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Think Big. Move Fast.

“Customer loyalty is the single most important driver of growth and profitability. – Harvard Business Review

Today, we are excited to announce our investment in FiveStars.  Founded by Victor Ho and Matt Doka, FiveStars makes it easy, and affordable, for retailers and merchants to reward their most valuable customers.  It is the first loyalty offering that integrates directly with over 90% of existing point of sale (POS) systems and is already being used by hundreds of merchants.

So why loyalty and what makes this company and market interesting to us?

In the face of economic pressures, consumers are thinking more carefully about every purchase, and retailers now face more competition than ever.  However, smart retailers are facing these challenges and actually growing their businesses, and bottom lines, by retaining their most loyal customers.   A recent student by Harvard Business School found that a 5% increase in customer retention yields an increase in profits between 25 – 100%.

The key, however, is how to retain these customers without increasing complexity and costs.  As a former loyalty consultant at McKinsey & Company, Victor Ho has a keen understanding of the challenge that retailers face and has delivered a product that not only meets those needs, but also does it in a way that works seamlessly within their existing business structure and is frictionless for consumers to adopt.  It literally “slides in.”

FiveStars offers consumers a single card that they can use to earn rewards for everything from picking up coffee to getting a massage without the hassle of keeping track of multiple cards.  A consumer registers once by just giving their phone number and then simply provides the card to merchants on checkout.  And because the company integrates directly and easily with the POS, retailers can be up and running with FiveStars in literally minutes.  No extra equipment is required, like iPads or smartphones which add to complexity and decrease adoption.  Furthermore, Five Stars allows merchants to track spending habits and better personalize promotions and rewards.

The proof is in the pudding, and the company has already signed up several hundred merchants in its first several months of selling with very little marketing or advertising.  They have developed a winning formula and with the new capital will be looking to accelerate their go-to-market activities.

It’s a great product, built by a great team and addressing a huge market.  We couldn’t be happier to partner with them as they think big and move fast.

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  • http://twitter.com/JConJC James Christensen (@JConJC)

    As a veteran in loyalty I see this as a refreshing approach. The concept of a POS logo that says get Fivestar treatment here is a brilliant way to get the attention away from the coalition and back to the merchant. Coalition always have issues with what consumers are loyal to and even take loyalty away from merchants. Fivestar appears to be addressing that, I would certainly like to know more and look forward to seeing them get traction with new funding.