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Sunday, 29 September 2013 22:00

A Toast to Technology: Conpoto deploys mobile technology to simplify gift card process

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Conpoto’s Matt Lepard has developed an easier way for consumers to interact with local merchants that’s as simple and convenient to use as the nearest smartphone. Backed by early stage funding, his Holland-based e-commerce firm wants to revolutionize the $100 billion gift card industry. Conpoto’s Matt Lepard has developed an easier way for consumers to interact with local merchants that’s as simple and convenient to use as the nearest smartphone. Backed by early stage funding, his Holland-based e-commerce firm wants to revolutionize the $100 billion gift card industry. PHOTO: REX LARSEN

Matt Lepard has a simple solution for revolutionizing the $100 billion gift card industry: Get rid of the cards.

The Holland entrepreneur plans to simplify the way consumers, companies, shops and restaurants use gift certificates by borrowing a page from both Starbucks and the “free beer chalkboard” that you might find at a neighborhood bar. His e-commerce firm, Conpoto LLC, is launching a new mobile service at several high-profile, local restaurants this week in what may be a first swipe at making the ubiquitous plastic cards obsolete.

In his favor: He’s recently raised almost $1 million in early stage funding and can count two of the region’s premiere restaurant groups — Barfly Ventures LLC in Grand Rapids, and Millennium Restaurant Group in Kalamazoo — as new customers that will be rolling out Conpoto’s services in the coming weeks.
Conpoto, which is Latin for “drink together,” has evolved from a mobile app that would let you buy your friend a beer at the local tavern into a new platform that lets merchants sell and redeem digital gift certificates. He’s also using his firm’s technology as a tool that allows companies to do promotions, outreach and employee recognition.

“It’s a simpler way to deliver gift cards, and it’s a more engaging way to deliver,” said Lepard, who partnered with former LeanLogistics executives Andy Bass and Matt Ahearn to start the company.

Here’s how the system works: A person can go online or in-person to any of BarFly’s locations or websites and buy a gift card that’s delivered via email to the recipient, who shows the code to the waitress to redeem the gift.

Conpoto’s mobile gift cards are easier for consumers to use because they’re accessible on their smartphones. Instead of being stored in a plastic card that can be lost or forgotten, the gift’s information is stored in the cloud and accessed via the recipient’s smartphone. The system can even be set up to remind the recipient to use his gift or that he has funds remaining.

[RELATED: Other apps that share some similarities to Conpoto]

Ultimately, the system is easier for merchants as well since they don’t have the hassles associated with creating, storing or loading money onto plastic gift cards — even if they’re giving up part of the $2 billion they make annually across the country when cards go unredeemed.

Garry Boyd, ringleader at BarFly Group, doesn’t mind narrowing that loss because it means he’s more likely to have chance at winning a new customer.

“I’d much rather have the opportunity to take care of somebody than to turn that money over to the state at the end of the year,” Boyd said.

Conpoto’s gift card service provides a way to engage customers and market to them at the same time, Lepard said.

“The beauty is in the residuals,” Lepard said. “The promotion has brought (the merchant) a new customer for a drink. But they’re probably going to drink more than one, and they’re probably going to bring other people with them.”

The outsourced gift card service runs via a web-based portal Conpoto created for each of BarFly’s websites. The system links with BarFly’s accounting system, and every two weeks, Conpoto direct deposits a check for the gift card sales into BarFly’s bank account, Boyd said. BarFly can still sell the mobile gift cards onsite using a tablet computer that Conpoto provided for each location. Conpoto’s system delivers the gift card directly to the recipient’s email account.

Boyd said the system is more user-friendly because he can run one system across all of BarFly’s venues, plus he doesn’t have to wait weeks for a large national company to update the venues’ information or to send cards.

“In the long run, it will save us hassles,” he said. “With (Conpoto), all we have to do is change one thing online and we can change our offer instantly.”

Tapping B2B, B2C markets

Conpoto’s other new merchant service helps companies with business outreach. Lepard signed up six of the 11 Millennium Restaurant Group locations in Kalamazoo to help streamline their business-to-business marketing. Instead of making dozens of plastic gift cards, the restaurants can instead sell local client companies bulk gift card codes for them to give out electronically to treat clients or employees.

The beauty of the process for companies is that they only pay if the treats are redeemed, eliminating the money a company would waste when the gifts go unused, Lepard said.

