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Real-time targeting brings yield management to mobile

I recently had the opportunity to talk with Douglas Krone, CEO of Leloca and founder of mobile device retailer Dynamism, about an unexpected benefit of real-time targeting: yield management.

One of the challenges local restaurants face is keeping their dining rooms full at off-peak days and times. According to Krone, Leloca is designed to help solve that problem. Leloca is a mobile app that allows restaurateurs to create “controlled,” real-time promotions. The deals are controlled in the sense that restaurant owners can turn the deal on or off at any time, target customers geographically, or set the deal to activate at specific times each day, such as during slow hours.

“As a restaurateur, if you can fill a table with a discounted but profitable customer at a time when there was nothing, then you’re adding profit,” Krone says.

The business model mirrors that of an airline or hotel. Not wanting to lose a single dollar due to an empty seat or vacant room, airlines and hotels often are willing to cut their customers a deal to fill those voids. Leloca allows small businesses to do the same. Instead of losing money on an unoccupied table, merchants can blast out a deal to Leloca users nearby.

Customers can download Leloca’s free app and view approximately 200 deals at any given time, usually worth about 30% off, Krone says. The app taps into customers’ geographic location to show them nearby promotions. Customers also can sign up to receive notifications to alert them when they’re steps away from a bargain. Once a customer downloads a deal, he or she has 45 minutes to present the promotion by scanning a QR code at the restaurant before it expires. The customer can view these deals by filtering what’s close by, what the best deals are, or by looking at a map.

Now, I know what you’re thinking: This sounds a heck of a lot like Groupon. However, unlike its competitors, Leloca focuses on a yield-management strategy to drive revenue for its clients. The real-time targeting aspect of the mobile app helps Leloca clients to fill seats during days and times they most likely would have been empty.

Leloca has only officially launched in New York, but intends on expanding to other major cities–including Boston, Chicago, and LA–by the end of this year. And although I focused primarily on Leloca’s dining feature, the mobile app does offer discounts for other small businesses, including spas and retailers.

So what did I take away from this meeting? The discussion reminded me how smartphones are playing an instrumental role in the lives of today’s consumers–and increasingly in the operations of the businesses that serve them. Consumers are making it tougher for businesses to make a dollar. They want to research a company and compare prices instantly to ensure that they’re getting a bang for their buck. Yet, my hat is off to small, local businesses. Competing against large businesses isn’t easy or cheap, and with technology constantly evolving, the stakes are only going to be raised from here on out.

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