Jefferson Graham, USA TODAY
SAN FRANCISCO - Two years ago, Cyriac Roeding had a brainstorm for a new app: Turn it on when you walk into a store, and get rewarded with points for shopping.
Users can rack up "kicks" for discounts on products, iTunes gift cards - even free restaurant meals.
Four million users and more than 1 billion reward kicks later, Shopkick just revamped its app so shoppers can score even more rewards by starting their shopping at home. By identifying a product to buy at a retailer - and saving it to a "look book" section within the app - you get points just for entering the store.
"The more you know about what your store carries, the more likely you are to go in," says Roeding. And Shopkick gets a commission on each transaction.
The updated Shopkick app, released last week, is already driving up store traffic, he says. The number of store walk-ins increased 60% from the previous week, says Roeding. "A 20% increase was our best hope."
Retailers love it. "Our Shopkick customers buy twice as often as a non-Shopkick user," and have helped increase in-store traffic, says Fred Grover, executive vice president of the American Eagle clothing chain. "We're hoping the revised app will" be even more effective.
"It's really useful to have the customer pre-shop before they go out," says Kate Dickman, senior director of brand marketing for Old Navy.
The Shopkick user base of 4 million is small compared with the overall universe of Old Navy shoppers, but when the company adds incentives to buy in the app, "We notice an uptick in our business," she says.
The app redesign "gives brands a chance to tell a broader story," says Sonny Jandial, associate marketing director for consumer giant Procter & Gamble. "They've taken a more shopping-centric approach to the app."
On path to profit
Roeding started Shopkick in 2010 with $20 million in funding from a number of sources, including LinkedIn founder Reid Hoffman and venture capital firm Kleiner Perkins Caufield and Byers. He predicts the privately held Shopkick will achieve profitability next year.
How Shopkick works: Small transmitters installed in each store send out a high-pitched audio signal to communicate with Shopkick users' smartphones to let the app know you're there.
"The biggest problem for retailers is getting people to walk into the store," says Roeding. He figured that marrying a smartphone to the rewards system would produce more foot traffic.
He signed up Best Buy as his first retail partner, and has since expanded to 15. In the past three months, Target, American Eagle and Macy's rolled out Shopkick nationally to their stores, bringing to more than 7,000 the number of stores that are Shopkick participants.
P&G and Kraft Foods also are working with Shopkick, to pass promotions along to consumers and get them into a store.
The number of kicks offered depends on the retailer, but most retailers offer 100 kicks for walking in the door, and more if items are scanned at the store.
Attaining 875 kicks will net a $25 restaurant voucher, for instance. Roeding says that can be picked up in one to two days of shopping.
Fans tout the Shopkick app on Facebook and Twitter.
Denise Fouts of Chandler, Ariz., says she's "hooked," and is a frequent "shopkicker."
"I have a morning routine of checking my core apps on my phone, which include Facebook, Twitter, Instagram, and now, Shopkick," she says. "I want to know ... where the big walk-in kicks are, or any scanning opportunities to add even more kicks." Her goal is to pick up a $300 gift card for a Coach bag.
Angelica Nathan of Fremont, Calif., has shopped so many times with Shopkick that she's earned a $100 gift certificate from Target.
Using Shopkick "makes shopping more fun," says Nathan, a mother of three and owner of a local catering business.
Sucharita Mulpuru, an analyst at Forrester Research, says Shopkick's base of 4 million shoppers is more promising for retailers to use than developing a reward app of their own. Most retail apps have user bases of around 100,000, she says, and retailers' expertise doesn't translate into developing for the Apple and Android platforms.
"Shopkick takes all the hassle away for them," she says. Though many apps offer deals and e-coupons, Shopkick has the shopping rewards section to itself, she adds.
But for Shopkick to develop a mass market, such as that of the companies it works with, "it needs to have a lot more users," Mulpuru says. "Four million is great, but there are 200 million shoppers in America, and 100 million of them have smartphones. Shopkick needs to become a habit with them."