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Posted: April 09, 2012

Keep ‘em coming back for more

Think of it like a fun and engaging frequent flyer program for any website

Brad Feld

One of the most enduring challenges any Internet marketer faces is getting users to come back regularly and engage on their website.  In other words -- loyalty.

Social gaming companies and a few very popular consumer web services have gotten extremely good at creating loyalty, where loyalty rate is defined as Daily Active Users (DAU) / Monthly Active Users (MAU). Yet when you look at loyalty rates on the rest of the web, they look downright abysmal.  According to data from Nielsen, of the top 2,000 biggest sites in the U.S., only 21 of them have a loyalty rate better than 25 percent.  In fact the average loyalty rate among the top 2,000 US sites is less than 7 percent.  Do some quick math (7 percent * 30 days) and that means that on average their “active” users are only visiting their site two days out of the month.

That doesn’t feel very loyal, and this is the challenge, or opportunity, that our portfolio company BigDoor set their sights on.  The team at BigDoor has been busy building a gamification and rewards platform, but after two years of work and a lot of learning they discovered that what they had really created was an engine that helps publishers increase user loyalty and engagement.  

Once they realized this, they also realized they needed to have a drop-dead easy way to measure the impact they were having on loyalty rates.  So they built in cohort analysis that automagically creates a random control group and the analytics engine needed to compare control groups versus reward user groups.  Next came an iterative exposure function, because no smart marketer would roll something out to their entire site without testing it first on a subset of their traffic.  Then they made it as easy as possible to implement, with the requirement being that it should take the same technical ability that a person needs to install Google Analytics.

BigDoor has been in private beta with this latest version of their gamified rewards program for the last few months, and the results surprised all of us.  That’s because when a user goes to a site that is using BigDoor, they see a tightly integrated and highly gamified rewards program that lets them earn real rewards for engaging with the site.  The more loyal and engaged the user is, the more points and rewards they get.  

Think of it like a fun and engaging frequent flyer program for any website.  But behind the scenes is a white-label gamification engine that is churning through data, comparing cohort performance, and measuring results.  And what has their impact been on loyalty rates?  On average, across all of their publishers, they saw a lift in loyalty rates of more than 150 percent.

If you talk to the BigDoor team they will tell you that they still have a ton of things to improve upon.  They want to make the implementation process for a new publisher even simpler.  They want to create more and better integrated widget templates.  They want to get their loyalty score lift even higher.  They are busy doing all of those things, but what’s already there is working incredibly well.  That’s why we decided to double down with our investment in BigDoor and lead another round of investment into the company.

In addition to announcing their new funding round, BigDoor also announced they were bringing their gamified rewards program out of private beta, so it is now available to everyone.  They currently have a huge pipeline of publishers they are working with, but if you manage a website that is struggling with that never-ending challenge of loyalty and engagement, give their gamified rewards program a look and let them know what you think.

Brad has been an early stage investor and entrepreneur for more than 20 years. Prior to co-founding the Boulder-based Foundry Group, he co-founded Mobius Venture Capital and Intensity Ventures, a company that helped launch and operate software companies. Brad is a nationally recognized speaker on the topics of venture capital investing and entrepreneurship and writes widely read and well respected blogs at www.feld.com and www.askthevc.com. He holds bachelor's and master's of science degrees from from MIT. Contact him at brad@feld.com

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