Give and take - Loyalty Markets
Richard Zinck’s micro market approach includes giving out a $5 credit to new accounts to help ensure they get trained on the technology.
Entrepreneur Richard Zinck’s latest venture has him thinking of how to do micro markets differently. Loyalty Markets has tapped into technology, abandoned the need for a warehouse and developed a system for training its customers with a free credit.
Zinck’s former life as the operator of 35 coffee trucks in Guelph, Ont., seems to have prepared him well for pushing the boundaries in business. In 1995, he was awarded Entrepreneur of the Year Ontario by the Ontario Business Journal. After closing up the coffee truck operation, he got into the vending industry. He was introduced to the concept of micro markets during his tenure in vending, and therein lies the seed.
Zinck is also a business consultant and motivational speaker, and it is these roles that set up the circumstance for Loyalty Markets to spring to life. He was speaking at the University of Toronto and the man speaking before him asked to take him to lunch. The man turned out to be the founder of Red Flag Deals, a company that was sold for a tidy retirement by someone too young to retire who now had funds to invest. Over lunch, the angel investor told Zinck he had 10 minutes to pitch an idea. Zinck told him about micro markets and assured him he could get accounts – that was his forte. The investor struck a deal with him: if Zinck produced accounts, he would invest.
The next day Zinck went into Guelph Tool, an auto-parts supplier, and pitched them a micro market. He was told if he could do all the plants, then the deal was a go.
For the first year he operated out of his car as a one-man show, setting up the first site at Guelph Tool around Christmastime 2014. Rather than get his own warehouse space, he asked Guelph Tool to give him about an 8 by 10 foot space at their factories for a fridge and product. His suppliers deliver directly to Guelph Tool, where the company receives product for him and moves it to the onsite storage space. Loyalty Markets re-stocks from there. His micro markets are typically located in the general lunchroom and have, on average, four fridges and an ice cream freezer. It’s as important for you to approve the site as it is for them to approve you, he says, in ensuring the logistics work. This onsite warehouse concept is the system he has maintained going forward. He says he has up to 10 accounts now, with 10 more signed, and has hired two employees to help out. He focuses on companies with 100 or more employees to serve, saying most of his accounts are 300 or more but he does have some smaller ones coming up.
Loyalty Markets is dedicated to micro markets alone, and Zinck has been pouring his ideas into it, remarking, “micro markets are not just glorified vending.” For example, his kiosks are set up with suggestion buttons so customers can make requests, which are sent to his cell phone. His next step is to allow people to order lunch online through the Loyalty Markets website, and it will arrive the next day with their name on it. He finds people in factories are often a bit fearful of the technology, but once they are comfortable, once they can order lunch online, Loyalty Markets will be able to sell any number of products because the customers will be familiar with the system, he says.
Zinck went one step further than accepting credit and debit, and sets up payroll deduction where he can. Now, he says wherever payroll deduction is available, 90 per cent of transactions are lunch coming right off the employee’s cheque. Human resources notifies him of new hires. Zinck creates a $5 gift card and an account. Human resources shows the employee how to use the system and gives them the card during orientation.
The $5 initial credit is part of Zinck’s philosophy that you’ve got to be willing to lose some money and food in the first year. It’s important to keep the market full, he says; if people don’t see much there they tend not to buy. The $5 nets someone a large sandwich with Loyalty Markets, which gets the person to try the product.
The $5 credit also came out of need. On the first break after the first market was initially set up at Guelph Tool, no one bought anything or even registered. Zinck started handing out the gift cards as incentive for staff to take the time to learn the system with him. People don’t want to appear foolish trying to use it for the first time in front of friends and co-workers, he says, so you need to offer an incentive to get around that. Giving them a gift is also essentially paying them for taking some time to learn the system, making it a win-win, he says.
Another attraction to buy is aesthetics. “Don’t be afraid to make it look good...It’s got to be a store experience; I don’t want it to look like vending machines, I want it to be an experience.”
Theft is a common concern, and one Zinck shared when he loaded his first market up, even though there were plenty of cameras on it.
“I was afraid to go home because it’s all open…but the employees like being trusted by the company…People get it. They don’t want a criminal record or to lose their job over a chocolate bar.”
It’s been quite the adventure in micro markets for Zinck, one he clearly views as a great Canadian opportunity.