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Summary:

Here on the internet, just because you build it, it doesn’t mean anyone will actually come. Or click on a link. Or leave a comment. Or become a Facebook fan.YouSendIt co-founder Ranjith Kumaran wants to change all that with his loyalty-marketing startup, PunchTab.

Ranjith Kumaran

Here on the internet, just because you build it, it doesn’t mean anyone will actually come. Or click on a link. Or leave a comment. Or become a Facebook fan. For blogs and other content-driven businesses that live or die based on repeat traffic and user engagement, that’s a big problem.

Enter PunchTab, a new loyalty-marketing startup from YouSendIt co-founder Ranjith Kumaran and former YouSendIt employee Mehdi Ait Oufkir. In a crowded gamification space, the pair of self-described “analytics junkies” took what they learned developing a user-analytics system for the popular file-sharing company back in 2004 and tried to build a new, freemium service even a blogger on a zero-dollar budget could love.

The blogging community was already near and dear to Kumaran’s heart. They are the user-base behind another Kumaran-built service— Wordvu—which lets bloggers see what content is performing well by tracking what readers cut, paste and highlight from their sites. Now, he believes PunchTab has the potential to drive major shifts in traffic and engagement. “These types of businesses are so starved for the social components of loyalty, and yet they are totally driven by repeat visitors and engagement,” Kumaran says.

Of course, PunchTab isn’t just for blogs. Any business can sign up for free and reward users for social behavior online (commenting, visiting daily, content sharing, “liking” items on Facebook) with actual, real-life discounts and gift cards that PunchTab has snagged from retail partners such as Amazon. Businesses can also offer users more relevant, site-specific rewards (t-shirt, premium content etc) and run contests and raffles using PunchTab’s promotions module.

But unlike competitors like CrowdTwist and Badgville that are targeting larger brands (and charging), PunchTab has thus far focused on creating a simple widget dashboard system for smaller businesses. Businesses add the PunchTab widget to their home pages. Users click the tab and sign in using Facebook Connect (integration with Twitter is said to be “imminent”).

While other systems offer clients a range of analytics about user behavior, PunchTab’s offerings are currently, although probably not for long, more limited. But the system actually lets clients see the names and faces of individual users, along with their behaviors and connections.”And most blogs don’t even have a registration system,” he says. PunchTab wants to be that registration system.

Early figures show the service is catching on. More than 250 businesses integrated the PunchTab widget last month alone and the company reached 1.2 million consumers worldwide. And as PunchTab matures, it’s taking on a host of other company types, and is in discussions to add a few major brands as soon as this summer. Launched in January, the startup received $850,000 in seed funding this week to expand its platform and take the system mobile. The PunchTab mobile app is currently in development and in “alpha alpha” mode.

Of course, whenever gamification and giveaways meet, gaming the system is always an issue. What’s to keep unscrupulous bots from furiously commenting on your blog or sharing your article on PunchTab? Right now, users can only get points for one action in each category per site, per day. Beyond that, Kumaran encourages businesses to avoid the problem altogether by offering customized rewards, such as unlocking premium content, or in the case of one design magazine, access to premium fonts and vector sets.

Kumaran sees several possible paths to profitability PunchTab,including licensing deals (he said he has already received requests) and paid services in later “fremium” versions like more analytics and advanced customer relationship management tools. Can Kumaran get bloggers to pay up? We’ll see.

Photo courtesy of PunchTab

  1. You said “just because you build it, it doesn’t mean anyone will actually come” — but what I think you really mean is not *enough* people will visit. So, how do you determine that target number?

    If you have site with a niche topic and you produce quality content, then will using these type of tools really impact the volume of visitors? I’m curious if there’s evidence that this model is effective for all topics. And if so, is it sustainable — once the novelty is gone?

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    1. Hi David, thanks for your questions. As you noted it’s tricky to answer them for all business models but I’ll take a crack at one I know well: freemium (my first company, YouSendIt, definitely falls into this category and maybe one day PunchTab too).

      Probably the best blog post on determining your unit economics in a freemium business is by Andrew Chen here:
      http://andrewchenblog.com/2009/01/19/how-to-create-a-profitable-freemium-startup-spreadsheet-model-included/
      At YouSendIt we track (largely) the same key metrics and optimize the funnel to yield an increasingly profitable model.

      I think even in a niche model you want your current users to share your content with like-minded friends and drive traffic to your site. From that point on it is the quality of the content that does most of the work but existing behavior (visiting, sharing, contributing) can be reinforced by loyalty programs. Some good data on this comes from airlines, credit card companies and grocery stores that see huge lift in revenue from achieving top of mind (reach for that Citi AAdvantage card instead of the other two you keep in your wallet).

      And getting back to freemium / YouSendIt: these days getting a user to come back even one extra month means *millions* in revenue (we currently have 400,000 paid subscribers).

      PunchTab takes these fundamentals and makes it easy to implement for the average site owner and large brand alike. We’re improving and optimizing every day and, like the businesses we serve, are focused on the full customer lifecycle. You can read blog.punchtab.com where we will have and will continue to share success stories.

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