Goodbye

A couple of weeks ago, I wrote an article on the efficacy or otherwise of incentive programs online.

I predicted that by sundown of the day the article went online, I’d receive emails from a dozen or more online incentive companies. It’s nice to be right sometimes.

Interestingly, only a couple of these emails were from people who felt I was wrong, ill-informed or downright stupid. It seems that most people in the online incentives and loyalty business recognize that they’re operating in a whole different environment.

And then there is Eric Tilenius, chairman, co-founder, and all-round important person at Netcentives Inc. He not only emailed his reaction to the article, but we also ended up chatting on the phone.

From my perspective, we got off to a bit of a rocky start because he used the word ‘paradigm’ twice in the first two minutes. Yes, that is a sin. But from there on in, I got to learn some stuff.

Here’s what I learned.

1. If you set up an incentive program within your own site alone, you’ll likely not build up enough critical mass for any of your visitors to see much benefit. For example, if someone buys a book, packet of seeds and shrubbery-growing video from your gardening site, they’ll spend around $37.95 and earn less than a buck in ‘points.’

One buck buys you zero loyalty.

Come to think of it, I knew this already. The discussion that prompted my first article on incentives arose out of my arguing against an ‘in-site’ incentive program for exactly this reason.

But here comes some stuff I didn’t know.

2. If incentive or loyalty programs are unlikely to thrive within the confines of one site, how can they exist online?

Mr. Tilenius argues that they can work when you aggregate the purchasing activity of members across multiple sites. You leverage existing loyalties and purchasing patterns.

So if I buy books, clothes, videos, groceries, software and airline tickets from six different sites — all of which partner in one points program — I’ll spend enough for my points total to add up fast and begin to make a difference.

That being the case, I’m more likely to continue to purchase from those merchants.

Sounds like a good plan.

At this point in our conversation a small light began to glimmer in my brain.

If online loyalties are built on the aggregation of purchasing activity across numerous sites, the customer is not feeling loyalty to my site at all — he or she feels loyal to the points program. I’m outsourcing my loyalty. My site becomes a small part of a larger buying habit.

If I were to think in an offline way, this would likely trouble me. Offline, I want to generate loyalty to my own store. I want to tie my customers’ buying habits to my store alone.

Even if I think in an online way, but am a control-freak, this will still trouble me.

“Outsource my customer loyalty? Are you nuts? That’s an oxymoron, you moron.”

But it’s not such a crazy idea. So long as it brings in extra sales.

And here comes the interesting bit.

Be at one with Yoda for a moment here — feel the force of lots of millions of networked purchasers — and let go.

Maybe the concept of ‘owning’ your customers just doesn’t apply anymore.

Maybe the smart money will go towards tapping into your ‘share’ of an ownership that is spread across hundreds of different sites and activities.

And maybe there are dozens of different models that can achieve this — beyond the incentive/loyalty model.

Goodbye ‘sticky.’ Hello ‘free flow.’

If you see what I mean.

Eric Tilenius may be smiling right now because he clearly thought all this through a long time before I did.

But hey, at least I don’t say ‘paradigm.’

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