Spoqa is a Seoul-based startup that operates Dodo Points, a tablet-based loyalty platform for local merchants. Since its launch in April 2012, 1,500 local merchants in Korea signed up and Spoqa has driven 2.5 million customers to its partner merchants.

Today the company has announced that it has closed its second round of funding, putting its total funding raised to $3.9M US dollars. With this round, Spoqa aims to aggressively expand its business in Korea, and expand to Japan.

"We are speaking with potential partners in Japan, who look at our pilot test numbers and also believe our product has great product-market fit in Japan", explains Grant, whose previous experience in scaling international businesses at Rocket Internet enables Spoqa to reach to key Asian markets. Spoqa will also use the funding to upgrade its marketing platform to better target users for merchants who want more sophisticated targeting methods.

One of the key selling factors is ease of sign-up and use. At check-out, instead of handing over a punch card or smart phone, you simply tap your phone number into the Dodo tablet at the counter and your phone number acts as your ID. Merchants are able to design their own reward programs, with the most prevalent deal being a "buy 10 get 1 free" reward program.

Spoqa aims to irradiate the need for individual reward cards, which can jam wallets, and the need to download various reward applications. Uniquely Dodo Points doesn't require store customers to sign up or download any apps.

It’s not all been plane-sailing for the team though. The company was founded in 2011 and spent a year building a service that ultimately failed in the market. However, after realizing that their first service required too much engagement from users, Spoqa’s second service has ensured simplicity of use. Their second time to market has resulted in rapid and sustained user acquisition and vastly improved engagement.

According to Grant, the company has learned a lot through failure and now adopts a highly skeptical view to every upgrade. “Unless we are basically 100% sure of success, we don’t bother implementing changes. Everything is tested exhaustively first,” he explained.

Thanks to the low barrier to use the service, Dodo Points has seen explosive growth in their first 2 years of operation. In fact it only took Dodo Points 19 months to get to 1 million customers. And user acquisition is speeding up, with the second 1 million users signing up in only the last six months.

Dodo's partner merchants include beverage shops such as coffee & tea, snack shops and restaurants, retail stores (accessories, contact lens shops, clothes etc.), hotels, bars and lounges, internet cafes and even screen golf or karaokes. Dodo Points saw rapid user adoption in retail sectors such as cosmetics shops and accessories, and beauty stores including hair and nail salons.

Merchants choose Dodo Points over competing services thanks to its intuitive interface. "We wanted to make a super-simple CRM solution that just works out of the box for mom-and-pop stores" explained Richard Choi, co-founder and CEO of Spoqa. "With the phone numbers customers voluntarily input in exchange for loyalty points, merchants can reach out to customer base Dodo automatically sorts for them - promote special deals to store's VIP customers, and to win back lost customers."

Dodo Points offers targeted SMS text coupon services for merchants who want to reach out to customers. And with its customer targeting algorithm, Dodo coupons exhibit redemption rates 8 to 10 times higher than traditional coupons. Grant Sohn, co-founder and CSO of Spoqa explained: "If you look at what percentage of merchants come back to sending out coupons a second and third time, our retention rate hovers above 80%, meaning merchants see tangible revenue lift from Dodo's coupons.”

Spoqa charges merchants monthly license fees comparable to costs of operating other analog loyalty solutions such as punch cards and plastic magnetic cards for Dodo Points. "Dodo is the most cost-efficient and effective way for merchants to manage their customers - let it be by incentivizing customers to keep coming back, or collecting phone numbers to reach out to them when you need to", mentioned Grant.

"Our mission is to connect stores and customers in a smart way. Customer interface for hundreds if not thousands of years has been the same - cashiers. With Dodo tablets, Spoqa will change the way customers interact in stores" explained Richard.

The team at Spoqa is trying to do more than solving loyalty for mom-and-pop shops though. Because it is so easy for customers to start using Dodo Points to record their transactions and collect loyalty points, Spoqa is essentially getting customers to interact with its tablets. The company is also building an infrastructure of networked tablets that interface customers and merchants right at the point of purchase. While some tech companies are taking the mobile or online-first approach in tackling "O2O (Online2Offline)", Spoqa is going bottom-up in setting up a vast network of tablets in offline shops. Whether Spoqa can upgrade its Dodo tablet network as a true hub in O2O or not will depend on scaling and execution of sales expansion in the next few years.