EPISODE 018 : 07/09/2021

Dheeraj Sanka, Loyalti (Simply Modern Business)

Loyalti

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Dheeraj Sanka has a rich history in startups, retail systems and loyalty programs. His successful company Simple Modern Business runs Loyalti and a series of other new initiatives. As long-term partners with SnowShoeLoyalti provides business owners with better insights into the effectiveness of their loyalty program and also helps them engage directly with customers.

Host: Ned Hayes and Ashley Coates
Guest: Dheeraj Sanka

Topics Discussed in this Episode

  • Detailed small business insights from Olympia, Washington
  • Small business resiliency and adaptation during COVID
  • Doubling community outreach during the pandemic
  • Opportunities for small business loyalty programs

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Audio Transcript

Ned Hayes [00:00:01] Welcome to SparkPlug, where we talk to smart people working at the intersection of business and technology. Brought to you by SnowShoe making mobile location smarter. SparkPlug is happy today to host Dheeraj Sanka from SMB simply modern business, simply modern has created royalty as well as additional software services for the loyalty and retail market, and Dheeraj has been a really successful entrepreneur in that market. Welcome to Dheeraj.

Dheeraj Sanka [00:00:36] Thanks for having me. 

Ashley Coates [00:00:38] Dheeraj, thanks so much for being here. We’d like to start with a little bit about you. Can you tell us, can you tell our listeners who you are and what you do? 

Dheeraj Sanka [00:00:46] Yeah, absolutely. So, yeah, my background is actually in software engineering. So I was at the University of Michigan several years ago. Did my bachelors and software, as well as I had a minor in entrepreneurship, was actually a first year that Michigan was offering that minor program. So for me, growing up in India, we never really had entrepreneurship on our career path. So that was my first exposure to this idea of how you can actually be your own boss. You can build your own business, you can start from nothing and built it to something. So I’ve worked at a bunch of startups. I’ve been lucky enough to start a couple of companies myself and predominantly bounced prior to the startup bounce around between engineering and product management roles. 

Ned Hayes [00:01:26] So can you tell us a little bit more about the other startups that you’ve worked on or helped to found? Were they all in the same industry? 

Dheeraj Sanka [00:01:32] There across a few different industries, so founded a startup in college, so coming out of the the first course that we took in our in our minor. Me and my co-founder with pitch the concept during the course, our professor actually encouraged us to go to a local VC firm that was trying to build a, you know, a Y Combinator version in Ann Arbor. So we went and we pitched, it was also their first year doing that. And, you know, they loved our idea, they liked the team. So they gave us a grant for the summer to get started on the company. So for us, that was kind of a big validation. So the initial company that we started, it was a business called Campus Roots, it’s no longer  around the way I’ve always looked at it. It’s been a great learning experience. So we made a lot of mistakes while we’re in college, but it really taught us some stuff that set us up for, you know, future success with other businesses that we’ve done. So what that essentially was, we started out as trying to build a a website for that allowed students and colleges to search for rental housing, right, but to be more focused on things that students would care about. So not just, you know, around and square footage, number of bedrooms or more a what’s in the neighborhood? What’s it like being here? You know, the things that is, there’s a party area. Is this a quiet area? Things that only college kids we care about, right? Not when outside of that. So we started doing that when we tried to get a bunch of landlords to sign up with us didn’t quite pan out the way we wanted it to seem like a bunch of them weren’t really interested in working with, you know, a couple of kids on college. So we actually pivoted our business into becoming a a crowd sourcing style again, a neighborhood social network. So the idea was you would come in, you would claim your address and your house, and then in return, we show you your neighbors or you could interact with them, you know, for parties or whatnot. And in doing so, we would gather all the data with regards to, you know, how big is the house, what’s the land, what’s the area like, you know, just by building up the social feed and whatnot. 

Ned Hayes [00:03:34] So how did that segway into working in the retail domain? 

