IQ News: Closeup – Perked Up

Promotion and customer loyalty are byproducts of, an Andover, Mass.-based platform for individual investors, was looking for a way to retain and reward its Internet customer base., a Pasadena, Calif.-based entertainment site, wanted to supply sweepstakes and gift items for off-site promotions and to online chat participants.
Instead of staffing an in-house fulfillment department and hiring outside legal consultation to handle the logistics, both companies called on, a two-year-old Los Angeles-based provider of online customer loyalty and motivation programs, to make things happen.
This year, more than $1.8 billion will be spent by online marketers looking to manipulate consumer shopping habits, motivate company sales forces and retain employees, according to Cambridge, Mass.-based Forrester Research.
While that sounds like a lot of parties and swag, in reality online company promotions encompass more than just T-shirts and coffee mugs and now include a growing number of online promotions, such as coupons, rebates, price discounts, sampling, free products, points programs and referrals, say experts.
“It’s not just about bringing eyeballs to a site,” says Patrick Sinclair, vp of loyalty and retention products at the 90-employee “[Online promotions are] about changing the attitudes of the end users.”
For most of those end users, e-commerce sites are only as good as their last discounted deals. Non-existent switching costs coupled with a bevy of competitors promising better bargains, make commitment practically a dream.
To combat this, Perk’s Sinclair says e-tailers have to work on establishing customer loyalty so price doesn’t become the deciding factor between sale and click-by.
For example,, a Westwood, Mass.-based online grocer, includes free samples, coupons and specials with its online orders. Consumers who respond to freebies are added to a database.
Despite the increased volume of online promotions, few marketers are able to determine the effectiveness of their promotions, according to Forrester.
Nearly 40 percent do not have a clue regarding their customer acquisition costs related to the promotions, and many rate a campaign’s overall effectiveness on gut feelings rather than more precise return data, opines Sinclair.
“Many clients come to us with a Net solution but don’t know much about their market,” Sinclair says. “Others want to better understand their staffs.”
Rates vary based on client expectations, says Sinclair. Perks charges about $30,000, which enables a client to receive a customized incentive-based Web site, catalog of rewards, research, data tracking, profiling and customer service.
While some loyalty providers simply act as hired guns, Sinclair says Perks wants to integrate itself as more than a consultant.
“We want to become marketing partners with our clients,” he says. “In a sense, we are an OEM product for the client.”