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Shopkick app gives points for shopping local

In a partnership with Citigroup, Shopkick is looking for 1,000 small businesses in 10 states to sign up, for free. Shopkick installs a small in-store receiver that communicates with customers' mobile phones with pop-up discounts and offers.

"We will do for small and medium-sized local stores what we have done for large, national chains: drive foot traffic," says Shopkick CEO and co-founder Cyriac Roeding.

The app, launched in August 2010, has pulled in nearly 2 million downloads. But don't compare Shopkick with the "deals" craze made popular by such online sites as Groupon and LivingSocial, says Roeding. "We're very different," he says. "We're actually focused on bringing people back to the store, rather than giving a discount to people who drive across town to get it, and may not come back again."

Shopkick's app offers discounts on a multitude of products at retail stores, but it also offers "kick points" for entering the store and additional points for picking up a product and scanning the bar code. The points are interchangeable between retailers and can be paid off with iTunes gift cards, Facebook credits, dollars off at restaurants and gift cards for Best Buy, Target and Sports Authority .

Shopkick is backed by $20 million from venture-capital firms Kleiner Perkins Caufield & Byers, Greylock Partners and LinkedIn founder Reid Hoffman . The receivers installed in stores cost about $100 each and are in place in Shopkick's network of 2,500 retailers. For local expansion, Shopkick is accepting applications from businesses in New York , San Francisco , Los Angeles , Chicago, Seattle, Dallas, Austin, New Orleans , Detroit and Washington at shopkick.com/local.

Citigroup is footing the bill for the new receivers, by sponsoring the local program. If what's happened with large retailers translates to small business, those mom-and-pop enterprises "will begin to see customers returning more often and building loyalty," says Chris Kay, managing director for Citigroup unit Citi Ventures.

Roeding says he's looking for businesses with high customer frequency such as coffee and yogurt shops. In test-marketing the local expansion, Roeding has been trying it out with 100 small businesses the past few months.

Shanna Biederman, manager of the Peninsula Beauty shop here, says the app brings in customers who wouldn't normally shop at her store, "because they get the reward points from Shopkick. So it's a benefit on top of the 15% (off) they get for shopping here." She estimates that at least 10 new customers have come in monthly, finding out about Peninsula Beauty on the mobile phone after receiving points from big retailers. "It's more than paid for the discounts," she says.

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