You know those gift cards you see at the checkout counter in various stores? Well, it’s a kind’ve crazy business.

Most people, when given gift cards, forget to spend them or that there’s a use-by date. And yet they remain popular, with so many people buying gift cards and vouchers instead of presents. As a result, most of the players make money from non-redemption. This is bad for the provider of the gift (excess inventory) and you the user.

Some startups are addressing this., offers a marketplace where consumers can buy and sell their unused gift cards, and has raised a $56 million round of Series B funding, led by New Enterprise Associates (NEA).

Now another has appeared, Loyalty Bay, with a different take on loyalty. Loyalty Bay has raised a $1 million round led by Talis Capital with Howzat Partners, NEON Adventures, Chris Mairs and Richard Verney participating.

Billions is spent on driving traffic to websites but in comparison very little is spent in converting that traffic into a desired action. i.e. conversion.

Loyalty Bay uses data and rewards (such as gift cards, incentives etc) to incentivize any action (i.e. sale, signup, referral, reduce churn) on a website to increase conversions.

Co-founder William Roberts used to run and used wine as an incentive on comparison sites. He saw the effect it had on their conversion rates so decided to apply data, intelligence and a choice of rewards to dramatically improve on this. They use data and rewards to increase sales (or insert any conversion metric) on websites.He says “we have increased the conversion rate by over 100% working with some very large enterprise clients.”

Here’s how it works. Marketing drives a customer to a sales landing page i.e. to buy broadband. The Loyalty Bay API picks up the marketing channel and target audience then offers them a choice of 4 different rewards that are personalised. After the sale, Loyalty Bay understand that a sale has happened, so can immediately email that person his/her reward in realtime or with a specified delay. It then crunches all the data and provides reports on what works and what doesn’t.

Enterprise clients include Virgin Media, so expect to see more of these incentives start to pop up. And don’t forget to redeem that stuff…

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Loyalty Bay Raises $1M For Its API To Incentivize With Gifts