Searching For High Fidelity

When Netcentives was hired by Nortel Networks earlier this year, the solution provider wasn't asked to create a new e-business strategy or build an e-commerce infrastructure. The mission at hand was to help Nortel fight employee turnover.

Thus, Netcentives embarked on its largest project to date by implementing its Employee Reward System for Nortel's PRIDE Program, which recognizes and compensates members of the company's 70,000-employee base. The three-year deal with Nortel gave Netcentives a boost in the third quarter,the $11.9 million in revenue represented nearly a 500 percent increase from 1999's third quarter, and the company's net loss beat Wall Street's prediction by $0.14,and further pushed the loyalty solutions market into the limelight.

With today's increasing competition, consolidation and uncertain market conditions, companies are struggling with employee retention and building loyal relationships with customers and partners. Loyalty solution providers have rushed to the rescue.

"Companies are now looking for different technology and services to help deepen and maximize relationships with their stakeholders," says Netcentives CEO and chairman West Shell. "Up until now, the only choices companies had [for loyalty solutions] were paper-based systems or very expensive legacy systems. Companies know they need to [build loyalty systems] but they don't know how to go about executing it."

In Nortel's case, it came up with the initial PRIDE Program and then brought in Netcentives to install the proper infrastructure and manage the program's award-nomination and fulfillment systems. Netcentives grabbed a number of marquee clients in 2000, including Microsoft, 3M, America Online, and American Airlines.

Incentive Systems is another solution provider that's gained traction in the loyalty-building field. The Bedford, Mass.--based company calls itself an enterprise incentive management (EIM) solution provider,fitting in somewhere between ERP and CRM,that helps customers motivate and align their employees more effectively. Mike Byers, CEO and president of Incentive Systems, believes the market for loyalty solutions is deep because employee, reseller and partner concerns are universal.

"Everyone has these problems. People have been begging us for these solutions because they're in so much pain," Byers says.

The company tries to alleviate the pain, for instance, by using the EIM software to create Web-based access to sales information for resellers and instilling more communication and credibility. "We act like a beacon," he says. "We model a strategy, automate the plan with the software, and point [customers] in the right direction.

Incentive Systems is also involved with Nortel; the company's EIM software will be delivered with Nortel's Clarify eFrontOffice as part of a new global alliance announced Monday. Network Associates and Telcordia Technologies are some of Incentive Systems' newest customers.

Other loyalty solution providers are prepping for primetime as well. Entigo, founded in 1995, found its niche in the channel-management market, providing B2B sell-side e-commerce solutions. Entigo, too, has begun building out its solutions offerings. On Monday the company released its newest application, Entigo Warranty!, which manages the entire warranty and claims process for large enterprises to improve customer service. Entigo has also racked up some big names, including Honeywell, GE Information Services, and General Nutrition Centers.

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