While millennials aspire to seek out meaningful experiences, they don’t necessarily have the spending power that enables them to do so.
On the other hand, many local businesses are looking to bring in younger customers who carry the weight of being trendsetters, tastemakers and influencers, but those establishments may not be clueless on exactly how to attract and keep such an audience.
Realizing this gap and looking for a way to solve it, Blaine Bolus, co-founder of VocoLife, said the consumer marketplace and mobile app that brings together restaurant and fitness businesses with the millennial customer segment was born.
“What we saw was this disconnect between the businesses and how they would target this young professional audience,” Bolus said.
The app enables young professionals to have access to experiences at one of those two merchant segments, and get it for a bit of a discount as well.
Many consumer businesses operate with very high fixed costs and oftentimes have excess capacity to fill, he explained. While on the other side of the coin, there are millennials who like to go out in groups, with budgets that may be more restricted but with time to go out more frequently.
In this week’s episode of The Matchmaker Is In series, Bolus joined host Karen Webster to discuss how Boston-based VocoLife is matching these two sides together through the use of curation and dynamic rewards.
Here is an excerpt of the conversation.
KW: What do you mean by dynamic rewards? Is VocoLife similar to an OpenTable app for restaurants and people that want to bring friends together?
BB: We see it as very complementary to OpenTable. Many of the restaurants in Boston or across the U.S. use OpenTable as their reservation platform, but despite this we still saw an opportunity for restaurants to fill excess capacity and target a younger customer segment that was opting for more fast casual or delivery food options.
We took a very consumer-minded approach towards helping the restaurants connect with this customer segment through dynamic rewards. When a group of friends books a reservation through VocoLife, their payment is handled through the app, and they are entitled to a reward for going and dining through our platform. We have also formed partnerships with companies like Uber, Amazon and Starbucks in order to reward our customers with credits to those platforms. The rewards can range from cash-back rewards that are processed through the app to rewards from these other merchants.
KW: You have some pretty impressive partners, like the restaurant No. 9 Park, which is certainly one of the best restaurants here in Boston. Let’s say I have a few friends and we want to go out for the evening at No. 9 Park; can you walk me through the experience of using VocoLife?
BB: The way that it works is you will open the app, search for the restaurant and book the reservation. From there, you’ll actually invite your friends to join. In traditional reservation platforms, it’s one person booking on behalf of an entire group, but with VocoLife, the idea of collective booking is used. What you’ll actually do is book your reservation with your friends, so each friend you are going with will join, and at that point the reservation is set. Then you’ll go in and eat, and all the payment will happen through the app so you can walk out without ever having to pay in the restaurant. The reward will be processed through the app and payment.
KW: Does everyone who is part of the reservation also have to have the VocoLife app and put in their credit card information as part of the booking?
BB: Yes, exactly. Everyone will have the app in order to book and join the reservation together, and the payment will be split evenly among the group unless they would like to use the bill split function. It’s up to the users to split the payment however they’d like.
KW: Is there a minimum or maximum group size that VocoLife or its partners impose?
BB: For restaurant reservations, the minimum group size is going to be a two-person reservation. But ultimately we work with our merchant partners to figure out what they’re trying to target and what works best for them. This partnership needs to work for both sides of the matchmaking spectrum, so on the restaurant side, we work with them to identify how we can best help them to target this demographic. What we’ve seen for most of the restaurants we work with is that they want to target group sizes of two people or more. The range goes up to as many as the restaurant would like, and our platform is flexible to the point where everyone can join. We want to work with the restaurants to ensure we are driving customer traffic to them in a way that’s working, by offsetting their fixed costs and being complementary to their current services.
KW: I saw an article recently that talked about VocoLife in the context of letting broke students in Boston have a nice experience out. It sounds like you’ve pivoted a bit away from that particular value proposition.
BB: I think what we’re seeing is that it’s not necessarily just for broke students; it’s for a wide range of people. The same person who is going out to eat a quick casual meal at the local food place down the street is the same person who on a nice date may want to go out to one of the more expensive restaurants and have that great experience. What we’ve seen is that millennials place value on experiences according to what they’re looking for on a particular day – on some days it’s more casual, and other days it may be more high end, but it’s all based on the value they are getting out of it.
KW: Are you integrated with the restaurant’s point of sale (POS)? Is that how you enable payment?
BB: We actually work alongside a restaurant’s POS, without having to integrate into every single one.
KW: Was it hard to get the first couple of merchants onboard, or did you have a group of consumers that were ready for such an experience? How did you actually solve the preverbal ‘chicken or egg’ problem?
BB: In the beginning, it was more difficult in terms of getting the partnerships, and we took a very on-the-ground type of approach. But fortunately through the conversations we’ve had and explaining the value proposition to partners, they were able to buy in and with more growth on the partnership side then we could parlay that into growing the consumer side. It’s just a constant back-and-forth and balancing act.
