L017: PunchTab Creates Killer Frequent Flyer Program for Your Site (or "Flooz 2.0!")

PunchTab [ http://www.punchtab.com/ ]

LAUNCHERS: Co-founders Ranjith Kumaran, former co-founder of super-simple file-sharing system YouSendIt, and Mehdi Ait Oufkir, intern-turned-web-app-lead at YouSendIt.

WHAT: A "frequent flier" program for your website or iPhone app.

HOW: After adding PunchTab to your website, you can reward users with points for common behaviors such as commenting on, Liking and tweeting your content. You can also reward users for coming back each day. After accumulating a certain number of points, users can then cash out for schwag, gift cards or other premiums.  

LEVERAGE: Eventbrite found that a Facebook Like drives an average of $1.34 in ticket sales, compared to only $0.80 for a tweet. If those numbers carry over to other consumer verticals, publishers should be doing everything in their power to get more users to click that little blue thumbs up. Luckily for them, PunchTab takes just seconds -- install the widget, put the word out about their new rewards program, then sit back and hope/watch the likes roll in.

WHEN/WHERE: Private beta March 2011/Menlo Park

WHY: Only a small percentage of your site's fans are probably liking your content on Facebook, Tweeting it or posting comments. Reinforcing and rewarding social behavior should help nurture more superfans (aka brand evangelists).

Ranjith tells LAUNCH: "One day I woke up while I was working at a chip-design tool vendor, and I went to this sales conference and started to talk to customers of the company and I realized I had nothing in common with them. I wanted to work on something that I could use, my parents could use, my peers could use. That was philosophically what I was trying to do when I started the company -- I just wanted to work with customers I had something in common with."

ENTREPRENEURIAL PHILOSOPHY: "You really need to surround yourself with people who just can't help but build things, test things."

Click on the PunchTab welcome message to bring up the rewards dashboard.
PunchTab 1

On the rewards dashboard, you'll see what behaviors you can do to earn points (A) as well as see where you rank against other users (B).
PunchTab 2

After accumulating points, users can cash them in (at least on this website) for gift cards from Amazon, Starbucks and iTunes. In this implementation, a $3 Starbucks card would represent 30, 100-point behaviors (i.e., 30 comments, likes or daily visits). That's $0.10 a behavior for those of you doing the math. Obviously, sites can customize their rewards and behaviors. Additionally, publishers set the quantities, so rewards can sell out.
PunchTab 3

WHO BACKED IT: PunchTab raised a micro angel round in January that included early Facebooker Chamath Palihapitiya.

WHAT A PUNCHTAB USER THINKS: Tommy Chen is a self-described early adopter who put PunchTab on a site he was running (Cheapskat.com) and also uses the service.

"[PunchTab] is really interesting and builds off the mechanics of check-ins. To me, it seemed similar to Foursquare -- you can brag to your friends about where you've been and try to one-up them by getting more points."

WHAT ANOTHER PUNCHTAB USER THINKS: Jarin Udom is the lead developer at SetforMarriage.com, a site using PunchTab since its March launch. He says he really likes the idea and wants to support it, possibly on some of the other sites he runs, including an "adult" site. Hmmm... a frequent flyer program for p0rn sites? We don't want to know what behavior they'll be rewarding.

"The [PunchTab] team been really good about keeping me posted on what they're working on. When I talked to them on the phone, it sounded like the whole team was there, speaking with me. I think they're on the right track."

LAUNCH Analysis: Incentives are powerful, and ones with perceived cash value can bring out the worst in people. PunchTab's clients will need a deft hand to keep their programs at the level of Starwood and American Express rewards to avoid legions of social drones in Manila and Mumbai from doing the arbitrage between $2/hour workers and $10 gift cards obtained from two hours of work across dozens of accounts. We're fans of giving away schwag but have learned the horror that can come with tilting people with gift-card rewards.

ONE MORE THING: PunchTab recently launched a killer contest widget that site owners can embed instantly. When users see the giveaway, they can take the same actions that would normally earn them points to earn raffle tickets. Additionally, they'll get a "lottery ticket" for everyone who clicks on their bit.ly url. All the tickets are then put into a pot and a winner is drawn.

AND ONE MORE THING: If a publisher can see who their most active and engaged users are, they'll be itching to contact them in other ways to forge a deeper relationship. Kumaran recognizes this and says he's excited about the potential for a premium version that would serve as a jumping off point for further CRM.

1. Social Commerce: A closer look at the numbers. (Eventbrite, March 16, 2011)

2. The Value of an Existing Customer. (Flowtown, Oct. 17, 2010)

3. Who's Playing Social Games? (Mashable, Feb. 17, 2010)

4. E-currency site Flooz goes offline. (CNET, Aug. 9, 2011)

Ranjith Kumaran
This Week in Startups Episode #138

Email: ranjith at punchtab dot com

Mehdi Ait Oufkir
Email: mehdi at punchtab dot com

Chamath Palihapitiya


PunchTab Blog

#3: Starting is easy, finishing is hard.

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