Dheeraj Sanka [00:03:38] Yeah. So it’s kind of a long story from there. So I went from campuses to another startup where the founder actually far from Campus Roots was employee number one there. And I was also in the rental space, know we helped them launch a new line of products that kind of double the revenue, and then they receently had to exit themselves after that, bounced around a couple of Silicon Valley startups, you know, VC backed several hundreds of millions raised all those kinds of places. And then I actually that wasn’t the perfect fit for me. So I decided to go into it for for a short span, for about four years. And that is where I really got into the small business software space. So I enjoyed was making the transition from desktop towards SaaS in 2011 through 15 when I was there. And so I got to learn a lot about the SMB space while I was there, and that’s how I got interested into getting into the retail space and the loyalty space. 

Ned Hayes [00:04:34] Right? Well, that is really impressive in terms of your history with start ups. I know right now you’re doing a lot with digital loyalty and SnowShoe even partners with Loyalti so could, could you describe more how your solution pairs with SnowShoe and how we’ve worked together? 

Dheeraj Sanka [00:04:53] Yeah, absolutely so. So going back a little bit, the first time I actually came across SnowShoe was in 2014, believe I came across about a new list. And at that point, I just thought it was a really cool piece of technology know and obviously appeal to the engineering. And I was like, Oh, this is interesting, but I don’t really quite know what to do with that. So I had a bookmark and we’re kind of in the back of my memory and left it there. So it’s towards the end of 2015 when I finally left and so I started working on Loyalti. I did a bunch of research on the space just to see what are the other solutions that competition built out, what has actually gained traction, what hasn’t. And the one thing I noticed there were a lot of companies that came and went in this loyalty space running every every year you got a few companies started in space and then every few years you have them just go obsolete. And the one thing I noticed is the only thing that kind of stay constant for decades was a paper punch card, right? No matter what you say about, you know, it’s really old school, there’s no tech behind it, but it’s existed forever and it also exists in other markets, not just the U.S., right? You go to any country, you see some variation of a paper punch card. And my thesis at that point was the reason the stands the test of time is it’s simple to use. Everybody gets it right. There’s no learning curve involved. So the thought process there was how do we translate the paper card into something digital so that you can get all the benefits of its position? And that’s why I, you know, kind of the two things click together. I was like, Oh yes, SnowShoe that’s the perfect technology to take a old-school physical experience digitized without adding a whole lot of friction and the massive learning curve on top of it. 

Ashley Coates [00:06:35] So Dheeraj, can you talk about some of the benefits that your customers see when they switch from a paper card to a digital solution? Can you kind of touch on what the pain points are that you’re solving for there? 

Dheeraj Sanka [00:06:49] Yeah, absolutely. So I’ll approach it from two and so on from the business, on our standpoint and the second problem their clients or their consumers. So for a small business owner, you know, going digital, there’s a few benefits when you go with a paper card, almost none of them know how effective the loyalty program is. You know, they just know that, OK, I print 2000 cards a month, but they don’t know if they’re giving it 2000 unique people or if it’s the same person is, you know, forgetting the card 10 times, you know restarting a new card they don’t have to deal with, you know, running out of cards or, you know, someone trying to cheat them by punching the cards themselves or signing it themselves or, you know, customer coming in with the cards and saying, I have a free coffee, you know, here’s ten cards and they’re holding up the line, right? The second benefit they got, obviously besides the user experience angle, is we actually help them collect, collect a lot of data on their customers, which they can then use to a) study the effectiveness of the program, but also to communicate with their customers, whether it’s for sending offers, making announcements just a way for them to reengage with a paper card. You basically have no way to connect with your customers multiple times now from a consumer standpoint. You know, I don’t think any of us really like to carry a bunch of paper cards in our pockets, so we get rid of that. All the customer has to do sign up of the phone number and they start receiving points within a couple of seconds or so. Super low friction, no need to download a new app. No need to carry a bunch of cards and your on your keychain or in your wallet. 

Ashley Coates [00:08:20] Absolutely. And so can you also talk about the actual experience that customers have when stamping what that experience is like and really that experience for both customers and businesses? 

