Low-Cost Personalization Option Looms
A web personalization company is taking a new approach to pricing its services that could open opportunities for small and midsize companies.
Dynaptics Corp., of San Jose, Calif., this week will announce a performance-based pricing model for its Web personalization software. If successful, the move could spur competitors to similarly lower a prime barrier to deploying personalization, which presents individuals at e-commerce Web sites with buying opportunities based on data the company has gathered on them.
Dynaptics hosted service, called GetPersonal, offers the companys Personal Sales E.ssistant technology at a subscription fee of $3,000 per month. The company will negotiate the performance-based portion of the pricing model with individual customers based on click-through and conversion rates, officials said.
The performance-based part of the pricing model would typically add another $3,000 per month to the companys fees if the service performs as advertised. Dynaptics standard license includes a $10,000 one-time activation fee, a $75,000 annual subscription fee and a 10 percent maintenance fee.
Dynaptics officials acknowledged that their hosted software offers less sophistication than licensed personalization offerings from other vendors but said it has a better price/performance model.
West Marine Inc., which sells aftermarket boating accessories through 230 retail stores and a profitable Web site, is pilot testing GetPersonal to see if it can generate more impulse buys across product categories, which is known as "cross-selling."
"Its out of the question for a company our size to make a huge investment in personalization," said Tony Gasparich, vice president of Internet at West Marine, of Watsonville, Calif.
"Not that there arent some good solutions out there, but it just wasnt practical for us from the time, cost and labor standpoint to deploy them."
Gasparich evaluated personalization solutions from Net Perceptions Inc., Engage Inc. and Blue Martini Software Inc. and figured they would have cost from $250,000 to $500,000 to deploy, factoring in costs for licensing, implementation, consulting, hardware and hiring new staff.
"They never made the first hurdle, which was could we afford it," he said. "Now were paying $3,000 per month and pay per click. Its a really economical, low-risk way to test it out and see if dynamic offerings will work for us."
eSticker Inc., another early user of the Dynaptics hosted software, reports that Web site sales of products recommended by GetPersonal have increased tenfold.
"Its a simplistic way for us to get more information on what products are popular and what products arent," said Steve Mack, president and CEO of eSticker, based in San Jose, Calif., which sells stickers and related products online.
It remains to be seen whether other personalization software vendors will follow suit with performance-based offerings. A Net Perceptions spokesman said the Edina, Minn., company has no plans to offer a performance-based pricing model.
And last week, Net Perceptions announced it will cut 124 jobs, or 46 percent of its work force, in the face of sagging revenues, which figure to be just a third of what they were in the same quarter a year ago.