from dedicated loyalty startups and many payment and commerce startups like Square, Groupon  and LevelUp, who are adding more loyalty and engagement features. It also shows how Foursquare can use all of its great location data in a smart way, highlighting loyal users and using its app as a better tool for merchant outreach.

But Foursquare still has more to do. The check-ins are great for establishing recency and frequency of visits, but it doesn’t measure intensity and value through actual purchases. It has a deal with American Express that ties offers to a credit card, but that doesn’t cover all credit cards, so merchants are not seeing the full picture of who their loyal customers are. Also, local updates are just based on a user’s existing location. But Foursquare is smart enough to know, in many cases, that I head home or go to work at a certain hour and  should be able to use time as another signal to push out updates, anticipating where someone will be in a little while.

This is all important for Foursquare because the ultimate goal is to be able to charge merchants for the full suite of tools. The company admits it’s not there yet, but sees a better potential revenue opportunity in helping bring in new customers to merchants. That could come in the form of personalized offers using its Explore technology. That’s something we should be seeing soon. The question is whether merchants will ultimately want to pay up for Foursquare’s tools and give the startup a sizable revenue source. It’s unclear at this point. But with more than 20 million users and a lot of great data, Foursquare is still well positioned in the local market. It’s just got to keep showing merchants it can be as helpful to them as Foursquare is becoming for many of its users.

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LevelUp said it will not charge its 3,000 merchants interchange fees to process credit card payments and will swallow the cost. The company said instead of passing on interchange fees to move money over existing payment networks, it will look to make its money from merchants by helping them bring in new and existing customers. In essence, LevelUp feels like it can make more money by providing offers, loyalty and analytics than by facilitating pure payments.

It’s a big move that could shake up the emerging mobile payments market. Competitors such as PayPal, Square, Google and Isis are adding more value-added services themselves but they’re still looking to profit from the payment transaction itself. But Seth Priebatsch, LevelUp’s chief ninja, said transactions are a commodity that won’t hold up over time.

“The fact that we can move money, that’s not interesting. The fact that we can drive new customers and track them when they come back, that’s real value,” said  Priebatsch. “The amount of money we’re making on our campaigns is trending up and we stepped back and said if it’s stable right now we should just skip the middle part of this game and stop charging.”

For the last couple months, LevelUp has charged its merchants 35 cents on every dollar of credit provided to consumers during a campaign. So for instance, in a campaign to bring in 500 new customers, a merchant may offer $2 free credit for a first-time visitor. LevelUp will earn 70 cents for that transaction. Priebatsch said merchants typically bring in $18 for every dollar spent on a campaign. And of new customers who come in through LevelUp, 64 percent come back within 30 days and 40 percent of all new customers complete a loyalty progression with 30 days.

That’s how LevelUp believes it can be valuable enough to charge for these services. By letting merchants push offers to specific sets of customers and providing analytics that track how well the offer does and how often the user comes back, LevelUp is making enough money to support this new Interchange Zero approach. LevelUp, again, is paying the interchange fee but it’s acting like Google, which offers free search because it can make it up on advertising. For merchants, the removal of interchange fees means an average of $500 in savings a month, said Priebatsch.

But how can LevelUp afford to pay the existing interchange fee? Priebatsch said it is able to move money through interchange networks more efficiently using special algorithms and it has less fraud than competitors because of its barcode scanning and token payment system. The company is building out special relationships with banks to further decrease the cost of fees. Over time, Priebatsch said the cost of moving money over the interchange fees has also gone down, but the fees haven’t.

It will be interesting to see how competitors react. It’s still early in the race but merchants are hearing all kinds of pitches on payments, offers and loyalty programs. A service that does away with processing fees and only charges based on real business performance could stand out in the market. Merchants may feel more confident about trying LevelUp because they will only be paying to drive in customers and sales.

This fits into the larger discussion about mobile payment business, which many are realizing is much about about the services around payments than the action itself. Providing an alternative to credit cards or cash has limited appeal to consumers and merchants because the current methods of paying aren’t terribly broken. It’s really in the extra features where payment systems are able to sell themselves.

This will have an impact on not just payment providers, but also new offers and loyalty-focused startups. The reality is that these businesses are all coming together and competitors will need to be able to offer all these elements plus analytics, customer relationship management and other business services as well. LevelUp is showing that in this local scrum, the real value proposition may be in leading first with offers and loyalty and just throwing in payments for free.

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App users are now abandoning apps after using them just once at a rate of 22 percent, down from 26 percent when Localytics first looked at retention rates last year. And for users who open an app more than 10 times, that figure has gone up from 26 percent to 31 percent. That suggests that app makers may be figuring out how to better encourage engagement and long-term use, rather than shooting for quick downloads.

That’s been one of the big changes in the app ecosystem, as app makers realize it’s better to retain users than push for big download numbers, which can be easily inflated. It may also be a result of the fact that many of the tools for incentivizing downloads have been blocked by Apple. That may also partially explain why iOS apps perform better than Android apps in retention.

