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A new service called LevelUp aims to combine several online business trends—game dynamics, social media, and location-based services—not just to win new customers for local businesses but to turn them into regulars.

LevelUp is something like a hybrid of the daily-deal site Groupon, which offers steep discounts at local businesses, and the location-based game Foursquare, which encourages users to share their location to earn points and kudos. LevelUp offers users a deal per day and also rewards customers with additional, even bigger discounts when they follow up by revisiting the location. The service was launched today in Boston and Philadelphia by SCVNGR, a company that already makes a location-based game tied to deals offered at local. “This is all about one word: loyalty,” Seth Priebatsch, the founder and “chief ninja” of SCVNGR, said of LevelUp.

Groupon, which boasts 60 million users, $1 billion in venture capital, and $760 million in revenue, has spawned countless hopeful imitators. To stand out from the crowd, Priebatsch has designed LevelUp to address some of the criticisms of social-media promotions websites and location-based services. In particular, experts have suggested that discount services like Groupon attract bargain hunters who are unlikely to return to a business. And location-based services like Foursquare are still seen as a niche phenomenon—in part because not many people have phones that are capable of running location-focused apps.

Priebatsch says, “We want to do what 500 knockoffs in the daily-deal space, and millions of dollars in the location-based-services space, haven’t been able to do: to get customers actually coming back.”

SCVNGR latched onto the gaming concept of “leveling up,” in which  players are rewarded with new powers for achieving in-game goals. Priebatsch wants to encourage new customers to “level up” into ever better customers.

Every promotion that LevelUp offers has three levels: “Try it,” “Like it,” and “Love it.” Typically, the initial “Try it” deal is about 50 percent off, and the subsequent deals progress to deeper discounts. Users have seven days to buy an initial deal, and the two subsequent deals have time limits that vary depending on the nature of the business.

“The number three is a really valuable tipping point,” Priebatsch says. Data collected through SCVNGR suggests that a customer who returns three times is much more likely to keep coming back after that. In some cases, LevelUp deals will try to get customers progressively more engaged. For example, an upcoming deal with MetroRock, an indoor climbing gym in Boston, will offer discounts on a beginner’s lesson, a more advanced lesson, and finally a membership.

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Credit: Technology Review

Tagged: Computing, Communications, social media, gaming, location-based services, location services, game dynamics, social games

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