January 5, 2016
Small businesses make up 98 percent of all U.S. firms and account for roughly half of private sector jobs and GDP. Yet for all their economic might, they have little leverage. On an individual basis, independent businesses and retailers just don’t have the scale and resources of their bigger corporate rivals, and that puts them at a competitive disadvantage.
What if you could connect these indie businesses and give them the tools they need to compete effectively against their bigger rivals?
That’s the idea behind Placemaker, a digital loyalty platform for small businesses that aims to take the marketing tools and network effects of large businesses down to a local scale.
The company was founded in 2010 by Katrina and Michael Scotto di Carlo after a shopping mall opened near their Pacific Northwest neighborhood. The couple watched in dismay as local businesses struggled to compete with the new chain stores, and their Main Street filled with vacancies. They decided that the way to fight back was to get local businesses to band together, share customers and magnify their impact.
So in the middle of the recession, they took a leap. Michael quit his job as tenured professor and Katrina, an artist, put her work aside and the two launched Supportland, a digital loyalty platform that has been active—and beloved—in Portland, Oregon for five years.
More recently, it has expanded into new regions, starting with Victoria, British Columbia, and is in talks with more than a dozen other communities. Today, the network spans more than 90,000 customers and 200 businesses. To reflect the expansion, the company is changing its name to Placemaker.
Breaking Down Isolation
The platform offers a digital punchcard that lets retailers reward their customers with “merits”—pretty standard stuff. But it goes beyond that to let customers earn and spend those points across a network of local businesses. To engage customers, it also offer “tokens” that can be earned during special promotional campaigns—hearts that can be earned across the network on Valentines Day or maple leafs on Canada Day, which convert into merits.
“Breaking down the isolation is key,” says Katrina Scotto di Carlo. “Imagine if independent businesses started working together to share customers with the sophistication of the big guys—we’d be formidable.”
Take Starbucks, for example. The company has 23,000 barista-manned outlets across the U.S. And its popular rewards program lets customers earn “stars” that can be redeemed for free coffee and food at any of its locations.
Placemaker aims to provide local businesses with the same marketing tools and back-end support that corporations like Starbucks enjoy—sort of like a central headquarters for local businesses.
“By operating as a network,” says Scotto di Carlo, “our members are able to gain the benefits of scale while still holding true to their independent values.” Those benefits include access to a large pool of shared customers, a constantly changing menu of rewards and promotions to entice customers, enhanced customer engagement, and a data analytics dashboard that lets retailers glean valuable insights from transaction data.
A recent Placemaker analysis found that customers that visit a business that is engaged on the platform visit an average of nine other businesses in the network. That’s led to unlikely alliance and cross promotional opportunities among stores, such as a coffee shop offering a free coffee to customers who make a purchase at the local toy store.
And roughly three-quarters of respondents to a recent survey said Placemaker helped them feel more connected to local businesses and shift their spending to them.
Putting Indie Business Back in the Debate
In the future, Placemaker envisions mini-networks thriving all over the world with rewards transferable among all locations. “Imagine traveling to Europe and using Placemaker to find the true local hangouts,” says Scotto di Carlo. “With big-box technology in the hands of the little guys, anything is possible.”
As the network expands, the data Placemaker generates could some day be its most valuable assets. When holiday sales are reported, for example, they concentrate on big retailers, because that’s the only sales data being captured today, notes Scotto di Carlo. That undermines the political and economic power of the independent business sector.
“Right now independent businesses is left out of every debate because there are no numbers,” she says. “Placemaker at scale will have this data as a byproduct of our operations. The bigger picture is using the data so that these businesses are no longer invisible.”
In the meantime, the impact is decidedly more local. In the quaint town of St. Johns on the outskirts of Portland where the Scotto di Carlos live, the Main Street has been slowly coming back to life. An abandoned store is being renovated to make room for a new independent hardware store—replacing the longtime local hardware store that closed a decade ago. And a new shoe store just opened.
“I know it doesn’t feel like front page news,” says Scotto di Carlo, “but I walked into the place and felt like we’d done it.”
Amy Cortese is an award-winning journalist and the author of Locavesting (Wiley, 2011), about the local investing movement and its potential to rebuild the economy, one community at a time. Her coverage of business, technology and social/environmental issues has appeared in Business Week, The New York Times, The New York Times Magazine, Mother Jones, Plenty, Wired, The Daily Beast, and many other publications. Used with the permission of ‘The Network, Cisco’s Technology News Site.’ http://thenetwork.cisco.com/.