Make a Case for Incentive Marketing

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This column is a response to Rosalind Resnick's column "Can Incentive Marketing Work on the Internet?," which ran Aug. 14.

A few weeks ago, Rosalind Resnick asked, "Can incentive marketing work on the Internet?" With all due respect to the author's tidy denials, the answer is: Yes.

The author suggests that consumers are too smart to require an incentive to get them, for instance, to open an e-mail from an advertiser. Thus, she suggests that services like my own company's flagship product, BonusMail, which rewards consumers to interact with targeted e-mail, are somehow less efficient than nonrewarded forms of direct marketing by e-mail.

May I suggest that Resnick has missed entirely the point behind rewards-based targeted direct marketing over the Internet? The rewards-backed offer is not intended as some kind of cheap door prize beneath the dignity of the online consumer. Quite to the contrary, the existence of rewards programs like BonusMail acknowledges and responds effectively to an increasing level of consumer sophistication.

The Internet has reduced transaction costs in ways never before possible. And e-mail, in particular, allows direct marketers to reach consumers more quickly and more efficiently than ever before (i.e., no ink, no paper, no printing, no postage). Is it somehow beneath the consumer to accept a portion of these cyber savings in the form of a reward? I don't think so.

But in the e-mail space, the argument behind incentive-based direct marketing goes deeper than that. Despite the cost-efficiency of e-mail as a marketing medium, reaching consumers by e-mail can be difficult and even treacherous. Spam, or unsolicited commercial e-mail, is strictly verboten. It can tarnish a direct marketer's brand permanently. Moreover, there is little if any useful demographic data attached to an e-mail address, which makes targeting messages next to impossible.

However, in a rewards program like BonusMail, where consumers earn incentive points just to join and participate, e-mail from advertisers is a welcome communication. Also, because the program seeks to deliver targeted offers, consumers willingly fill out detailed profiles to ensure a high degree of relevance in their communications.

But the advantages to incentive marketing don't stop there. By aggregating consumers in a rewards-based e-mail program, direct marketers get turnkey access to the power of the incentive itself. And, because they have saved so much in transaction costs over traditional direct mail, direct marketers can easily afford to offer the consumer a reward to respond to their messages. This lifts e-mail [offers] out of the realm of the low-level impulse buy to the level of the considered purchase.

Finally, and most importantly, incentive marketing over the Internet makes one more leap past its nonrewarded counterpart: It helps build lasting relationships between advertisers and consumers, something that is especially difficult on the Internet, where your competitor is never more than a click away.

Like Resnick's Postmaster Direct Response e-mail marketing service, BonusMail gives its members the guarantee that they will receive offers about products and services that fit their interests and that their personal information will be kept completely private. But unlike Resnick, we have decided to reward our members for their participation. Credits are redeemable for valuable products from premier brands and frequent-flier miles on popular airlines.

Junk mail rarely leads to a relationship. But rewards-backed interactions form the building blocks of the most important commodity a merchant can have: long-term consumer loyalty.

Steve Markowitz is president/CEO of Intellipost Corp., San Francisco, serving more than 1 million consumers across four different Internet loyalty programs.

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