Ron Herman | Executive Profile | ATLANTA TREND
The Rewards of Loyalty
By Robert Green
Ron Herman grew up appreciating the benefits of loyalty and hard work. So it comes as no surprise that he is enjoying great success as the CEO and founder of Sionic Mobile, one of the most innovative companies in the electronic mobile rewards and loyalty space. Starting with the premise that mobile personal devices would disrupt all future human transactions, Ron’s Atlanta-based company has focused on compensating customers for making mobile purchases at merchants via accumulated rewards - called IONs - and is today the nation’s largest mobile rewards marketplace.
Born in Saginaw, Michigan, Ron grew up in the small farming community of Frankenmuth, about one hour north of Detroit. As in early America, everything was about the land. His family’s 44 acre farm was two and a half miles outside of town, and they grew the majority of their own food. “I grew to love it,” Ron says, “and to this day I keep a working garden at my house. It’s gratifying.”
Most of Ron’s neighbors and friends were farmers, and farmers, Ron will tell you, have a very distinct work ethic. “Everything depends on you and there isn’t anyone else to do the work so you just get used to it,” he says. Somehow, Ron managed to farm, play various high school sports and work full-time all through high school, a feat that is even more impressive when you consider that the school record he set for the high jump was not broken for nearly 30 years. Clearly, here was a very hardworking young man. “It’s true that I was never afraid to work hard,” he says, “but then, I was always properly rewarded for my work.”
At the age of 12, Ron decided that he wanted a job to earn money away from the farm so he got his local phone book and simply started cold calling businesses to tell them he was available to work. After quite a few hang-ups and rejections, Corky Leslie at Leslie’s Hardware store told him to come to the store to meet with him to discuss a possible job opportunity. “When we met, I told him that I could sweep, mop, stock shelves or whatever needed to be done. Thank goodness he hired me,” says Ron, “but I still had a problem.” With his tight schedule of farm work and other school activities, travel to and from work was going to be a time problem – he needed faster transportation. “Corky decided to invest in me by buying me a bicycle and letting me pay for it by working free for the first six months. I received regular pay after that.”
Ron worked at the hardware store for two years before switching to the Ford dealership across the street, where he started detailing cars. When it was time to buy his first car, you can be sure that he loyally bought a Ford. “I traded in the bicycle and bought a used Mustang; I was so proud of it,” he says. Senior year of high school was the usual mix of his many activities plus a full-time job as the assistant manager of McDonald’s.
Working his way through college, Ron became an engineer and worked in that profession for a number of years. He had a natural curiosity of understanding exactly how things worked. So the day his sister asked him to review the technology for a new company she was working for, Jet-Fax, and then write a report on what he thought of it – he was ready to accept this challenge. His report listed a number of problems and functions that could be improved. The CEO of the company got in touch with him and offered him a job in Menlo Park, California. Ron also helped raise money for Jet-Fax, which later became E-Fax. “The most important part of this experience for me was learning how the Silicon Valley system of investing in and developing technology worked,” he says.
In 1994, Ron moved to Atlanta in a transition plan with EDS, but by the end of the decade co-founded a locations-based mobile phone data technology company, IntelliOne Technologies. The company’s primary goal was to deliver useful traffic data accumulated from anonymous mobile phone signals, and the company’s technology was eventually used in one of the first applications for Apple’s iPhone.
Sionic Mobile was spun out of IntelliOne Technologies in 2011 with five employees, and from the beginning, their goal was to use mobile devices and the cloud to create a loyalty and rewards platform that was innovative and unique to anything else on the market. At its core, Sionic Mobile is a one stop network for loyalty. The company offers two mobile applications: ION Rewards for consumers, and ION Loyalty for merchants. “Our goal,” says Ron, “is to make sure that customers are rewarded for their loyalty with IONs – which they can spend at over 100,000 major retail and restaurant locations like Barnes & Noble, Lowe’s, Maggiano’s and many others.” The size of the network and ease of use are key. “Loyalty and rewards become unstuck – you earn IONs at one place but can use them in many, many other places,” he says. “We truly built the world’s first universal rewards program.”
The ION platform and app have been extensively refined since 2011 both in terms of the business model and the technology. First, unlike Starbucks, which gives one star per visit regardless of the amount spent, customers using Sionic Mobile’s ION Rewards app earn IONs instantly for every dollar spent, and there are no restrictions on how and when users can spend IONs. Second, their partnership with J.P. Morgan Chase makes the payment and reward system seamless for business owners using the ION Loyalty platform. “It has to be easy for customers to use,” says Ron, “but most important for merchants are the reduced processing rates we offer. Plus, we take full liability for the transaction.”
Ron is very proud of the company’s relationship with J.P. Morgan Chase and the benefits it brings to merchants. “Merchants keep telling me that interchange fees are killing them,” he says. “With our ION Loyalty platform, we offer a way for them to both save money and get a turnkey rewards system.” According to Ron, Chase has 20% of all US payment transactions and Sionic Mobile is now positioned to “ride that 20% and become one of the largest players in the co-op marketplace by this time next year.”
Now in discussions with an auto insurance company that has millions of customers, Ron clearly sees a future in which customers should get rewarded for all the payments they make, whether in-store or online. “Why shouldn’t a loyal customer be rewarded for making that monthly insurance or security system payment, or even paying the cable company?”
Ron is most excited about Sionic’s move into small business. “It’s great to have more than 100,000 national brand locations to use ION Rewards, but what we really believe will be game changing is our new ION Loyalty Small Business Center,” he says, “because it helps small business compete with larger retailers in ways they could not in the past.” Small businesses get unlimited mobile advertisements in the ION mobile rewards marketplace and their own-branded eGift Cards. “We are also providing an industry low 1% credit card processing fee,” he says. “We are now in the process of rolling out over 3,000 individually owned restaurant locations.”
With everything going so well, Ron expects a huge ramp-up for the company in 2016 - including hitting two key milestones: cash/EBITDA positive operations and double the transactions and revenue of the two closest competitors combined – all from rewards. “People work so hard for their money,” he says, “so they should be rewarded for their loyalty in where they choose to spend it. Additionally, merchants really want to give customers these rewards. It just hasn’t been easy for them to do it in the past.”
Not until Sionic Mobile, that is.
“I am curious about one thing,” he says. “I’m starting to wonder how long it will take for the word ION to enter the language as a new word for currency.”
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