Test-driving SCVNGR's new LevelUp app for local discounts

By Scott Kirsner, Globe Columnist

Cambridge-based mobile app developer SCVNGR launched a new app called LevelUp yesterday. It's available for iPhone and Android, and it displays retail discounts available all around your current location. Once you enter a credit card number, you can start buying. (LevelUp gets points for good design.) The interesting twist is that after you buy one deal, you're presented with an even better deal from that same merchant — hence, "leveling up."

I downloaded the iPhone app yesterday morning, entered my profile and credit card info while walking to the T, and purchased my first deal before boarding the train. Since I often eat $8 or $10 lunches at Boloco, I bought a LevelUp digital coupon for $5 that offered me $10 worth of food at the burrito chain.

LevelUp encourages you to tell your Facebook or Twitter network about a deal you've just bought, and the incentive is that if one of your friends also buys the deal, yours is free. I tweeted about the Boloco offer, and a few minutes later the company had sent an e-mail informing me that I'd just gotten the mythical free lunch.

When I showed up at Copley Square Boloco yesterday to redeem my coupon, I ordered a teriyaki chicken wrap, cookie, and Vitamin Water drink, which totaled a little over $10. When I showed the cashier my phone, he wrote down my name and a transaction ID number on a piece of paper, and told me I was all set. What about paying the additional 45 cents that I owed? The cashier just pointed me toward the pick-up station. He also didn't click the button on my phone's screen that says "Redeem Deal," which left me wondering if a less ethical person than I might be able to use the coupon a second time.

Because I'd purchased Boloco's "Level 1" deal, the app presented me with a "Level 2" deal from Boloco: pay $10 and get $25 worth of food. Unfortunately, the terms of that coupon specify that it must be used on one visit, and when I eat at Boloco I'm usually by myself, grabbing food to be eaten at my desk or on the run. Twenty-five bucks worth of burritos and smoothies sounded like a bit of a binge to me, and even if I brought a friend, getting the tab up to $25 might be a challenge.

Since my account had $5 in credit — the reward for my sharing details of the Boloco deal on Twitter — this morning I bought another Level 1 deal, shelling out $4 for a trio of cupcakes from Kicka** Cupcakes in Davis Square. The next level of that deal? A half-dozen cupcakes for $9. (On Twitter, venture capitalist Alex Taussig joked that LevelUp should offer half-off deals at local gyms, too... but the closest thing I could find was $15 for a week of unlimited yoga at the Karma Yoga studios in Boston.)

LevelUp assumes that after you've bought the Level 3 deal, you'll be a loyal customer and it won't take further discounts to keep you coming back. (LevelUp gives all the revenue from the first level deal to the merchant, but takes 25 percent of the money from levels two and three.)

I love a good bargain — who doesn't? — but for me, LevelUp and Groupon haven't really gotten me in the door of businesses that I haven't patronized before. Instead, the deals have either saved me money at places I go regularly (like my free, social-media-sponsored lunch at Boloco) or gotten me to return to places that aren't on my usual rounds (like Kicka** Cupcakes.) Still, I'm sure that the cupcake bakery is probably not losing money charging me $1.33 for each cupcake... and there's always the chance that I'll buy a glass of milk while I'm there.

Update: When I showed up at the cupcake shop, picked out three cupcakes, and showed the clerk the LevelUp coupon on my phone, she pulled out a special LevelUp-supplied notepad and wrote down the transaction ID and my name. (Again, I wondered how the bakery would prevent me from showing up again in a few days and using the same coupon, since she didn't click the button on the screen that says "Coupon Redeemed.") Then, the clerk asked me for $4. I explained that I'd already paid for the cupcakes via LevelUp. She explained that they'd just started offering this particular deal, and that she wasn't yet sure how it worked. I left, feeling a bit like a con artist.

We'll see how well LevelUp's salespeople do at convincing more local businesses to offer deals through its app, and how many users it can attract quickly so that it can really drive new customers in significant volume to a business. That's what you call a chicken-and-egg problem — one that Groupon has already solved.

Since LevelUp can't count on your opening up its mobile app every day to check for new deals, it also offers a daily e-mail summarizing what's available. Not sure about you, but I'm signed up for so many of those that I've stopped paying close attention to their contents.

LevelUp is currently live in Boston and Philadelphia.