Buy a hamburger and get rewarded with Facebook Credits to spend on a virtual cow. That’s the mouth-watering promise of startup Plink, which is launching a virtual currency loyalty rewards system for restaurants. You register a credit card with Plink, and then when you make purchases at Taco Bell, 7-Eleven, Dunkin Donuts, or one of Plink’s other clients you’ll get Facebook Credits automatically deposited into your account. As demand for Facebook Credits to spend on social games and media increases, expect more virtual currency incentive companies like Plink to pop up.
The reason virtual currency microincentives work is because they are so cheap to distribute, and users perceive their value as higher than their cost. Mailing someone a coupon or rebate can cost enough to prohibit small incentives for small actions and purchases. Since it essentially costs nothing to drop Credits into someone’s Facebook account, businesses can cost-effectively reward users with just a few Credits, which typically cost $0.10 each.
Those cheap Credits power entertainment by letting users continue playing their favorite social games or buy virtual goods and powerups. Many games accept Credits, but few users actually pay, and those that do may feel guilty about it. This and some A/B tests I’ve heard show users prefer a reward of 50 free Credits to $5 off a purchase show users may irrationally value virtual currency at higher than its actual cost.
That means incentive companies like Plink can be more persuasive giving away Credits than money, and that margin between perceived and true value turns into profit. Since late 2010, Ifeelgoods has been helping online businesses reward users with Credits for signing up for email lists, following Twitter accounts, and making ecommerce purchases. Plink is targeting offline restaurants instead with a very valuable business proposition.
Plink helps businesses draw new customers and increase loyalty with a system that requires no point-of-sale integration, hardware, staff training, or up-front fees, Plink told AllFacebook. Rewards are distributed automatically when customers pay with a registered credit card, and clients pay Plink a percentage of what its users spend.
The only friction for users comes in with registering a credit card. Since Plink needs read-access to your purchases so it can see when you make purchases at its clients, you have to log in to your online banking account. While totally secure, this process could cause significant drop-off during sign up.
Still, Plink’s idea is brilliant. It has the beneficiary trifecta, where restaurants drive sales, users get rewards without having to change their behavior, and Plink takes a cut. Businesses have been searching for a better loyalty system, but most come with the barrier of complicated in-store redemption. Plink’s system could easily expand to support retail or any other type of businesses. At that point, it could be taking a small percentage of a huge volume of sales with little overhead. Doesn’t that sound tasty, investors?