Dheeraj Sanka [00:08:34] Sure. So let me start with the business and become the business as a couple of pieces. So there’s the owner. So for them, the thing they do like about SnowShoe and the loyalty products is there’s no extra training required for their staff. They just get it. So it’s like, Hey, whatever you’re doing, on the paper, just do that on an iPad instead of a physical card. Right. So the training level over there is, as you know, the curve is learning curve was basically very flat, so it’s not a whole lot, but they need to teach their staff, the staff, actually. We’ve heard this more of their. They actually like using the stamp because it’s fun for them to do. So it’s not something that adds to their workflow, and so they’re happy to use the stamp on the iPad. And then, you know, for that for the customer, basically, all they have to do is sign their phone number. It takes about one second to sign up and they can start receiving points right away as opposed to, you know, downloading an app or carrying a card, which is going to take a little bit longer for that. Like, what I’ve noticed with our system is the amount of time. Thanks for the credit card to process the customer can type in their phone number to get their points. So we’re not holding up the line, we’re not slowing anything down, but we have customers who have lines out the door for lunch and nothing slows down the process. 

Ned Hayes [00:09:51] Well, in terms of the data that you’re collecting for your, for your clients, for the merchants. Can you speak about what type of data you’re collecting and what that allows customers to do? 

Dheeraj Sanka [00:10:03] Yeah, absolutely so. So at a broader level, what we’re actually helping the business to do, we’re helping them take their foot traffic and digitize that road, and that’s our goal. So the main pieces of data we collect from the consumer, it’s the their names, you know, just the first name, something to identify them by phone number, which is the unique identifier in the system. That’s what are using to earn points. And the reason we go with phone numbers is one it’s easy to type and two everyone has one phone number. If you go with email is always the same where I forget which email address I used to sign up for some service in reducing the friction there. The other benefit of having a phone number is as soon as the customer signs up the first time we send them a text message asking them if they want to receive future offers and communications from the business, and they can opt in and then they’re there and they’re able to engage with the business. We collect the emails as a fallback, you know, in case someone doesn’t want to go into the text messaging. And then the last last piece we collect is birthday information. So just a month from the date. And the reason we do that is almost all of our businesses have this automated trigger set up with our system where during the week of the customer’s birthday, they’ll send them an offer. And usually it’s something of value, right? Like, maybe it’s a free ice cream. Maybe it’s a free cupcake, whatever it is. You know, just another way for them to kind of remind the customer of that and build their relationship with the customer over time. Now the data that’s been collected a few times can be done. So first thing is just how well is my loyalty program performing right? So are people coming back or am I just giving away stuff for free? And I’m not getting the return, so it’s at a high level. How effective is my loyalty program? The second thing that I want to do is direct outreach. So text messaging, email marketing, whether it’s your new store hours, you are releasing a new product or, you know, it’s it’s it’s a big holiday coming up on, you want to do some sort of promotional discount. The other thing I system does is also has automated triggers. So based on certain rules, the system can automatically engage with your customer without you having to engage as a business owner. So the perfect is one example we have dug campaigns. You if someone hasn’t been to your store in a month or two months or three months, we can try to reengage them. You can even set up milestones, for example, after their 50th coffee, give them a discount on a bag of coffee or something, right? So very customizable. Each business can start out the way they want, and it’s just a way for them to engage with their customer multiple times. And that’s kind of how you build loyalty, right? It’s an ongoing process. It’s not a one time. 

Ned Hayes [00:12:40] Well, so has this change the way that your clients are able to do business? Are retailers acting differently because they have different information? 