“It’s a unique, thrifty way for employers to set up an in-house gifting program,” said Brandy Gulley, director of marketing at Millennium Restaurant Group, noting Conpoto would “strengthen” her firm’s business-to-business marketing options. “We thought it was really cool and neat for an employer to be able to spontaneously treat or gift someone lunch or a beer or a snack — just because.”

Taking the gifting idea to the next level, Conpoto also started a pilot project with employee recognition and awards firm Terryberry Company LLC to integrate into the company’s “Give A Wow” platform. By the end of the year, participating Terryberry clients can send Conpoto treats to their employees in recognition of hard work or as a congratulations for reaching a milestone, said Mike Byam, managing partner at Terryberry.

Giving clients a chance to connect to local merchants drew Byam’s interest in Conpoto.

“You give people the opportunity to have a real local option, which one would think would be a more meaningful connection rather than a McDonalds gift card,” Byam told MiBiz. “From a recognition standpoint, if you’re a company with a lot of locations and you can give somebody something from their local market, it’s that much more meaningful.”

For companies, it’s also a cost-effective recognition tool, he added. “You don’t have to buy it and ship it and send it. You can do it at an inexpensive price point.”

Cheers to investors

Lepard said he got the idea for Conpoto in 1999. A buddy knew he often visited the Draft House in Dewitt, Mich. and pre-paid for a beer upon Lepard’s next visit. The bar listed the gift on a chalkboard bearing patrons’ names, the gift due to each person (“free draft beer”) and the person’s name who gave the gift.

As smartphone technology advanced, Lepard revisited the idea, ultimately leading to the launch of Conpoto in 2011. Replicating the spirit of the beer board, Conpoto started as a friend-to-friend gifting service with the ultimate goal of “making giving easy,” Lepard said.

The social gifting app allows a smartphone user to choose from menu options at restaurants sorted by city and state and email the friend a redeemable code for a treat, which can range from food and beverages to car washes or oil changes.

To date, about 100,000 to 200,000 people have been the recipient of a gift via Conpoto, said Lepard, who declined to disclose the company’s annual sales. Conpoto currently works with about 200 merchants.

Conpoto currently employs six people but has plans to hire very soon, given its success in attracting investors. The current $1 million seed round includes a syndicate of private investors as well as local funds Start Garden and the Lakeshore Seed Capital Fund in Holland, which each invested $100,000 in Conpoto.

“They’re a team of seasoned entrepreneurs. Their experience is pretty stellar,” said Start Garden’s Paul Moore, citing the connection with two key LeanLogistics executives as proof of the company’s experience in running lean startups. “I don’t know if gift cards are a thing of the past, but for small businesses and companies looking for simple rewards programs, Conpoto is meeting a niche.”

Joe Lampen, controller at Start Garden, said Conpoto’s technology “is both easy to use and has proven, real value to businesses who are trying to either incentivize their employees or engage customers through small ‘treating’ programs.”

The strong leadership team also stood out to fund managers at Lakeshore Advantage, which oversees the $1 million Lakeshore Seed Capital Fund. Conpoto is the technology fund’s seventh investment.

“We seek out good ideas with good leadership behind the ideas — we see that with Conpoto,” said Angela Huesman, director of new venture services at Lakeshore Advantage. “They have identified a unique problem in the market and have developed a clever web tool to alleviate the problem.”

Lepard said the reaction to Conpoto from the state’s investment community has exceeded expectations.

“We had a very friendly environment to raise money. Michigan’s been great for us,” he said.

Perfecting the pour

After launching in West Michigan, Conpoto remains focused on building its base of merchant partners across the state.

Conpoto recently expanded into the Detroit area with a dedicated salesperson, and it’s also working with Birmingham-based Brogan & Partners on a rebranding project that’s set to launch in October. Next, Conpoto plans to do a more widespread rollout nationwide as it continues to improve its user experience and make it easier for companies to sign up.

“It’s an opportunity to embrace a trend,” BarFly Ventures’ Boyd said of working with Conpoto. “People are managing their lives more and more (on their smartphones). It makes life easier when it comes to a simple thing like … having a gift card on your person. It’s a positive for us to be tied to something that makes it easy.”

Another positive, according Boyd and Gulley, was the ability for their Michigan-based companies to work with another local company.

“One of the major reasons we were interested aside from (the technology) is that they’re a Michigan-born and growing business,” Gulley said. “We think it’s a fantastic idea and the fact that they’re our neighbor is attractive to us. We strive to be a better partner in the state.”

Read 6689 times Last modified on Monday, 30 September 2013 10:29
Joe Boomgaard

Managing Editor

jboomgaard@mibiz.com

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