Direct stock sales pump brands, retail purchases

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Companies searching for ways to attract loyal customers online are adding pitches to buy stock to their Web sites.

StockPower, San Francisco, which operates online direct stock-purchase plans for corporations such as BP Amoco, Compaq Computer Corp, Home Depot and Kmart Corp., also offers its partners affinity marketing programs.

Home Depot, StockPower's first client in October 1998, is the first of the company's nine current partners to also use StockPower's affinity marketing services. Earlier this year, Home Depot sent 18,000 online shareholders a preapproved credit card offer and inserted information about the online purchase feature in its annual report.

Home Depot said it believes most shareholders shopped at its stores before they bought stock online.

"If you look at this program or other programs like this, there is no possible way [online purchasing] is going to drive your stock price up or change your capital," said James Grant, investor relations manager for the Atlanta-based home improvement chain. "If you don't utilize this to drive sales in your stores, you kind of miss the point and the opportunity to try to make a customer a better customer."


Last year, StockPower partnered with consultancy Bain & Co. to research what it intuitively knew: Shareholders make better customers.

The Bain survey found that 83% of shareholders are more likely to buy from a company in which they own stock. Such customers spend an average 54% more than non-shareholders, visit stores or Web sites 68% more often and are two to three times as likely to refer friends to a company.

Ninety percent of shareholders who have bought stock through StockPower have opted-in to receive promotional offers from those companies, said Donna Kuker, senior director-affinity marketing at StockPower.

Ms. Kuker would say only that tens of thousands of customers have purchased through StockPower's link since the company launched 19 months ago. Consumers who buy stock online through a corporate site pay no commission, even though they must pay a small fees, and have online access to their accounts.

Home Depot began mailing new online shareholders a welcome kit in late April created by Rosemont, Ill., direct shop Townsend Agency to drive them to the Web site to provide feedback and sign up for newsletters.

StockPower has signed contracts with 15 companies to provide online stock purchasing in coming months. Yahoo! recently registered with the Securities & Exchange Commission to directly sell 10 million shares online through StockPower.

StockPower is promoting itself to corporate America through a $6 million print campaign that started last week and runs through August, via Swirl, San Francisco. The effort includes ads in Forbes, Fortune, The New York Times and The Wall Street Journal.

StockPower, which tapped Townsend to create its affinity programs, is working with several other clients on future programs.

Robert Vevang, senior VP-director of client services at Townsend, said there are plans to create special stockholder e-mail newsletters, Web site announcements, store signage, brochures and even print ads for more companies.

"All the materials we develop to drive people to the Web site and to buy more product have to mirror the brand image of the [company]," he said.

Copyright May 2000, Crain Communications Inc.

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