Sweet Tooth Lands $2.25M to Expand Its Loyalty Platform

Waterloo, ON-based Sweet Tooth announced a round of seed financing this morning, totalling $2.25 million and including OMERS Ventures, the MaRS Investment Accelerator Fund, Points International and other unnamed investors. Sweet Tooth provides simple white-labelled loyalty and rewards programs for online and brick-and-mortar merchants, and with the funding it now plans to expand its platform availability and make some strategic hires.

Sweet Tooth already has impressive traction, having landed over 1,500 customers since its launch in 2009, which puts its product in front of over 15 million consumers, with a significant international presence. In an interview, Sweet Tooth CEO and founder Jay El-Kaake said that while it’s true that there have recently been a lot of loyalty and rewards players popping up, including Perkville, PunchTab and Swipely among others, Sweet Tooth offers something unique that he thinks merchants are responding to.

“A lot of the other offerings are focused around the customer having to do something in order to earn the points,” he said. “We’re kind of giving merchants the ability to do it turn-key, and not requiring customers to have to install any apps and do anything extra to get the rewards. That sort of benefit to the merchants is how we’ve been able to get so many running our software.”

Part of Sweet Tooth’s appeal lies in its flexibility for merchants; a partnership with Points.com allows vendors to use established reward programs, like Best Buy and American Airline miles, or they can opt to create their own loyalty program specific to their storefront. That allows merchants more leeway in terms of finding out what kind of rewards best encourage user engagement, versus being stuck with an either-or choice between external and internal programs.

One thing Sweet Tooth plans to do with this new funding is help it expand to other platforms; so far, it only works with Magento in terms of ecommerce platform integrations, but El-Kaake said that future integrations are in the works, including a PrestaShop partnership which is tentatively planned for deployment in about a month’s time.

Perhaps the most significant benefit of the funding is that it will allow Sweet Tooth to try out a new revenue model, one which El-Kaake thinks merchants will favor, since it’s based on successful engagement with the Sweet Tooth program, and carries almost no upfront risk for a merchant.

“We’re changing our pricing model so that it’s a success-driven model for merchants,” he said. “The idea is that our new pricing is based on the number of points transferred per month, as opposed to fixed licensing which we used before. As a merchant is using a rewards program more, we’ll charge them more, and for the new guys just getting started, they won’t pay anything unless they see a return.” The new model will help Sweet Tooth compete with others in the space like LocalBonus, which use the same kind of value-driven pricing structure.

Sweet Tooth may be working in a very active space, but it has managed to capture a unique vantage point via its international adoption. Only around 50 percent or less of Sweet Tooth’s customers operate in English, and the service’s clients cover 13 languages in countries all over the world. Few others in the loyalty space can claim such strong international presence so early on, and without products specifically targeted at those markets. With this funding, it could be in a position to extend its worldwide appeal further still.



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