Constant Contact acquires Boston-based CardStar to help small businesses run loyalty programs

January 19, 2012|By Scott Kirsner, Globe Columnist, Globe Staff

By Scott Kirsner, Globe Columnist

The acquisition talks between Constant Contact chief executive Gail Goodman and Andy Miller, founder of the mobile app start-up CardStar, began to get serious last summer.

First, Goodman had a drink with Miller at the MITX Innovation Awards last June. (She was there to pick up an "Innovation Hall of Fame" award for building the Waltham company into a major force in digital marketing for small businesses, with 900 employees; CardStar took home two awards, too.) Then, she was on a panel with Miller as part of FutureM week in September. What started out as vague discussions about how Constant Contact might partner with CardStar, which makes an app that lets consumers store their frequent-shopper card info on mobile phones,turned into conversations about how Constant Contact might acquire the small Boston start-up.

"The two teams started to get really excited about the potential as the weather got colder," says Goodman. By early December, they'd agreed on the terms —which aren't being disclosed. The purchase is being announced this morning. It is Constant Contact's third acquisition since 2010, as the company seeks to diversify beyond its core business of helping its customers conduct e-mail marketing campaigns.

Miller says that CardStar's app is available on six mobile platforms, including Android, iPhone, and Windows Phone 7. Users can enter the account numbers for their various loyalty programs —at pharmacies and bookstores, for instance — and their phone's screen then displays a scannable barcode that can be used instead of a physical card. Retailers can also offer coupons and special deals through the app. (I test drove the app in 2010.) "We don't talk about download numbers," Miller says, "but we do talk about active unique users. Those are people who've installed the app and used it at least three times." CardStar has more than two million of those; about 85 percent are in the United States. The company raised about $1.75 million in funding, from Verizon Ventures, LaunchCapital, and others.

Goodman says Constant Contact will maintain the CardStar brand: "Their consumer base is a big help to us. We've always felt like loyalty was something we'd need to have an application in. But the question was, how do you make it simple enough for small businesses?"

I regularly use the CardStar app when I shop at CVS, but I asked Goodman how it might work with an independent local business, like a bagel shop.