App-reciation: Cardagin helps businesses say 'thanks'

To launch his 21st century phone app business Cardagin, Rob Masri says he learned everything he needed to know when he was a kid at his family's restaurant in southwest Virginia.

"My father always said to me, 'If the same 40 or 50 families didn't come here time and again, there's no way our restaurant would survive'," recalls Masri. "Customers would drive up, and he'd begin making their order before they even got inside."

Now 41, Masri had emigrated with his parents and three siblings from civil war-torn Lebanon in 1977 and settled in the tiny town of Pearisburg, outside of Blacksburg. He recalls that for particularly frequent patrons, his father sometimes refused payment for the entire meal.

"He'd smile and say, 'Your money's no good today,'" says Masri.

Three decades and a law degree later, those memories of such special treatment and customer loyalty helped Masri launch what's poised to be a global customer loyalty appreciation business based right here in Charlottesville.

The key to Cardagin's success, says Masri, is the rise of smart phones coupled with the popularity of "customer loyalty cards," which include grocery store swipe cards and the freebie-offering punch cards popular at sandwich shops.

Masri recalls the day in 2008 that he sat in the basement of his Charlottesville home sorting stacks of such cards he'd collected from coffee shops, restaurants, and other businesses as he traveled the country in his job as the chief development officer for UVA Law School.

He'd taken that position at his alma mater in 2004 after working as an attorney both in private practice and as in-house counsel for a dot-com-boom-era company in Northern Virginia, but his childhood interest in customer service never waned. Today, he makes big plans from a light-filled office that was formerly a dance space above Hamiltons' restaurant on the Downtown Mall.

"I thought, there's got to be a better way to do this," he recalls of the day when the then-just-released iPhone sparked a modern twist on his father's lesson.

So does Cardagin mean we can finally toss out those grocery and other loyalty cards that turn our key chain into a ball-and-chain?

Not exactly, says Masri, who notes that the big national chains already have their own electronic loyalty programs in place. Cardagin, he says, is primarily aimed at the smaller businesses without sufficient size to implement and support their own.

Mom-and-pop businesses seem to be embracing the concept. In the past year, 1,500 firms have signed up for Cardagin, paying as little as $59 a month for the service, which includes an iPod Touch used to scan a code on customer phones. Meanwhile, 250,000 people have downloaded the free app, which enables them to receive "shout outs," specials just for loyal customers.

"I love it," says Corbin Snow, president of Snow's Garden Center, which signed with Cardagin two months ago and praises it as "simple, easy for the customer, and easy to train my sales people how to use it."

Unlike group deal sites Groupon and LivingSocial, Cardagin rewards the existing customers without completely destroying margins or taking a massive loss, something particularly tough on small businesses.

"They," says Masri, speaking of the businesses, "don't have to give the discount or reward until a certain amount of money has already been spent."

Snow says the garden center recently ran a deal on CvilleSaver, a locally-owned group deal site, and he says he sees the benefit in both services.

"That's a great way to draw new traffic," he says of the group deals. "Cardagin is an excellent way to retain customers and keep them coming back."

With sales offices starting to dot the East Coast and having recently contracted with a Dutch company to bring the Cardagin service to Holland, Cardagin is only poised to grow, Masri says. Similar partnerships are in the works in Ukraine and Mexico, so Masri figures it won't be long before Cardagin is helping businesses reward loyal customers on nearly every continent.

The boss, however, is happy staying put.

"I always wanted to retire to Charlottesville," laughs Masri. "I just never thought I'd be able to run a business from here."