Playing Tag: Loyal Customers Flock to Merchants for Deals . / Credit: Flock Tag image courtesy of Flock Tag

A customer loyalty card program that works can be the killer app for small businesses. The only problem is the cards themselves, usually paper that is manually stamped to show progress toward earning a reward. They get lost, clutter up pockets and take too much time to find.

Now, a small startup in Ann Arbor, Mich., thinks that more durable multi-program plastic cards provide a better solution.

Flock Tags, the brainchild of David Lin, the owner of an Ann Arbor cafe, and Adrian Fortino, a graduate at the University of Michigan there, look like everyday credit cards. But their embedded near-field communications (NFC) chips enable them to interact with card readers at participating stores, providing valuable consumer purchasing behavior to retailers that enables them to offer tailored deals to Flock Tag card users.

Users can also participate in the program and track their purchases and rewards with free apps for Android phones and iPhones.

 "Flock Tag takes purchase data and creates specific offers from retailers that it pushes to users in a scalable, automated way," Fortino told BusinessNewsDaily. It only sends offers to users who are truly going to bring them a profit."

Flock Tag analyzes more than 20 factors of consumer behavior, enables merchants to find the most relevant customers nearby and delivers  deals that eliminate the cannibalization of sales that frequently plague daily deal offerings.

The consumers get great deals and the convenience of using one card for all their participating loyalty programs, Fortino said. By swiping their card, they accumulate "tags" that record their purchases and eliminate manual stamping of a card.

Lost cards can easily be replaced with new ones that retain past purchases and information.

The ability to track, target and segment users is Flock Tag's key differentiator from competitors such as LevelUp and Belly, Fortino said.

The cards are free for consumers. Merchants pay a tiered fee from $50 to $200 a month based on volume. Flock Tag also provides retailers an Acer 200 tablet and NFC reader that attach by USB port, Fortino said.

Flock Tag is now in use by 100 businesses and has 50,000 users, he said. The program, launched in January, has been rolled out in Ann Arbor and East Lansing, Mich.; Bloomington, Ind.; Columbus, Ohio; and Champaign, Ill., all cities with large populations of college students. On average, businesses have an average of 650 active users, Fortino said.

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