“Shop small” and “shop local” are common refrains among SMBs and those who support them — refrains that continue to grow louder. Even giants like American Express are showing support for local commerce, with initiatives like Small Business Saturday.
In the days of one-stop stores and online shopping, though, it can be difficult to convince even the most dedicated consumers to abandon the speed and convenience of mass merchants in favor of local shops — but, perhaps payments can be an incentive to get customers through the doors.
That’s the idea behind Nift, a firm that is working to help local companies promote and drive business to each other’s stores via a gift and reward distribution platform, according to founder and CEO Elery Pfeffer.
In a recent interview with PYMNTS, Pfeffer explained how Nift’s platform enables a network of local businesses to reward loyal shoppers with gift cards that are redeemable for gifts at other neighboring SMBs – all with the goal of driving new customers through the doors of every store involved.
“Fifty percent of the economy is built out of small businesses and, to a large extent, they have superior products to any large chain,” Pfeffer said. “People just don’t know about them, and that’s the problem Nift is looking to solve.”
Getting More Shoppers Through the Doors
One of the reasons SMBs struggle to bring in a steady stream of new customers is that they typically have a smaller pool of resources with which to work.
Because their budgets are far smaller, local merchants often don’t have access to the same marketing and discovery tools as their big-box competitors, Pfeffer explained. In today’s digital and online-heavy business environment, this severely limits the number of consumers to which those small businesses can effectively market.
“[SMBs] have limited access to tech,” he added. “That tech either provides clicks to their websites, or a bunch of bargain hunters coming in for a deal they found on a deal site.”
Nift offers a better way to market, working to drive business for SMBs by inviting those nearby into a network. It also ensures that two competitors do not join the same network, meaning a local coffee shop doesn’t need to worry that it is promoting a competing bean roaster or that a pair of clothing boutiques won’t be going after the same fashion fanatics.
These merchants then work together to drive business to all other network stores by giving digital or physical gift cards, redeemable with others in the network, to the shoppers they’ve identified as the most dedicated small store customers. The gifts give customers an extra incentive to try out another merchant, Pfeffer said. So far, they seem to be successful at bringing customers into stores, too — at least if the store owners themselves are any indication.
“Some local businesses were very jaded from failed experiences they had before with anyone trying to help them bring in more customers,” he recalled. “They were very skeptical at the start, but now that it’s working, we’ve got a lot [of SMBs] trying to sign up.”
Turning One-Time Visitors into Loyal Customers
But even hundreds of new customers aren’t necessarily helpful for SMBs if they only make one purchase, then pay for another with a gift card. The challenge is to turn these one-time shoppers into loyal, repeat customers.
The Nift cards are designed to encourage consumers to make an initial purchase using a reward, then return to the shop to make another out of their own pockets, Pfeffer said. To that end, Nift’s offering operates differently than other discovery and reward platforms.
The measures seem to be successful, too, with Pfeffer claiming 74 percent of those who receive a Nift gift card have never visited the store named on the card, and 86 percent haven’t visited in one year — but what happens after they receive the gift?
“When we surveyed [those customers] a month later, we found that 88 percent had the intention of coming back, and 34 percent already had,” he said.
Nift isn’t stopping there, however. Currently based in the Boston metro area, the company is considering expanding its networks to a wider group of SMBs. It’s also working to develop a mobile app to help its member companies keep pace with innovation and provide the technology consumers have come to expect from their retailers.
Through these upcoming changes, the emphasis will remain on providing consumers with a gift and a reason to visit an unfamiliar local business, Pfeffer said – because even in the age of technology and convenience, offering payment-powered incentives may still be the key to turning average consumers into SMB saviors.