Social Passport Goes After Retailers and Consumers with Its Own Take on Loyalty Cards and Deals

New York’s Social Passport wants to appeal to retailers and restaurateurs who are not quite sold on the other check-in deal programs on the market. CEO David Merel founded the startup last December and brought his company’s technology out of beta this October. Thus far Social Passport has raised some $350,000 from angel investors, and Merel says the company wants to take in upwards of $3 million to fuel its expansion into more cities.

The daily deals industry currently faces questions about its viability as players such as BuyWithMe wither and are acquired. Merel says the predominant strategy for offering discounts that are not scaled to retailers’ budgets is not cost effective. “There is no way to continuously bring more foot traffic into the store” with that model, he says.

Social Passport says it has a different approach, thanks to technology that brings together several options for businesses to offer discounts and loyalty rewards to their customers. Retailers who use the software can scan their customers’ personal quick response (QR) codes displayed on paper or on their smartphones. These unique codes let the retailer dole out discounts and spread the word across the customers’ social networks. Consumers with smartphones can likewise scan QR codes posted in the store or restaurant to redeem available offers.

Social Passport’s technology can also be used to check-in attendees who bring their QR codes for admission to concerts and tradeshows. These codes can be scanned by smartphones, webcams, and traditional barcode scanners.

Businesses can also use electronic chips supplied by Social Passport for near field communications to give customers deals when they enter the store, comparable to the app created by Shopkick in Palo Alto, CA. Near field communication is the transmission of signals between two devices, often to make payments for retail purchases. Whereas QR codes require a visual scan, near field communication only requires the devices to pass within close physical proximity of each other. Merel says Social Passport uses more active methods to attract new business to retailers by spreading the word about the deals in social arenas.

When customers accept discounts and deals through Social Passport, the software automatically follows or “likes” the respective retailers and shares that information with the consumers’ friends on Facebook, Twitter, Foursquare, and other social networks. If a customer wants to redeem a discount on a T-shirt, for example, they may have to agree to let the seller post a promotional note on that user’s social networking pages.

Before privacy advocates cry foul, Merel says businesses that use Social Passport cannot flood consumers’ social pages with marketing messages because the software only allows new posts when customers agree to accept new deals. “The business does not get to retain any type of ongoing spamming capability or contact information,” he says.

Merel says his company’s multi-faceted service may differentiate it from daily deals companies such as LivingSocial and Groupon, as well as Google’s Punchd loyalty card program. Social Passport also offers analytics to retailers about their customers. “We’re not trying to provide an alternative; we’re just trying to provide an ongoing repeatable marketing solution,” Merel says.

Restaurateurs and retailers, he says, may see little return on their investment by giving discounts through daily deals even though such offers are supposed to attract more customers. “The whole idea was you will get more customers in the future, but where are the stats?” he asks.

By leveraging consumers’ social networks, Merel believes Social Passport can help retail stores and restaurants make their discounts more cost effective. The business owners can choose to offer discounts that fit within their budgets and reach a wide audience rather than an extreme half-off sale, say, to bring customers in the door. He says Social Passport currently is available for free of charge for consumers and businesses. However that is scheduled to change for businesses in about 12 months, when a monthly subscription model is expected to be established for the service.

Prior to launching Social Passport, Merel founded Merel Technologies in 2009 in Yonkers, NY, which makes electronic multi-touch Web tables—interfaces with touch screens that display interactive visual material. Merel says the mTouch tables can be used at such venues as restaurants and conferences.

Merel says that though he never got into the retail or restaurant world, he understands the challenges those industries faces. “I must know about 30 restaurant owners that I grew up with,” he says. Merel says the narrow profit margins in retail make it difficult for small and midsize shops to put money into deals programs that have questionable results. “They are either breaking even or losing money,” he says.

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