Dheeraj Sanka [00:12:49] The biggest difference is we actually noticed for the last year through the pandemic and the related lockdowns. I think that’s exactly when a lot of business owners went from realizing that this was a nice to have to a must have, you know, to be able to do things like announce changes, store hours, store closures, being able to tell customers what kind of safety protocols in place. It’s like we’re now delivering on DoorDash, Uber Eats, whatever and all of these things that they previously would not have been able to do. They were able to actually engage with their customers. We even had something that completely used to like use cases that we never thought of. So one of our earliest customers, hair salon owner, but apparently, you know, they had a talent for doing flower arrangements and they couldn’t have people into the salon. They started in flower arrangements and they announced that to their customers as another way to kind of generate revenue for themselves. Pre-COVID, it was mostly being used as a nice to have an extended offer here, and they’re treating it to customers to COVID and beyond. I think it’s become a but we need to be able to communicate with our customers. It’s no longer kind of a luxury, it’s a necessity. 

Ashley Coates [00:13:58] That’s really fascinating to hear how COVID really did change, how important that communication with customers is at any time, even when they’re not in the stores. I’m curious if you have thoughts on what will happen post-pandemic based on what you saw this past year and how all of these business owners were adapting. Will there be a Big Retail revival? What do you think you’ll see and we’ll all see in the market? 

Dheeraj Sanka [00:14:22] Yeah, I mean, it’s always hard to predict in the future on these things. So the one thing that I definitely feel pretty confident about is every business owner, even, you know, small business owners are now looking at some level of, you know, an online or digital strategy, like some way to communicate with our customers, some way to have online ordering online storefront. All of these things that were kind of nice to have so now become front and center for business owners. There’s probably also going to be other changes, but I think a lot of business owners have figured out how to run more efficient things. You’ll probably see maybe certain concepts explode, and things like the ghost kitchens will become more popular. Maybe you have a lot more fast casual versus fancy kind of sit down. Big waitstaff that place, I mean, they’ll still exist, but maybe you see a difference there. The fact that everyone wants out is a strategy. That part is very clear from mom and pop shop all the way up to Fortune 500 companies. Everyone is visiting the store. 

Ned Hayes [00:15:17] Your technology has been really useful to retailers. A lot of new technologies are emerging in the loyalty space, in the retail space. What interesting technologies have you seen out there beyond just the stamp technologies? 

Dheeraj Sanka [00:15:31] Yeah. So the one that I think to the pandemic, it looks like QR codes made a comeback. Know I’ve seen them everywhere. I’ve seen a lot of online ordering systems that are really taken off in different formats, whether it’s, you know, ordering from your table, ordering a head for a pickup or integrating with delivery partners. And then like I said, ghost kitchens another thing that I started to see kind of a spike that so you have this kitchen somewhere on the outskirts of the city that’s now able to cater to the entire entire city. So I’ve seen a lot of stuff on of the commerce being taken online away from the point of sale to the online. 

Ashley Coates [00:16:07] So Dheeraj Loyalti has clients in a variety of different markets and industries. Can you touch on what you see as being the which different types of loyalty programs are successful in different markets and maybe even different industries? 

Dheeraj Sanka [00:16:22] Yeah, absolutely. So I’ll give you some information from my standpoint based on the kind of businesses we work with. We’re a lot more narrowly focused today than we were, let’s say, when we started. So but we have worked with small businesses across retail, sit down restaurants, a lot of service businesses like our nail salons, hair salons and fast casual restaurants. Now, having worked with them for several years, what we’ve noticed is that there’s a there’s a few types of programs and a few types of businesses that where this works really well. So I’ll list off a few characteristics for where we’ve seen the most amount of success. The first thing is your business. Whatever your selling needs to be a place where customers want to go frequently, they’re more likely to sign up for our loyalty program. So, so think about it versus your local coffee shop, where you’re probably going there a couple times a week, a couple of times a month. Whatever the frequency, you know, versus a like a fancy restaurant where maybe you go there once a quarter, once every six months or something like that. People are more ready to sign up for the one where they’re going more frequently because they know they’re going to be back. If they want to be able to earn points, obviously the way we work as we collect information at the point of sale. So businesses we’ve got for traffic tend to do better with the system, then once without and then the last thing that we’ve noticed and I don’t have a technical term for this, but businesses are what we call a simple menu. You tend to do really well. So what I mean by a simple menu is, you know, they make most of their money selling one item or a variation of the items sandwiches, cupcakes. You can have a bunch of combinations on it, but it’s one item that you know you’re selling a lot of variations on. And the reason behind that, I think, is simple with a lot of their loyalty programs are very simple and easy to understand buy ten get one free. Easy to understand, I can sign up as opposed to, you know, earn a point, or earn five points for every dollar spent. And then when you reach 50, this happened, then 200, that happened. So it it starts to get complicated that a lot of consumers don’t want to deal with at the point of sale. So those are the high level of what we’ve seen. So we tend to do really well with our fast casual restaurants. Broadly, I think like, you know, drinks, so coffee, juice, bubble tea and then what I call it, like a lunch category. So that would be like sandwich shop. And then the last thing is like a dessert like ice cream, cupcakes and so on. So those are the industries where we’ve seen the most amount of value delivered to the business owner from our software. 

