LevelUp will fail but SCVNGR is at least looking in the right direction
Submitted by Think Locally S... on 10 March, 2011 - 19:01
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I learned of SCVNGR's new spin-off, LevelUp, via TechCrunch. I am interested in LevelUp because it crosses a number of the new business models that I believe point toward the future of commerce and which can *only* thrive in a world filled with smartphones.
Briefly, LevelUp:
The goal of LevelUp, says SCVNGR CEO Seth Priebatsch, is to offer the immediate distribution and new customers afforded by the daily deal sites, while simultaneously maintaining the long-term engagement that location-based games are usually better at. Priebatsch says that the big deal sites will often lead to a “one-and-doner” phenomenon, where businesses attract a flood of new customers eager to get in on a deal, and then watch as those customers never come back. LevelUp wants to fix that.
Clever. In the various smartphone business models I track, this cuts across several:
- Boring is Death: we are turning everything into a game. Everything. Shopping (and business discovery) will be no exception.
- Virtual is Real: back when magazines like Wired were getting started, you had these cyber-Rastafarian type dudes telling us we'd all be jacking into some "virtual reality." Wrong. We are porting the virtual into our reality. Not the other way around.
- Think Locally Scale Globally: LevelUp is a great example of this concept. Build a business that can satisfy a particular need, via the smartphone, in this case coupons and business location and commerce, and figure out a means of scaling this globally. Though LevelUp does not have the distribution yet, this concept appears in theory to leverage this business model.
Here's the problems with LevelUp, and why it won't succeed. It violates other smartphone era business models.
- Right Here Right Now: nothing matters in the age of the smartphone if it's not right here right now. The smartphone makes this possible. With LevelUp, the are creating a platform that disallows this! I am at your store. Ready to buy. I have my money in hand. But you're telling me I have to "LevelUp" to get the best discount? Fuck that. Fuck you. I'll go onto my smartphone now and find a replacement!
- Values Equal Profits: in a world where, like above, we can get anything anywhere anytime, then only a very very (very) few will be able to win on price. You must, instead, turn to values. Why should I buy from you? I can get this cheaper elsewhere. Are you supporting my community? Are you a fundamentalist Christian? Do you cater primarily to GLBT persons? I need a reason to hand over my hard-earned money to you.
Lastly, and this is not a smartphone era business model, though I think it applies. A *primary* reason that *any* business offers a first-timer a discount is because the loss (stemming from that discount/coupon) is worth it given the potential for repeat business.
Under LevelUp's plan, coupons and discounts may in fact increase. That is madness. LevelUp's parent, SCVNGR, can tell you they have market research that validates this. I call *bullshit* on that research.
Still, +1 for trying. Given that they created SCVNGR (fuck I hate typing that bullshit name) and are building LevelUp tells me that, even if this fails -- and it will -- they are getting warmer. I would not have trouble giving these guys some of my money as they continue to tinker with their platform and pull the threads on their notions of commerce in today's world.