Selling stock with a Facebook app
How would you like it if IR could become a profit center by increasing business from current customers while attracting new ones and building a stable, long-term shareholder base?
Don De Laria liked it so much, he joined the company. The former head of IR at cinema chain Regal Entertainment Group was in New York this week helping launch Loyal3, a San Francisco start-up which offers public companies customer stock ownership programs (CSOPs – ‘see-sops’).
De Laria, who is in his second week as managing director of Loyal3, will remain on NIRI’s national board until his four-and-half-year term expires in December. He is still based in Knoxville, Tennessee despite the new 415 area code in his contact details.
There was a lot of buzz around Loyal3’s New York junket, with the Wall Street Journal, the New York Times and Forbes all picking up on the news. The main focus was the announcement of a partnership with NASDAQ OMX to market CSOPs to its US listed companies. The exchange plans to launch a CSOP for its own investors this summer.
Loyal3 may also turn out to be the talk of the NIRI conference in Orlando, Florida, June 12-15, with Loyal3 to be represented in NASDAQ’s exhibition booth, in a demo room, and in a Tuesday lunch-and-learn session.
Investors can access a CSOP through a company’s website or Loyal3’s site, signing up and buying stock in just three clicks. The main route, though, could be through a Facebook app on the issuer’s Facebook page. One of the most interesting pick-ups this week was a blog post by David Kirkpatrick, author of The Facebook effect. He writes that a CSOP could help Facebook itself bypass Wall Street’s short-termism when it eventually goes public, by building a shareholder base of keen Facebook users.
De Laria got wind of Loyal3 when it pitched to Regal around 18 months ago. ‘What really appealed to me was the idea of stock ownership as a loyalty currency,’ he recalls. ‘People want to own the companies they know and love. Meanwhile, customers who are also shareholders spend on average 54 percent more than regular customers.’
From consumers’ perspective, Loyal3, which is technically a transfer agent, lets them buy and sell without any transaction cost. Instead, issuers will pay Loyal3 $10 to $30 a year for each customer that becomes a shareholder. Plus, investors could put in as little as $10, even if that means buying a fraction of a share, and companies could give away shares as loyalty rewards.
Regal, which is mostly institutionally-held, does not have a retail investor program, but De Laria saw Loyal3 as a great feature for its movie-goer loyalty program. Eventually he got so involved, Loyal3 found a way to bring him over to the team.
De Laria says his new role is basically a sales one, and with more than 15 years in IR, he’s positioned to lead the marketing charge at the NIRI conference.
He adds that IROs quickly ‘get’ Loyal3 and its technology, which makes it easy to convert customers to loyal ‘customer-owners’, and ‘opens the door to stock ownership for the masses.’