Shoppers get free products from retailers like iS3.com by accepting an offer during the checkout process from another retailer like Netflix or Gap. TrialPay serves as a revenue generator for some retailers and a customer acquisition tool for others.
Don Davis , Editor in Chief
Shoppers can get free products from retailers including software merchant iS3.com by accepting an offer during the checkout process from another retailer like Netflix Inc. or Gap Inc. TrialPay helps iS3 earn revenue from shoppers who otherwise abandon shopping carts, iS3 Inc. vice president of sales Rick Trefzger tells InternetRetailer.com.
“This enables us to get revenue for 5% of the people who leave our site without providing us any monetary value,” Trefzger says. IS3, which began testing TrialPay about nine months ago, is also known as International Software Solutions Inc. and is No. 398 in the Internet Retailer Top 500 Guide.
TrialPay, which officially launched last month, serves a dual purpose for retailers, says founder and CEO Alex Rampell. While helping merchants like iS3.com generate revenue from shopping sessions that might otherwise result in abandoned carts, it also serves as a customer acquisition tool for merchants like Blockbuster Inc., Netflix, Gap, Hammacher Schlemmer & Co. Inc. and Thompson’s Cigar Club, he says.
Rampell launched TrialPay after having sold his online web site security software retail business, SiteAdvisor, to security software vendor McAfee Inc. Because many software customers use trial versions of products but never pay for them, Rampell decided to figure out a way to earn revenue from customers whether they pay for products or not. The answer was to offer shoppers free software in exchange for agreeing to accept an offer from another retailer, which would then pay the software company a referral fee, Rampell says.
TrialPay has a client base of about 600 retailers and a stable of about 2,000 advertisers, including Netflix, Gap and credit card provider Discover Financial Services Inc. that agree to pay TrialPay and its client retailers, such as iS3.com, a fee to capture a customer in the retailer’s checkout process.
IS3.com and the other retailer clients of TrialPay set a minimum average net fee they want to receive for passing customers to TrialPay advertisers, then TrialPay works out the terms with each advertiser. TrialPay, which tracks transaction activity and administers the payment of fees, takes a cut of each fee.
Using an algorithm that factors in the gross fee paid by advertisers and the expected click-through rate of their offers, TrialPay places most prominently advertisers with the highest combination of fee and click-through rates.
TrialPay’s client retailers have the option to present alternative offers from participating advertisers either at the start of the checkout process or after a shopper has abandoned a shopping cart. Retailers selling lower-priced products with thin profit margins are more likely to want to present the alternative offers at the start of checkout because they can earn more from, say, a $20 fee from an advertiser than the margin they’d make on a $20 product, Rampell says.
IS3.com, however, does not present the alternative TrialPay offers at the beginning of checkout because it probably stands to earn more from a sale of its $39.95 Stopzilla anti-phishing software, Trefzger says. But for the shoppers who abandon shopping carts, iS3 presents them with the TrialPay offers in a pop-up window as a way to recoup some revenue and keep a customer engaged with its products.
“We’re making the minimum revenue goal we want through TrialPay,” Trefzger says. “And we’ve gained a customer who’s using our product while offsetting the cost of marketing to them.” The next step, he adds, is to win over that customer with quality and service for future direct sales.
TrialPay says it takes less than an hour to set up its alternative offers system on a client retailer’s site. But it can take a month or more for its software to learn from customer activity the most popular offers to emphasize from advertisers, Trefzger says.