Ottawa startup’s promo-tailoring technology clicks with users

Ottawa tech startup RareLogic is out to put an end to “one-size-fits-all” e-mail marketing blasts.

Founded in 2014 and officially launched just over a year ago as an accessory to Shopify e-commerce stores, the company has been growing rapidly among online retailers looking to learn more about their customers and keep them coming back to buy more using RareLogic’s predictive data engine.

The company looks at each customer individually, tailoring a message according to what each person is likely to respond to, rather than mass-e-mailing a single promo.  

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“I’m sure like the rest of us you buy stuff online, and then I’m sure you’re relentlessly spammed by that retailer with crap you’re not interested in,” says CEO Rob Lane. “So we said why, in this digital age, do you still spam me with garbage?”

The system works by gathering data on existing customers – such as which products they’ve purchased and when they tend to do their online shopping – and crunching it into a personalized profile of their individual buying habits, with suggestions for products they’re mostly likely to buy next. The store owner makes an e-mail template with placeholders that RareLogic fills in with different suggestions for different customers, meaning no two promo e-mails will look exactly the same.

Some of the most popular e-mail marketing companies include MailChimp, Constant Contact and Campaign Monitor. But the effectiveness of the current practice of sending the same e-mail promo to thousands of people is dubious, Mr. Lane says.

“They have a product they want to promote … and they blast it to their entire list. The odds of all that list actually being interested are very, very remote. So while you may be hitting a percentage of that list that actually likes the product you’re selling, you’re also alienating a much, much higher percentage of people that don’t care.”

Instead, RareLogic uses segmenting and sub-segmenting in order to laser-target stores’ customer bases. The main measure of effectiveness is the click-through rate: the percentage of people who not only open the e-mail, but who follow the link to the product being promoted.

The industry average for e-mail click-through rates is around three per cent, according to statistics compiled by MailChimp. RareLogic says it’s seeing an average of 10 percent and as high as 18 per cent in some stores that use its product, “just by giving people content they actually care about,” says Mr. Lane. “Which makes sense, really – but no one was doing it at scale.”

Mr. Lane, 46, a Brit who came to Ottawa via Dallas in the early 2000s, has many years of experience running startups. After arriving in the capital, he helped guide optical tech company Tropic Networks to $10-million in quarterly sales as its vice-president of sales and marketing before the firm was acquired by Alcatel Lucent in 2007.

He then went on to co-found Overlay.TV, an interactive video provider for e-commerce, which fizzled out four years later. He then co-founded MyMusic, a Pinterest-style web platform for music-related content, which sold to a French multinational in 2014.

So far, RareLogic has been installed by about 1,600 Shopify stores, and the firm says that number has been growing rapidly. The company reports that to date it has sent more than 90 million e-mails on behalf of its clients, which it says translates into $6.5 million in incremental, directly attributable revenue for those stores.

“As humans we like to think we’re free-thinking, but actually we’re not – we’re very much passively driven,” Mr. Lane says. “We’re very much creatures of habit.”

The firm has closed two seed rounds, the first for $480,000 in September 2014 and the second for $800,000 this past December. The company currently reports $16,000 in monthly recurring revenue, a figure it says has been quickly growing. RareLogic also plans to expand to other e-commerce platforms throughout 2016.

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