If you're SportsLine USA, you reward people simply for stopping by.
SportsLine in January unveiled SportsLine Rewards, one of the biggest and most ambitious loyalty programs on the Internet. In four months, nearly 200,000 people have signed up for the program. They get 1 point for each page they view; the points can be redeemed for sports merchandise, private e-mail messages from sports celebrities, concert tickets and more.
Those who pay $39.95 per year for SportsLine's Rewards Plus membership get double points and better prizes. All members also are entered in a $1 million sweepstakes; the more points they earn, the better their chances in a drawing taking place next January.
SportsLine hopes the program will help solve two of the Web's most vexing problems today: how to turn occasional site visitors into loyal customers, and how to learn enough about those customers to market to them on a one-to-one basis.
The company also hopes to revitalize an earlier paid membership program that had achieved only 50,000 subscribers since its launch a few years ago.
"The sense of loyalty, the sense of staying on our site wasn't there," said Lawrence Kruguer, VP-marketing at SportsLine. "You had 3 million people visit you each month, but you only had robust information on 50,000 folks."
So SportsLine embarked on Rewards, a program Mr. Kruguer calls "the driving force for us to build a robust database of sports enthusiasts and help us build a solid understanding of these people's behavior and tendencies when they come to our site."
What SportsLine is doing will likely be imitated across the Net. Yahoo! and Excite are reportedly considering their own loyalty programs; MSNBC on the Internet gives away frequent flyer miles in a daily lottery.
BUILDING THE INFRASTRUCTURE
So how does SportsLine manage its program? Here's a look inside:
It took a year of development to launch the Rewards concept. Much of the work was in developing the technical infrastructure to register new members (using an online demographic information form), track their site usage via a browser cookie and parse the data daily, so members can check point totals and redeem awards.
"The amount of programming and processes that had to be put in place is a task and is continuing to evolve," said Lew Bednarczuk, director of consumer marketing and a key architect of the program.
SportsLine built the program entirely in-house, partly because it didn't want to have to share any of its customer data with an outside entity.
Building the rewards catalog infrastructure meant meshing SportsLine's e-commerce partners with SportsLine's own assets. The catalog features more than 700 items ranging from a $5 gift certificate to Red Lobster for 4,250 points to a VCR for 309,080 points.
There are also dozens of awards designated as "Hot Picks" -- high-perceived-value products such as signed sports jerseys that SportsLine gets for free or nearly free from its various marketing partners.
SportsLine will devote 20% of its 1999 promotion budget to Rewards, Mr. Kruguer said, declining to give specific spending figures. The program launched with an online ad campaign, created in-house, on sites including Excite, Netscape and online contest and promotions site Webstakes, aimed at spurring sign-ups. SportsLine also sent e-mail messages to a portion of its 700,000-name list. SportsLine is not yet supporting Rewards with any offline marketing.
Now, however, SportsLine has shifted its focus to signing up people who are already on the site. Although the program has achieved double the number of members it was expected to so far, total membership represents just 4% of Sports-Line's 4.6 million unique visitors in March, according to Media Metrix.
HEFTY UPFRONT COSTS
Unlike frequent flyer programs or supermarket discount cards, which reward consumers for making a purchase, SportsLine rewards people for showing up. The only revenue the company derives from members is the annual fee for Rewards Plus membership (SportsLine declines to say how many people pay the fee); and any purchases members might make in order to earn points.
In effect, SportsLine is betting on the long-term profit potential of its loyal visitors, rather than short-term revenue. That makes for hefty upfront costs and uncertain long-term payout.
As with any loyalty program, SportsLine must carefully manage its "point liability" -- how many points its members have accrued and what would happen if they all decided to redeem them at once. Each "unspent" point is worth 1/10 of a cent on SportsLine's books. (The company declines to say how many points members have accrued.)
Part of SportsLine's strategy to reduce point liability is to steer members toward redeeming points for Hot Picks, for which SportsLine incurs little or no cost, rather than saving points for items in the catalog.
So far, SportsLine has processed more than 600 Hot Picks, vs. only "a handful" of catalog redemptions, Mr. Bednarczuk said.
REWARDS PROGRAM A MUST
SportsLine says Rewards members view an average of 110% more pages per visit than other site visitors. But Mr. Bednarczuk admits he doesn't know whether people actually view the content or simply click pages to rack up points.
Members can gets points for visiting up to 50 pages a day. Both levels can earn an additional 10 points each day for visiting a bonus page .
"Are there some people out there who will view 50 pages a day to get points? Probably," he said. "But anything that would resemble an attempt to get people to fly around our site and rack up points would be shooting ourselves in the foot."
More promising is this statistic: Pages that have been designated bonus pages get 20% to 50% more page views in the following week, showing that people aren't just clicking to earn points; they're going back for the content.
All this data gathering is just the beginning for SportsLine. The company plans to launch customized pages for Rewards members this quarter. Messrs. Bednarczuk and Kruguer also talk of the possibility of offering targeted advertising opportunities down the road.
On a broader scale, SportsLine will use Rewards member data to study how visitors interact with the site and learn what their value is, now and over time.
"A rewards program is going to become a requirement in this competitive environment," Mr. Bednarczuk said. "The challenge is to develop one that is truly unique and puts the customer first."
Debra Aho Williamson is a Seattle-based writer focusing on Internet business issues. Send Internet case study ideas to her at firstname.lastname@example.org,