JustBecause: Taking word-of-mouth to the next level
October 02, 2012
By Steve Hendershot
JustBecause, an app launched in September by Chicago-based Cognitive Companies, aims to use online gifting to fuel startups' efforts to acquire new customers.
The idea is to get JustBecause users to give $1 gifts to their friends who introduce the friends to merchants such as glasses-maker Warby Parker or clothier JackThreads. The giver gets to be thoughtful and spend only $1; the recipient gets merchandise or a service worth well over $1; and the business not only gets in front of a potential customer, it does so with an implicit recommendation from the giver.
Cognitive Cos. founder Matt Hartman tells Silicon City more about the new app.
Crain's: Where did the idea for Just Because come from? What got you interested in this space?
Matt Hartman: I built this product called ReferBoost that let apartment buildings run referral campaigns by saying, for instance, that the first five people to post (about a promotion) on Facebook would get a Starbucks gift card. We created these incentives for people to share.
I was at Uber's Chicago office because they were launching in Chicago (and giving away $20 promotional vouchers to attract customers). I had a building in Chicago, and I had said, 'Why don't we let people compete for these $20 Uber gift cards?' At that point, my buildings were buying Starbucks gift cards at market price — we didn't have a special deal. There were a thousand people in this building, so I told Uber, 'We're giving you free advertising basically.' And they were like, 'Sure, it's a no-brainer,' and they gave us ten cards.
I came home that night and thought, 'That's interesting — we're paying for something but we don't need to be paying for it, because [the giveaways] helps these companies.' So I went back and asked, 'How many of those would you give me?' And one of those guys took out a stack of like 2,000 Uber gift cards.
Later I was at the BirchBox office in New York. The founders of that company are mentors to me. I mentioned this whole story to them and I asked, 'Would you guys do something like that, where you gave some amount of money for customer acquisition and people got this free gift that we could let them give them to a friend for a dollar?' They said, 'Yeah, and we can think of half-a-dozen other companies that would do that, too.' So they really encouraged me to do it, and we ended up getting all these companies together and building this app.
A lot of your value is in offering gifts to chic, up-and-coming businesses. How did you approach the process of selecting and recruiting those partners?
I would describe our partners in a funny way. What I ask them is, 'Is your brand so awesome that the only thing that keeps it from exploding is people not knowing about it or trying it?' For a lot of consumer-facing companies, that's the case.
For them, we're in between between outright, paid customer acquisition and organic referral, which doesn't have much design around it. We make sense for companies that have money flowing through the system, that have the budget to pay for customer acquisition, and that have a good measure of a customer's lifetime value.
How do you determine what they'll give away? Since your website positions these giveaways as gifts, there's at least a little pressure to make sure you're delivering something of value.
We start out asking what a company's customer acquisition cost is. If they have a customer acquisition cost of $10 and they have products between $5 and $100, we'll take a look at all the things they have under $10 and find the thing that best represents their brand — the thing that one person will send to someone else who then says, 'That's really neat. I want to go check that place out.'
If they're used to giving away free trials, then it makes sense that we'd like to do something a little bit better. So we say that to them, 'We just need something that is a bit more compelling than what you're normally giving to everybody else, because this is something special.'
Why start with the iPhone?
We wanted to do mobile first because JustBecause is really a mobile idea; it's about serendipity. For example, when I walk away from here and think, 'That was an awesome meeting, so I'm gonna send you something.' Or if I have a conversation with someone about how they need a pair of glasses, then I want to send those to you right now. I think there's a big piece of it that is about serendipity and having the ability to do this is the right time.
Then we wanted to go to iPhone first because right now, I think the iPhone user is more likely and more willing than an Android user to pay for things using their phone. Our app is free, but we're charging a dollar to send a gift. But I also I want to get Android quickly because there are a lot of people using Android devices, too. We just had to make a choice, and chose iOS first.
Link to Original Article: https://www.chicagobusiness.com/article/20121002/BLOGS06/121009949/justbecause-taking-word-of-mouth-to-the-next-level#ixzz28RlHPFSC
