Services Are 2x the Spend – Yet 100x Less Digitized

01 /The Concept

Loyalist is a loyalty management platform for cafes and restaurants that, in the founders' words, aims to "redefine the customer experience."

The core idea: the platform aggregates and analyzes all customer data from multiple sources – in-venue purchases, online reviews, reservation requests, and the full history of every communication a venue has had with each guest.

This unified view gives the platform and staff a complete guest profile – visit history, what they ordered, how much they spent – along with automatic segmentation: "high spender," "regular," "wine enthusiast," "first-timer," and so on.

That profiling enables the venue to build individualized communication strategies for each customer – both online and in the moment during in-person service.

Wine enthusiasts get emails about new additions to the wine list. First-timers get offers designed to convert them into regulars. Reservations from high-value or frequent guests get routed to a VIP line, jumping the queue. Online reviews get AI-drafted responses calibrated to the reviewer's status and visit history – making replies feel personal and specific rather than generic.

The startup just closed its first $10M round – but the ideology and vision behind it are at least as interesting as the product.

02 /Why It Matters

The founder laid out that vision in a post published earlier this year titled "The Loyalist Manifesto: How the Hospitality Industry Must Evolve in a Digital World."

Picture this. It's Friday evening, you're deciding where to unwind after the work week – and a message arrives from the manager of a restaurant you visit occasionally: "We can't wait to see you again tonight." Because the system noticed you tend to come in on Friday evenings.

You walk in, the host recognizes you from your photo, greets you by name, and walks you to your usual table. Before you've had a chance to order, the server suggests a dish that isn't on the menu – something similar to items you've ordered often at another location in the same group. And they pair it with a salad and starter from the menu that match your known preferences.

A few weeks later, when you haven't been in for a while, a message arrives: "We've missed you. But we've already reserved your favorite table – come try our new dishes, picked for your taste."

That's the future of hospitality that Loyalist makes possible. The platform turns guest data into a personalized, individual experience.

Achieving this with conventional tools means paying what the startup calls a "fragmentation tax" – the time and effort staff spend manually pulling together scattered guest information from different systems. Plus the revenue lost when those efforts fall short.

As a result, only a small fraction of guests experience the "magic of personal attention" – usually the ones who happen to be memorable to staff, and only as long as that staff stays. When people leave, the memory walks out with them.

Loyalist enables this "personalized magic" at scale – applied consistently to every guest, regardless of staff memory, mood, or turnover:

- A guest visiting for the third time in three months is a potential regular: at minimum, the manager should come over and greet them personally.

- A guest who made a reservation after a long absence? Save them a slice of their favorite chocolate cake – to signal they've been remembered and missed.

- Hosting a champagne tasting? Don't forget to invite the guests who've ordered champagne on previous visits.

In other words, Loyalist is a "translator" – converting fragmented guest data into specific actions that turn occasional visitors into regulars, and keep regulars loyal.

As the startup argues: by 2035, the hospitality industry will no longer be simply a place to receive a service. It will be a place to cultivate personal relationships – because personal relationships are the most powerful retention tool that exists.

In the digital world, this has already been understood and implemented. Users stick with Spotify because it knows their music taste and starting over elsewhere is painful. Netflix curates recommendations for each viewer so there's always something worth watching. Even the most basic online store shows purchase-history recommendations.

The offline world hasn't caught up. At least not at an industrial, systematic level that's independent of individual staff and applied to more than a lucky few customers.

And hospitality, broadly defined, means far more than cafes and restaurants – it includes hotels, retail stores, gyms, beauty salons, and any other offline venue. Which is why the founder has now launched a new startup called Magic, designed to take the same concept into all of those categories – building a purpose-built product for each, the way Loyalist was built for food and beverage.

Reading the Loyalist Manifesto was hard to separate from the "Regular's Manifesto" published in 2023 by Blackbird ([related review](/review/my-chto-zhrat-tuda-prihodim)) – another loyalty management platform for cafes and restaurants that described the same idea: regulars return to the places "that know them by name and know what they like." Blackbird raised $24M then, and a further $50M in April this year. Its focus has since shifted toward payments infrastructure – but loyalty management remains a core pillar of that system.

03 /Opportunities

The service sector, generally speaking, is a mess from the standpoint of predictability and quality. The goods sector has mostly solved this problem through digitization – from marketplaces to logistics management systems.

But here's the striking thing: in the spending mix of the average American consumer, services account for roughly 70% versus just 30% for goods. In dollar terms, the services market is at least twice the size of the goods market.

Which means that digitizing services now has the potential to generate twice the return that digitizing goods commerce once did.

The broad trend and direction: build digital platforms and tools for the service sector that make services more predictable, faster, and higher quality.

Within that broad direction, beyond pure mechanical automation and digitization of workflows, customer loyalty platforms deserve special attention. Because when buying goods, the most important factor is usually price. But when receiving a service – the relationship frequently matters more than the price.

Put simply: I'm not going to have morning coffee and lunch at whichever place has the cheapest espresso or sandwich today. I'll go to the place that knows me by name, remembers what I like, and keeps a good corner table or window seat available for me – even one meant for four people.

Platforms like Loyalist and Blackbird therefore have genuinely strong prospects. And most importantly, all the individual building blocks are already available – they just need to be assembled in the right configuration for the right vertical. And not only for cafes and restaurants.

So – which service sector could you go digitize right now? What in that sector needs to be digitized first? What's the biggest magnet for attracting and retaining customers? How can you turn that into a repeatable, scalable system?