LevelUp plays in the same sandbox as Groupon, LivingSocial and the myriad of other daily deals sites, but the product attempts to reengineer the formula with game mechanisms and location -- two areas SCVNGR knows well -- to benefit both the consumer and the merchant.
"LevelUp is a new type of location-based interaction. It combines the best parts of the check-in, the challenge, and the reward into one bite-sized unit,” says SCVNGR founder Seth Priebatsch.
Here's how it works: LevelUp users can locate nearby deals -- say $10 for $20 worth of food -- through the iPhone or Android app. Upon purchasing and using the first deal at a partner merchant, the customer has effectively completed Level 1, and unlocked Level 2, an even better deal -- like $10 for $30 worth of food. When the customer returns to same spot and buys the Level 2 deal, he'll unlock the final Level 3 offer, which in this example would be $10 for $40 of food.
The idea behind LevelUp is that first-time diners will turn into regulars as they go through the leveling-up process. Priebatsch believes that with LevelUp the SCVNGR team could "crack the science of loyalty at scale."
The location-meets-game-mechanics deals product is being released with a built-in business model similar to other daily deals sites. SCVNGR will take 25% commission on all the Level 2 and Level 3 deals purchased through LevelUp.
The startup will spend $1 million apiece in Boston and Philadephia over the next six weeks to promote the new offshoot application and deals offering. If the LevelUp experience resonates with mobile users, SCVNGR will consider merging the experience with its mobile social game experience.