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Poshly has created a lot of excitement in the industry, because we can get answers in real time from beauty lovers, traditionally, they'd have to wait two months to get the same results

Doreen Bloch, Founder and CEO, Poshly.com

Want Your Customers' Personal Data? Bribe Them

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May 13, 2014 — Kris Frieswick

As the battle over personal data privacy heats up, one company, Poshly.com, has figured out a way to get its users to divulge intimate information that some people don't even tell their best friends--think details on things as diverse as skin type and unpleasant and embarrassing medical conditions. And while those users could disclose this information anonymously, many of them are choosing to do it using their real name, address, and email.

How does Poshly do it? The old-fashioned way--bribery. Co-founders Doreen Bloch and Brad Falk don't call it that, of course, but that's essentially what's going on. Every time a user fills out a Poshly health and beauty questionnaire, she or he gets the chance to win brand-new health and beauty products (from companies such as Benefit, L'Oreal, Cutex, and Murad) targeted specifically to their types and conditions. It's a symbiotic relationship that helped Poshly gather more than 150,000 users--users who return again and again to spend an average of five minutes on the "gamefied" site filling out questionnaires in exchange for access to the most recent trove of free goodies. Users can improve their odds of winning a particularly coveted item by answering additional, more detailed, questions.

The Business Model

In an industry that has relied on mass marketing to advertise its wares, Poshly's near real-time information--attached to actual people--is invaluable. Bloch and Falk monetize this data trove in a few different ways. First, the company strips all personally identifiable information from the data, aggregates it, slices and dices it for specific clients--mostly personal care and publishing brands--and sells this trend data for $10,000 to $20,000 per report. It also provides a Smart Sample service, in which it sends out sample-size products on behalf of a client to users who have told Poshly that they have the specific health or beauty concern that the product addresses (Poshly charges clients $3 to $5 per sample). Poshly does all the fulfillment in-house so the client never knows to whom it's sending the targeted samples.

Finally, the company is about to unveil a product that may become the Holy Grail of health and beauty marketing--a Web-based platform that Bloch calls the "Bloomberg of Beauty." It will allow clients to access survey data in real time as well as create their own customized reports based on their marketing criteria (like the location of the highest density of users with a specific skin problem or beauty concern).

"Poshly has created a lot of excitement in the industry, because we can get answers in real time from beauty lovers," Bloch says. "Traditionally, they'd have to wait two months to get the same results. Plus, the old marketing model worked on creating focus groups and paying respondents for their time."

The question is why these enormous manufacturers haven't done this themselves. Bloch says it's because they don't want to.

"These conglomerates are not tech companies," she says. "They look to the tech sector to provide better, faster ways to do it. They're innovation focused."

The Trust Factor

Perhaps a better explanation is that Poshly doesn't align with any particular brand. That means that Poshly can act like a trusted friend who offers access to the best products from throughout the industry. But even that's not enough to get customers to give up their most personal information. The real magic, Bloch says, is honoring your pledge to keep user data private. "We never want to do something that the user feels is not in their best interest," says Bloch of her website's visitors. "We want them to know that this data is going to help make better products" but won't lead to a spam deluge from a company.

Poshly launched in mid-2012, and last quarter it closed its first round of funding for an undisclosed sum. Investors include Frontier Equities VC, 645 Angels, Astia Angels, and several other private investors. Bloch and Falk have not, however, agreed to any strategic investments from client firms in the health and beauty industry. "We want to remain agnostic within the industry," she says. Although Bloch says she sees obvious exit opportunities within the market research space, right now, she's focused on the Q4 launch of the real-time Web platform.

"We definitely want to see this platform come to life and build value for the brands," she says.

Read more: http://www.inc.com/kris-frieswick/poshly-trading-privacy-for-products.html#ixzz31uFoSN33