Localytics found that among heavy users opening an app more than 10 times, 35 percent are iPhone and iPad users while 23 percent are Android users. For one-time users, Android apps also see 24 percent of their users abandon the app, while 21 percent of iOS users leave after one time. The company examined the behavior of app users on 60 million devices, comparing a nine-month period that ended in March 2012 with a previous nine-month period ending in March of 2011.

The year-over-year improvement in retention may be a result of app makers getting better at building apps, said Localytics. Users might also be more discerning about which apps to try. Also, users are downloading more apps overall, according to Nielsen, which reported last month that the average number of apps per smartphone has increased from 32 apps to 41.

As for Apple’s loyalty advantage, Nielsen also found that 88 percent of iPhone users are app downloaders while 74 percent of Android users are, another reason why retention may be better on iOS. Localytics’ CEO also told The Wall Street Journal that iOS apps may also be more polished because they’re the primary target for many app developers. iOS devices also enjoy higher customer retention compared to other smartphone makers.

There are still plenty of challenges for app makers. The numbers show that 69 percent of the time, an app doesn’t get opened more than 10 times. But for app makers, it’s clear that you need to continue to build for repeat usage and long-term engagement. With most of the monetization models for apps based on in-app purchase or advertising, it’s all about keeping people coming back to the app. The fact that people are returning to apps more often is an encouraging sign considering that the deluge of new apps is not slowing down. Maybe app users aren’t as flaky as we thought.

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LevelUp was originally created by SCVNGR as a daily deal competitor to Groupon , but repositioned itself in October as more of a loyalty app with its own payment system. The new direction has helped LevelUp attract 200,000 users, who are spending $2 million a month with the app. That’s up from 100,000 users and $1 million in spending reported in March. The service is now used by 3,000 merchants in eight markets. The new money will help LevelUp expand its footprint across the nation.

Here’s what SCVNGR’s chief ninja Seth Priebatsch had to say about the funding: “Our vision is to make LevelUp the first interchange zero payment network. That means we’re working to bring the cost of moving money down to nothing and enabling businesses to re-invest that cost into growing their businesses, by  attracting new customers and bringing them back more often.”

LevelUp, which has raised $32 million so far, is still growing but it offers an interesting option for merchants. It gives them a way to attract new users with small discounts and offer loyal users rewards for coming back. And with a Starbucks-like barcode payment system built in, it can close the loop on offers so merchants know the effectiveness of working with LevelUp. That gives LevelUp a pretty impressive package of services it can deliver to merchants, who are being offered all number of payment, loyalty and offer tools from Square, PayPal, Groupon, Google Wallet and many others.

Now, it looks like LevelUp is pushing even harder on its payment angle and is hoping to differentiate itself by being ultimately cheaper for merchants. Groupon is also testing out a new payment service that will offer a 1.8 percent transaction fee with a 15 cent transaction charge. Lower transactions fees could ultimately help merchants in the long run but it’s also confusing for now, seeing so many options in the market.

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The report is interesting, and we’ll have to see if the tests lead to a widespread product. It could put more pressure on existing payments players and potentially cut into the growth prospects of Square and others if it can find traction. Groupon is reportedly offering merchants a free iPod Touch, not just a credit card reader, to process transactions.

But it got me thinking that it seems like a number of loyalty and deals apps will start going down this road, adding mobile payments as a way to build out their services. These days, there’s a big land grab going on in local. People are trying to provide merchants with tools for deals and offers, loyalty and payments. Some of the latest payments plays like Google Wallet’s and Isis’, two NFC wallets, are trying to tackle all of those services. But we have some other startups who are coming at this from a deals or loyalty angle, and increasingly they are moving to offer the entire package to appeal to merchants.

Paying with LevelUp

LevelUp, for example, started out as a Groupon competitor but then retooled by building its own payments system into its app using help from Braintree. Now consumers can not only take advantage of discounts but also transact right through the app, closing the loop on offer redemptions. That’s a key point, because it means a merchant can understand how effective these programs are because they can see exactly how much money they’re generating.

With more payments tools like Braintree, Stripe, Card.io and CardSpring, which allows people to sync their credit card to an app, we are seeing more apps build in payment services. I just wrote about two loyalty services, Cardify and Mirth, that launched this week that use CardSpring as a way to track and reward spending. Groupon itself introduced its own Groupon Rewards loyalty program earlier this month that allows consumers to sync their credit cards to get rewarded for their purchases at certain merchants.

Ultimately I think we’ll see more of this convergence as these apps try to become a one-stop shop for merchants, providing deals for demand generation, loyalty for continued engagement, and payments to close the loop and track spending. It’s going to get really confusing for local businesses, which are going to have to decide who they want to turn to as their local operating system, a term Groupon’s CEO Andrew Mason coined recently.

