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Sandie Allen
Wednesday, July 7, 2010
Tech Watch
Micronotes targeting promotions at customers
By Lynette F. Cornell
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MHT's Galen Moore: Cambridge Innovation Center celebrates 10th anniversary
Companies born in the recession
Micronotes LLC founder Devon Kinkead wants to change bill paying from a routine chore to an engaging sales lead experience. His company, founded in June 2008, is using customers’ purchasing data to tailor sales promotions to an individual’s interests. The idea is to eliminate untargeted marketing while presenting offers that customers might actually want.
The marketing platform, called KulaMula, works by analyzing customers’ purchase history to discover trends and spending habits. Customers can opt in to receive promotional offers from businesses that have paid to be featured for customers that fit their target market.
When an opted-in customer goes to their bank or credit card website to pay their monthly bill, they are alerted to new offers from merchants. If the customer chooses a merchant offer, they are given a 30-second web survey that assesses their interests and then presents a coupon customized to their responses.
To encourage customer participation, merchants pay a cash reward, typically around $1, to the customers for taking the survey, which is transferred directly to the customer’s account. Cambridge-based Micronotes’ software checks the customer’s spending during the offer period to see if the coupon is redeemed and sends reminder emails until expiration or redemption.
It’s a move away from traditional marketing, which Kinkead said is inefficient because so much money is wasted on untargeted marketing messages that customers ignore. The amount spent annually on B2C marketing in the United States will reach $239 billion, according to a report by Outsell Inc., a research and advisory firm with an office in Cambridge.
Yet, for all the money spent, customers are just as intent on not being contacted by marketers, said Kincaid. He wants to cut out the unnecessary noise and present customers with deals he describes as “too good to pass up.” Customizing the offer isn’t enough, he said; the deal must also be good enough to persuade the customer to use it.
The banking relationship is one of the most durable financial relationships, with an average tenure of four to eight years, according to Kinkead. By working with banks, he is able to use their customer stability to his advantage, reaching a vast amount of people at once for a long-term period.
Despite the numbers of customers being reached, he said, each person is addressed individually through the power of the one-on-one interview. He refers to the concept as a “digital sales call.” He wants to bring back the intimacy of the personal sales call, something that is not without its challenges.
“The tough part is to literally recreate something that has been lost,” he said.
He is testing the platform with about six banks right now, with plans to continue testing through the summer and formally launch in the fall. The company recently landed a $1.6 million round of funding at the beginning of June, adding to $450,000 in funding from December and January. The money, said Kinkead, will go toward turning the test product into a fully developed product.
This concept of a customized approach to marketing is just what marketers want, according to Susan Aldrich, senior vice president at Wollaston-based Patricia Seybold Group, a marketing research and consulting firm. Ever since the Internet became a commercial vehicle, marketers have been scrambling to integrate tools that would allow them to reach only their target audience, said Aldrich.
Aldrich compared the pursuit of customized marketing to an arms race, where each merchant is hurrying to adapt before their competition beats them to the sale.
She said the conversion rate of a targeted pitch versus a generic offer can mean the difference between a 20 percent and a 2 percent conversion rate. Consequently, the desire for this type of individualized marketing is not going to die out, she said.
One area where she says Micronotes might face challenges is in regard to customer privacy concerns. “People are more aware of privacy issues, and I think we have Facebook to thank for that,” she said.
Kinkead said he has designed the Micronotes software to quell any fears users might have by masking the customer’s identity from the merchant.
Don’t expect traditional marketing to disappear anytime soon, though. Aldrich said the highway billboards, cold calls and television ads will stay with us, because for some companies, those methods are the ones that work.
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