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Constant Contact has acquired mobile developer CardStar and its mobile platform for putting merchant loyalty programs on consumer smartphones.

Essentially, CardStar's application enables shoppers to store all of their rewards programs--the cards and keychain tags favored by grocery stores, big box chains, and other retailers--on a single smartphone app instead of lugging around stacks of plastic. Shoppers' favorite merchants can then send special offers, coupons, and promotions based on whatever criteria shoppers choose.

Small companies typically haven't had the infrastructure or scale to automate and optimize grand-scale loyalty marketing tactics. Constant Contact, which focuses exclusively on smaller businesses, is betting that the rapid rise of the mobile app will change that--especially given that the rewards program concept is already so ingrained in the consumer mindset.

[To learn more about some of the most recent trends in the mobile industry, see 5 Mobile Trends From CES 2012.]

"Small businesses have never really been able to take advantage of that because there wasn't a simple but powerful way for them to run a loyalty program," Constant Contact CEO Gail Goodman said in an interview. Moreover, consumers weren't keen on toting 50 different rewards cards around. "Now they don't need a unique card--they can use the application they're already using to store their national brands to store the loyalty programs for the businesses they love in their neighborhood," Goodman said.

The move also adds a significant mobile component to Constant Contact's existing online marketing suite for small businesses. The company began as an email marketing provider and has since added social, CRM, surveys, and other pieces to the puzzle. Some of its competitors already have their own mobile features. MailChimp, for example, touts a mobile app for adding subscribers, managing lists, and reading reports. It also offers app tools for iPhone and Android developers.

Goodman believes the ability to reward existing customers and connect with new ones via iPhone, Android, BlackBerry, and other devices will help set Constant Contact apart. That's largely because the mobile application will be its first that can help customers connect with small businesses instead of vice versa. "All of our applications to date have been permission-based, where the relationship starts after the customer has found the small business," Goodman said. "Now we can help consumers find small businesses they might like near them."

CardStar, which started in 2008, initially focused on big businesses. Now their application will be in front of Constant Contact's 450,000 small-business clients--and their customers. Asked how his company stacked up against other geo-location apps like Foursquare, CardStar founder and CEO Andy Miller--who joins Constant Contact as director of mobile products--said the loyalty component makes it much more valuable to the merchant.

"CardStar is a check-in app," Miller said in an interview. "We're probably the only real check-in app in the sense that when you go to a merchant and you open up CardStar, you're opening up your loyalty card, and it's used for a purpose--not just to say to some network, 'I'm here.''"

The CardStar app's chief weakness at the moment is on the back end--businesses are pretty much on their own on the database and analytics fronts. While companies can track purchase behavior to determine rewards and other loyalty tactics, more robust tools for storing and analyzing customer data are absent. Goodman said building out a more complete platform will be part of the post-acquisition product strategy. While noting that plans for integrating the CardStar platform are still in "back of the napkin" phase, she also indicated the loyalty applications will likely plug into its email, social, and CRM tools in the not-too-distant future.

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