Pursuing Points for Profits

Getting people to act has always been the raison d’être of direct marketing. Tactics for motivating behavior have ranged from simple bribery to more subtle manipulation. And while brazen in our approach, most of us prefer to think of ourselves as subtle psychologists tweaking the will of our target audiences. This professional conceit is the reason MyPoints.com is so successful and so irritating.

MyPoints.com makes no bones about the bribery part. “Do this, get points” is its mantra. Executed in a graphically appealing way, the naked replication of B.F. Skinner’s rats-through-the-maze experiments gives me the willies. MyPoints is so obvious and so unashamed in the ways it drives consumer behavior that I feel unmasked.

MyPoints chairman/CEO Steve Markowitz started out with the premise that 75 percent of Americans already belong to at least one points program. Since these people were conditioned to the idea of earning rewards in an alternative currency, he figured he could sell stuff, get customers to buy more, come back often and take discrete steps in the buying process by rewarding them with points: fewer points for baby steps and more points for purchases and repeat purchases.

On the Web, the concept morphs into a superaffiliate site, which attracts partners such as Sprint, BMG, Ziff-Davis and Macy’s; allies including Experian, Talk City, [email protected] and GTE; and tons of traffic. MyPoints is measured as the third most visited e-commerce site on the Web, bested only by Amazon.com and eBay.com.

Yet Markowitz claims “It’s not the points alone that drives behavior, it’s the combination of points linked to targeted, relevant offers. You’re interested in electronics. I make you an offer that you are likely to be interested in. It comes with a built-in bonus. You figure … why not?”

In practical terms, he sells access to a targeted set of consumers who have registered and opted in for offers in specific categories. MyPoints has, for example, 450,000 registered users between the ages of 18 and 25 available for contact. He e-mails them on your behalf. They get points at each decision point. As an added motivator, users see their accumulated total with every offer, so they can watch the points add up.

If you go to the site and read the message, you get points. If you answer “yes” or “no”, you get points. If you click through to the site, you get points. If you buy, you get points. This works. The rats hit the bar and get the cheese. Mypoints regularly gets 25 percent click-through rates vs. the steadily declining banner click-through rates now pegged, industry wide, at between 0.35 percent and 0.50 percent.

This blatant approach appeals to a broad demographic group. With new registrations running at 10,000 per day, the typical MyPoints responder is “an active online shopper.” In demographic terms, the MyPoints responder is 24 to 34 years old. Half are married, the average annual household income is $55,000 and 41 percent own their homes. Evidently, points appeal to younger, middle-class shoppers who are willing to work a little to get a deal.

Those who participate in the program are moved through the maze of offers by using explicit expiration dates, embedded URLs to insure one-click access and the use of HTML e-mail for as many as one-third of registered users. MyPoints makes short, often soft, text offers, liberally uses the promise of “free” and directs the actions most desired by clients with offers of 1,000 points or more.

With the introduction of MyPoints Shopping, Markowitz aims to motivate users to shop all across the Web, shopping frequently where they see the Mypoints icon; in effect becoming the Green Stamps of cyberspace.

The psychological principles underlying direct marketing are optimized and on display courtesy of MyPoints. It is no wonder that direct marketing luminaries such as Lester Wunderman, George Weidemann and Steven Drapper serve on the board of advisors.

Now the game will get even more interesting as www.iwon.com, flush from an investment by CBS, substitutes cash – as much as $10,000 per day and $1 million each month – instead of points. Will our rats turn left and head into someone else’s maze? Stay tuned.

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