CHICAGO – AlleyCat Comics in Chicago’s Andersonville neighborhood has an unorthodox approach to rewarding frequent customers: Shoppers who reach 50 purchases get to punch a store employee in the stomach.

The rewards program is new, so the prize remains unclaimed. But because future winners will have spent a lot of money, “I guess I can take a shot in the gut,” said store owner Nicholas Idell, who opened the business with his wife four months ago and expects he’ll take all the hits.

Additional Photos

Brett Opie, from left, Phil Peters and waitress Trece Tisdale at Harry Caray’s Restaurant on Kinzie Street in Chicago. The restaurant company has partnered with Pegmo, a social media company, to establish a loyalty program for its restaurants. The restaurant recently sponsored a site-wide raffle on Pegmo, which also helps streamline the restaurant’s ongoing social media efforts. Terrence Antonio James/Chicago Tribune

AlleyCat Comics’ rewards program may be an extreme example of the creative tactics local merchants are employing to convert casual customers into repeat ones. But the store’s experiment, which also taps into technology from a Chicago-based startup called Bellyflop, is part of a larger push by startups to put a fresh spin on loyalty programs.

Such efforts to improve customer retention address a common dilemma faced by local businesses that have dabbled in the young but fast-growing phenomenon of daily deals, powered by companies such as Groupon and LivingSocial.

A steep discount can attract thousands of new customers, but merchants say the challenge lies in convincing buyers to return. That’s where these new technology companies are stepping in, harnessing such things as mobile applications and social media to keep merchants close to their customers.

“You’ve got consumers carrying, in many instances, a device, which is the first time we’ve been able to know where they are at all times,” said Bryan Pearson, chief executive of LoyaltyOne, which specializes in strategy and customer analytics for big brands. “Secondly, you’ve got this rise of consumer power (through social media), which is helping those consumers hold companies to account.”

Bellyflop, which is funded by Chicago technology investment firm Lightbank, designed a version of the traditional punch card that is either paper-based or stored on a smartphone. The company also provides participating businesses with an iPad to scan the cards. Merchants design their own reward system, but the same card can be used at any business signed up with Bellyflop.

“It’s something for small businesses not just to provide discounts or coupons for customers but ways to foster loyalty, which is more than just price,” said Bellyflop co-founder Logan LaHive, who launched the business in Chicago several weeks ago. He declined to say how many clients he has signed up. “It’s about helping small businesses foster personal relationships.”

On Chicago’s Southport Avenue shopping corridor, where Candace Canty runs the Dog-A-Holics pet-supply boutique and a separate day care and grooming facility, Canty estimates nearly a dozen of her fellow merchants have signed up with Bellyflop. One way Canty rewards frequent customers is by hanging a portrait of them and their dogs on her shop wall.

“You have to cater (the rewards) to your business,” Canty said. “For our customers, dogs are part of their life, and we’re part of their routine. We’re their little community store.”

Creative rewards help address a crucial challenge: how to wean customers off coupons.

Incentives should “not ingrain (consumers) to always look for a discount,” said Jere Doyle, CEO of Eversave, a marketing company that offers daily deals and rewards for making a follow-up, full-price purchase. “It’s hard to make your margins if you’re always giving out a discount.”

Social media, which connects consumers to businesses and brands through platforms such as Facebook, Twitter and Foursquare, can mix monetary benefits with less tangible ones. Chicago-based Pegmo offers rewards for completing “pegs,” or small social media tasks such as commenting on a restaurant’s Facebook page or posting a photo of a dish on Twitter.

These incentives are often “hookups or the velvet rope or some sort of VIP opportunity,” such as being able to book a table at a restaurant that normally doesn’t take reservations, said Pegmo founder Jordan Ho.

Harry Caray’s Restaurant Group, which is active on Facebook, Twitter and Foursquare, recently sponsored a sitewide raffle on Pegmo. Marketing manager Sonja Leskinen said Pegmo helps her streamline the restaurant’s ongoing social media efforts.

“The buy-nine-get-your-10th-punch-free is not necessarily the most common practice anymore,” Leskinen said. “I think we have a unique opportunity in social media and in restaurants to reach those customers in real time and reward them on the spot for their loyalty, instead of waiting 10 punches.”

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