Microns and Loyalty: Gamifying and Rewarding Attention (Part 6)

Emails, Microns, Opens, Points

If one looks at the open rate of 15%, it would seem that brands have trained customers to ignore their emails. Microns offer a fresh start for brand-customer communications. Previously, we have discussed how microns can drive more opens and engagement. The use of rewards can be an additional layer which can improve performance. What is needed is an intermediary who can bridge both sides of the market – brands and customers.

The intermediary (in this case, Netcore’s MyToday) can offer 1 point to the customer for every opened micron. The points earned could be higher for a streak (continuous daily opens). A click could be worth much more. The points earned could be shown at the bottom of every micron. Brands would pay Netcore to transfer points to customers. Brands could start by offering points to everyone. Later, specific customer segments could be incentivised with more points for every opened micron. The key is to gamify the interaction and do it across brands so that microns as a category become the vehicle to earn points.

The only way this will work is if brands see better performance to justify the additional spend for points. (Remember that brands are already paying for creating and delivering the microns.) My belief is that given the low open rates that emails have, there is plenty of room for improving RoI for brands:

  • Let’s say a brand pays 1 unit for every email that they send
  • For 100 emails, the brand spends 100 units for email delivery
  • 15 emails get opened, so they are spending 6.7 units for each open
  • Assume microns have an open rate of 50% and are priced based on opens
  • Also assume 1 unit is paid to the customer (email recipient for every email)
  • Thus: 100 microns will cost 100 units – 50 going to the email service provider (for the 50 opens), and 50 as reward points to the end customer
  • The brand spends the same, but sees 50 opens of microns as against 15 of emails – definitely a better RoI
  • And there are delighted customers who now have 50 reward points to spend

To complete the analysis, let’s understand the economic analysis for the service provider.

  • Seemingly, the loser is the email service provider whose revenues have halved
  • In the emails case, the ESP makes 100 units of revenue
  • Emails have a 90% gross margin (GM) so the ESP makes 90 units of GM when sending emails
  • Microns cost lower to send because of their smaller size, so let’s assume 95% GM
  • The micron service provider (MSP) will make 47.5 units margin (95% of 50 units paid for opens)
  • While this looks like a significant loss of GM, given that brands see a 3.3X better performance with microns as compared to emails, they could be persuaded to double their spend which would even the score for the MSP

In a nutshell, the economics can work very well for brands, customers and the micron service providers.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.