We made the process pretty easy in the beginning in order for merchant partners to sign up and get onboard without having to do any integrations or anything like that. In the beginning, the value proposition was basically, ‘hey, you have times or inventory that we can help you activate; let’s do that without the risk being on you.’ We had restaurants that were willing to get behind it and see we’re bringing them a customer that is typically opting for different sorts of experiences to spend their money on. We want people to eat in their restaurants just like they want people to eat in their restaurants, so it was something that some of the earlier merchants could get behind. One thing led to another, and then we were able to expand our partnership base that way.
KW: When you talk about excess capacity, are you talking about just during off hours or is it that the merchant partners are giving you their shoulder times (before 7pm and after 9:30pm)? Or is it a mix?
BB: It’s actually a mix. Looking at restaurant occupancy in general, not just the peak times but throughout the course of the week, there’s about 36 percent occupancy. We have a consumer segment that restaurants actually want in their establishments because they’re hyper social, go out with groups, they tell people about the restaurants, they’re taking photos and posting to social media, and they are the trendsetters and tastemakers. On the restaurant side, obviously we don’t want to interfere with any of the operations while creating this great experience. What we’ve been able to come to is leaving it up to the restaurants, and we have that back-and-forth with them to say, ‘this is what we have and the ball is in your court.’ We have many restaurants that want all times made available; they love Voco parties because it’s easy, and they never have to split a check, while others want to start with certain times and increase as they see fit.
KW: Let’s talk about the consumer side and getting critical mass of consumers to download the app; how do you manage to make that happen?
BB: With supply obviously comes demand. Being able to put on and partner with many of the best restaurants in the city certainly helps, as well as the curation aspect of breaking things down and really knowing our demographic. For example, Zagat and OpenTable take an approach of working with restaurants that are suitable for everyone. We want to complement that by describing a restaurant to the customer segment we know, whether that’s through social media influencers and people who frequent those places and have a voice in our customer segment, or based on our curation team.
KW: How would you characterize your competitive advantage?
BB: I think it’s pretty simple to break down. On the consumer side, the number one advantage is the dynamic rewards. Customers are being rewarded when they book on VocoLife, and there’s curation in being able to know not only where Voco and our curators think are good spots, but also what their friends think of places. It’s the idea that a friend’s recommendation is worth a lot more than a random person’s recommendation – the value in knowing where friends are going and what they like. Also on the customer side, there’s the experience, being able to book and pay together without the onus being on one people in the group to pay for everyone or book the reservation. Instead, everyone can buy-in together and all be in it together.
On the business side, being able to drive traffic and offset the costs of running the business in a way that works for each particular restaurant or studio, while also being complementary to the existing services they use. The biggest one is the ability to target the millennial and young professional segment and doing it through the channels they consume most, such as social media.
KW: How do you make money?
BB: It’s a standard transaction fee, and we work with our partners on a case-by-case basis in order to activate their underutilized inventory. There’s no subscription fees; it’s more pay for performance, and that’s why we’re able to work in tandem with other systems.
KW: You have 300+ merchant partners in just a year; that’s pretty big progress.
BB: It’s been very busy, and we’re just expanding to New York and we have a couple more cities on the way, so the pace is pretty frenetic, but that’s how we like it.
KW: If you think about OpenTable, they started initially spread a little but too thin; they were a mile wide and an inch deep. I think what everyone has learned is that having capacity in Austin when you’re sitting in Chicago, isn’t particularly helpful – going deep in a geography is very important in terms of getting both merchants and consumers onboard. But I can imagine that part of your city expansion must reflect where these young professionals like to go out, almost in the shadow of where they socialize.
BB: Exactly, I think you bring up a great point that it’s so important to get to a critical mass in any city that you’re operating in. For us, Boston was the first city and a tremendous amount of our efforts went into growing the platform here. We want to make sure before we go anywhere else that we have everything locked down in a certain area before expanding.
KW: How of much of a competitive threat is Venmo to you?
BB: We don’t see Venmo as a competitive threat; we see them as very complementary. I think the way in which they’re positioned and we are positioned is different. Venmo is a great service; I use it myself and it’s a great way to exchange cash between people, but we take a more curation booking side approach for social experiences in a city.
KW: As we wrap up, we generally like to get a sense of where matchmakers get their inspiration. Is there a particular matchmaker platform or business that you take lessons from and aspire to apply to your business?
BB: I think Amazon’s platform is really inspirational, and what Jeff Bezos has done in terms of always investing in the future, looking for big opportunities and constantly applying that mentality of growth, makes them one of our big influencers. Their approach of fast speed and going after a huge market in something that you wouldn’t even think is attainable is something that really resonates with us, so that’s definitely a big inspiration.
KW: Any words of advice for matchmakers out there with ideas and a lot of energy? What’s the lesson you’ve learned?
BB: The big lesson is that you have to stay focused and keep pushing. It’s also about really trying to know your selling points and being able to differentiate them and be persistent. That’s the absolute key, especially in growing a two-sides platform. You’re trying to satisfy the customer side while also sourcing supply and inventory, so the persistence on both is very important. Just stay with it!
KW: Is it as hard as you thought it would be?
BB: Harder…but a lot more fun as well.