Hitmetrix - User behavior analytics & recording

Can Incentive Marketing Work on the Internet?

There's no doubt that incentive marketing works. Frequent-flier miles have practically become the universal currency of the corporate world. Rewards programs, affinity clubs and sweepstakes promotions have ballooned into a $23 billion-a-year business.

What remains to be seen is whether incentive marketing will work on the Internet or whether it even makes sense for direct marketers to tempt online consumers with points, miles, giveaways and other freebies to get them to respond to their offers.

Let me explain. I flew to Seattle last month to speak at the NCDM conference. The topic was “permission marketing.” Joining me on the panel were representatives from Intellipost (BonusMail), Motivation.net (MyPoints) and Cybergold, all incentive marketing companies vying for a piece of the action on the Internet. While each company's business model is slightly different, the premise is the same — if you dangle a reward in front of an Internet consumer, he or she will take the bait and snap up your offer.

Participants in the MyPoints program, for example, can earn 50 points by visiting the Credit Card Sentinel Web site and taking a short “Worry Quiz,” 10 points for checking out the telescopes at Edmund Scientific and 5 points for perusing the pantyhose at One Hanes Place. Purchases are rewarded with additional points.

“Consumers can be trained,” said Frank Pirri of Motivation.net, likening the process to Pavlov's experiments with salivating dogs. “The behavior that you reward is the behavior that you're going to get.”

That may be true, but what kind of behavior are incentive marketers rewarding? And is this the type of behavior we really want to encourage on the Internet?

Founded in the late 1960s by academics and government employees and underwritten by federal research dollars, the Internet has always been a bastion of free ideas, free software and free information. When it went commercial in the early 1990s, Netscape tapped into this culture of free stuff by giving away browsers to gain market share; newspaper and magazine publishers ladled out free content to build an audience on the Web. The result: The Internet community has swelled to more than 70 million users, but publishers, software companies and electronic merchants are losing millions of dollars because they have educated consumers whom they don't need to pay.

And that's a problem because at the end of the day, the consumer has to plunk down his credit card to keep the Internet economy afloat. Magazines that offer points to induce prospective subscribers to order free trial issues must ultimately collect their subscription fees. Software companies that offer points to encourage downloads must convince trial users to pay up. And even merchants who offer points in return for a purchase must manage to eke out a profit in a marketplace that is rapidly becoming a zero-margin economy.

Ironically, the only behavior that direct marketers are reinforcing by foisting point systems on the Internet is their own. Accustomed to begging, bribing and cajoling consumers to accept the offers that they send out via postal mail, marketers don't seem to understand that many Internet consumers actually may want the products and services they're peddling — provided that the consumer gets to call the shots. Thanks to the Web, consumers now have a quick and easy way to tell marketers what offers they want and what personal information they're willing to share to receive information about the products and services that interest them most.

That's the premise behind our company's PostMaster Direct Response opt-in e-mail marketing service. We don't offer points, miles or any other incentives to the consumers who sign up to receive marketing messages from our service — only the guarantee that they will receive offers about products and services that they've requested and that their personal information will be kept completely private. Now that may seem like a radical idea in the direct marketing world, but more than 1.4 million Internet users have joined our service so far.

Let's face it: The days of pasting green stamps into little books and redeeming them for toasters and lawn chairs are over. Internet consumers simply do not have time for that. So, before we head back to the past for inspiration, let's fast-forward to the future and give Internet consumers a chance to tell us what they want and how they want it. We may all be in for a pleasant surprise.

Rosalind Resnick is president of opt-in e-mail list manager and broker NetCreations, Inc. Her e-mail address is [email protected]

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