Kudos Community will unveil a twist on the daily deals concept as it attempts to compete against established leaders Groupon and Living Social. The site launches Tuesday in Seattle with expectations to expand this year to between five and 10 markets across the U.S.
While the social-couponing site will give retailers a means to connect with consumers to provide discounts and deals, it also expects to generate hefty donations to more than 1.2 million charities.
In fact, the site plans to donate 25% of its revenue to nonprofits and community organizations, such as the Juvenile Diabetes Research Foundation and American Lung Association.
Kudos members select up to three charities to support through the platform. Members begin earning money for selected charities by signing up and receiving coupon offers. Each offer that consumers receive automatically generates money for support. The organizations receive earned commissions quarterly.
Network for Good, a nonprofit organization, will process the checks to the charities.
"In this model, the business keeps the entire $20 at the time of the transaction, but pays to advertise the product up front," says Carl Lombardi Jr., Kudos cofounder and president.
Companies pay per person to deliver coupon ads to consumers, similar to the way bulk coupons are sold through the mail. Consumers do not purchase goods and services through Kudos, but rather "reserve" the purchase. No financial transactions take place through the platform between the merchants and consumers. Consumers reserve coupons and pay the merchant at the time services are rendered or products received.
Businesses create an account for free, use the Profile Tool to select their target audience, customize coupons, and begin directing coupons to site members. Coupons are posted for up to 30 days. The cost of distributing a coupon through Kudos depends on the quantity of members targeted, demographics and other factors.
The OC Register generated $188,000 from a daily deal boat ride from Newport Beach, Calif. to Catalina Island, off the coast of California. An additional syndication of the deal brought in more than $30,000, according to Doug Bennett, president of interactive at Freedom Communications, which owns the OC Register.
With all the services offing daily deals, it's not clear whether Kudos will survive the onslaught of daily deal sites.
Merin Designs, NW Float Plane, A la Mode Pies, Shoe Wallet, Swink Style Bar, Brief Encounter Cafe, and BluWater Bistro are among the local Seattle-based companies that plan to offer special deals at launch.