Loyalty programs have proven to be an effective tool to get customers coming back in the bricks-and-mortar world, so why not try to replicate the formula online?

That’s the question being posed by the founders of PointSite, a one-year-old Toronto-based application service provider that launched a new Web-based ‘white label’ – or generic – rewards program at the Comdex computer show in Las Vegas in June and introduced it to the Canadian market in November.

Although online loyalty programs are by no means a new concept, PointSite offers a unique proposition, according to Farhan Merchant, the firm’s CEO, because it allows companies to retain full ownership and control over the customer data generated by the program, as well as dominion over the branding of the program itself. Visitors still go to the client’s branded site – it’s just that PointSite handles the technological and fulfillment end of the loyalty program on their behalf.

‘Every kernel of information we receive through the system belongs to our [clients],’ Merchant says, adding that ‘reams and reams’ of data are collected from users as they continue to be active members in the reward program.

Another distinguishing feature of PointSite is that it gives Web site owners the ability to reward visitors with points based on both transactional and non-transactional activity, a feature Merchant says gives marketers a powerful tool to entice users to visit and make use of specific areas of their Web site.

Merchant, who got his start in the Internet space in 1995 when he launched one of the first online job sites in Canada, says PointSite clients can hand out reward points to people just for visiting a site, clicking on a banner ad, or reading an e-mail message. The technology can also be used to reward people for going to specific areas on a Web site. For instance, he says, ‘We can go in and set up a program to reward people just for reading a newspaper article online. It’s all driven by the requirements of the client.’

The cost to clients of each PointSite point is one cent, a figure that Merchant says covers all costs associated with the administration of the program, including data maintenance and management, as well as the cost of disbursing merchandise from the 1,000-item redemption catalogue, which is published and administered by U.S.-based catalogue fulfillment firm Maritz.

A third company, Toronto-based Internet developer Communicopia, developed and maintains the user interface that fronts the PointSite program.

PointSite, for its part, collects, stores and analyses the program data on behalf of clients that don’t have the desire or capability to do it themselves.

‘We have a number of reporting mechanisms within the system that will allow a marketing manager to go in and see exactly how well any particular offer is performing, and allow them to segment who is taking advantage of those offers and what their profile is,’ Merchant explains.

So far, however, the only client to sign on with PointSite is Toronto-based new media company ClickEffect, which owns a gaming Web site called InstantBingo, where an animated ‘Bingo Bunny’ hands out ‘carrots’ to frequent game players.

Beyond that, Merchant says PointSite is receiving expressions of interest from online e-tailers and portal sites ‘that want to attract eyeballs and retain a client base coming back to their site.’

As for the near-term future, Merchant says PointSite is ‘very aggressively’ pursuing a strategy that will allow its clients to be able to provide rewards to customers using wireless devices. In addition, the firm is targeting the business-to-business sector, in the hope that some businesses will see the advantage of incorporating a loyalty rewards program within their vortals, intranets and business exchange networks. He adds that PointSite can be a very effective tool for businesses to encourage employees to make greater use of internal intranets, as well as with online training programs.

‘A lot of companies are starting to look at how to integrate a [customer relationship management] solution within their organizations right now, and we feel that online loyalty can be a very important part of that kind of solution,’ Merchant says.