That also means I wouldn’t be surprised if Foursquare gets into the mobile payments arena. It already provides specials, and with its partnership with American Express, it allows those cardholders to redeem AmEx deals by just using their credit card. But if it wanted to, Foursquare could easily add a broader payments system or a card-tracking system of its own. That would help it explain to businesses how valuable the Foursquare service is. Right now merchants are rewarding user check-ins, but they don’t have a way to tie rewards to actual spending through Foursquare. This could introduce a new level of complexity for merchants, depending on the solution chosen. But it may be worth it for Groupon, Foursquare and others to look at becoming more of a resource and service for merchants.

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Mirth allows a regular of a business to get a set discount when they use their synced credit card. As long as they visit twice in a month, they are considered a Mirth regular, which gives them a discount at any Mirth merchant. Merchants can get analytics about their customers and message their regular customers to remind them about seasonal specials. The service is just getting underway in a few stores in New York and no mobile app at this point.

Cardify President Sean Rad

Cardify enables consumers to unlock rewards and perks at the places they frequent the most. For users who link their credit and debit cards to their Cardify account, they will get points for every dollar they spend at a Cardify merchant. This can be used for simple discounts or special perks, like the ability to get a premium table. The app provides real-time analytics on how much users are spending and can also display for merchants the profile of customers inside their stores, if they opt in to geo-fencing.

Cardify has got a slick mobile app that lets people track their reward points and see what perks they can earn. It’s also got a deal with CityGrid Media and UrbanSpoon, which will help the service get distribution at half a million locations nationwide. That’s a testament to Cardify’s roots as project out of Hatch Labs, the mobile incubator of IAC, owner of CityGrid and UrbanSpoon.

Mirth founder Jeremy Philip Galen

When CardSpring debuted in February, I imagined a number of businesses would launch using the technology. LocalBonus, another loyalty start-up in New York, also got underway recently using CardSpring’s technology. Now that there are more card-linked loyalty programs, it’s going to be harder to stand out if a company is merely tying loyalty to credit card purchases. The winner will be the service that can provide more data and tools to merchants that helps them identify and reach out to their best customers. And it has to have a great user experience for consumers, so the process of earning points, checking on their progress and redeeming rewards is effortless.

Between Mirth and Cardify, I’m more impressed by Cardify, which has a better interface through its mobile app, more tools for merchants and a way to craft rewards that are unique to each location. I’m not sure people will go to the lengths of opting in for a geofencing, which can be a drag, but that’s also a nice touch, allowing a merchant to recognize a customer when they walk in the door. Ultimately, there’s going to be even more loyalty programs that tie into card data. They will all have to get consumers over any concerns about turning over their credit card numbers. But more and more, people are willing to share their payment data if they can get some real rewards or perks for their trouble.

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Groupon wants to be known for more than just deals. It is launching a free loyalty program called Groupon Reward for U.S. consumers and merchants, part of a bigger effort to become the “operating system for local commerce,” as Groupon CEO Andrew Mason put it earlier this week. Groupon Rewards, which builds off an earlier trial in Philadelphia, will give merchants a way to track and recognize loyalty without employing old punch cards.

The system works by getting consumers to opt in and share their credit card information. When they visit a Groupon Rewards business (which doesn’t have to participate in traditional Groupons) their spending on that saved card is tracked by the merchant, which can choose at what milestone to reward their customer. The card-based system lets merchants reward users for their actual purchases, not their visits or check-ins. The rewards can be free items or it can be a Groupon discount similar to a regular Groupon.

This program could help Groupon become more of a commerce tool for merchants. The company gotten some flack from merchants, who complain about the steep discounts they have to offer or the lack of repeat visitors that come from offering a Groupon. By wading into rewards, Groupon can not only be a way for merchants to bring in new users but another way to help retain them.

Mason laid out the larger vision for Groupon in a letter to shareholders earlier this month in which he said Groupon would offer a suite of tools that is designed to go beyond marketing and spur on more transactions. This is a key test for Groupon, which has seen its stock price trend downward after a big IPO debut. It needs to show that it can become an indispensable tool for merchants, who are getting bombarded by marketing, loyalty and analytics options.

Groupon Rewards is a good start. With Groupon’s base of users, it’s in a position to get a number of people to sign up. The card-based system is also pretty elegant without requiring big changes at the point of sale. Consumers can participate by just swiping the cards they normally use and they can see their progress toward a reward in the Groupon mobile app though they have to look inside their profile to find it.

But I’m still not clear on how a merchant is notified in real-time when someone hits a milestone. I’m told by a Groupon rep that a merchant will get notified in their merchant center dashboard but if that’s not next to their point of sale, I’m not sure how easy it will be to recognize a customer at the moment they earn their reward. Also, it’s unclear how Groupon will make any money off this if it’s offering the tool for free.

But overall, I think it’s good that Groupon is moving in this direction as it tries to expand its business. So far, it looks like the Groupon Now deals are not turning into a big money maker.  The company will face a lot of competition including Facebook, Foursquare, Yelp and other newer start-ups like Belly, which just raised $10 million this week.

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