Ashley Coates [00:18:41] And of those categories, were there some categories of clients that were affected more last year than others? And can you describe in general how your customers adapted to the closures and the new restrictions? 

Dheeraj Sanka [00:18:55] A good chunk of our customers were able to adapt, given that they were in the fast casual also. The main thing they did is they got rid of the indoor seating capacity and they switched pretty much to a pick up only model, so a good chunk of them were able to adapt. Obviously, people who were in the service business like nail shops, hair salons, they kind of had to just do a full blown shutdown and leave it at that. So a big chunk of our businesses were able to adapt, just given the fact that their business models were relatively easy to translate into a COVID world. But yeah, some of the more service orientated retail businesses that we did that struggle with dealing with restrictions. 

Ned Hayes [00:19:31] So where do you see loyalty in your business in general, expanding in the future? 

Dheeraj Sanka [00:19:36] Yeah. So I think our goal is to continue to help customers, small business owners, get more out of their customer data. We’re working on a couple new product lines internally that we’re pretty excited about, that we’re not quite quite ready to announce yet. But when we do get those out, I think they’ll be able to build on top of the data that we’ve been collecting for for our customers. And then the other thing that we really focus on is, you know, we work with really small businesses right to your local neighborhood mom and pop shops. So a couple of other things are important for us to be able to deliver on so ease of use of software. So we want to build anything that’s super complicated that has, you know, lengthy training cycle. You know, this is like selling Salesforce into a big organization like where you can have training and coaching for hours on end. Business owners need something that they can plug into their workflow, and it has to just work without a lot of ramp up time. And then the second thing is to be able to do those without breaking the bank for the business owners right. There’s a lot of software that’s super expensive. Maybe there’s a lot of stuff that the small business doesn’t need, but you know, it’s just well out of their budget where they cannot really adopt it. So we want to be able to deliver a lot of value at a price point that is small, business friendly. So we’re going to stick with those guiding principles that work for us so far and hopefully will work for us for the future. 

Ashley Coates [00:20:52] Thank you Dheeraj so much. I do have one more question, but before that closing question, anything else you’d like to share with our listeners before we close? 

Dheeraj Sanka [00:21:00] No, not a whole lot. 

Ashley Coates [00:21:01] OK, so our final question for you is what is your mission and what do you hope to pass on to others? 

Dheeraj Sanka [00:21:09] I know a lot of businesses will say a customer centric or consumer centric, and we have been trying to kind of live through that right. So we want to make sure that we understand our customers and be able to continue to deliver a whole lot of value for them. So yeah I think broadly we want to stick with what’s worked with us so far, which is making sure we get understand what we’re dealing with and be able to do the right thing for our customers for the long term. 

Ned Hayes [00:21:32] Great. Really appreciate the time with you Dheeraj. Great discussion. 

Dheeraj Sanka [00:21:36] Yeah, no. Thanks for having me. Now, happy to have help. 

Ned Hayes [00:21:51] Thanks for listening today to the SparkPlug podcast hosted by me, Ned Hayes, and brought to you by SnowShoes Snow.sh for smarter mobile location, SparkPlug is a wholly owned property of SnowShoe all content. Copyright 2021 SparkPlug Media.