Rewards based viral marketing system

REWARDS BASED VIRAL MARKETING SYSTEM

0002FIELD OF THE INVENTION The present invention relates to methods and systems for viral marketing over a computer network. More specifically, the present invention provides methods and systems for an on-line, rewards based viral marketing system.

0003BACKGROUND OF THE INVENTION The increasing use of wide area networks such as the Internet has resulted in an explosion in the provision of on-line services. Computer users can access a vast wealth of information and services by utilizing a wide area network to establish a connection with other computers connected to the network. There are myriad documents and files corresponding to a vast array of information and services accessible on the Internet. Indeed, the Internet has quickly become a means for not only obtaining information, but for conducting commercial transactions. As one can imagine, the unique features and advantages of computer networks, like the Internet, allow for innovative marketing and business strategies.

0004Frequency- reward programs, such as "frequent-flyer" programs, are well known in the travel and airline industries. Under such a program, a traveler is rewarded with "points" based typically on the number of miles to the destination. When a traveler accumulates a sufficient number of points, she may redeem them for an award, like a free flight ticket, rental car or first class upgrades. In addition, such programs may also include rewards based on the frequency of using a particular credit card. Points are awarded, under this aspect of the program, based upon the dollar amount paid for merchandise using the credit card. As disclosed in U.S. 5,774,870, the prior art also includes the application of such frequency-reward programs to the Internet. Unlike the rewards' programs of the prior art, such rewards' systems conducted over computer networks allows for redemption of one's award concurrently with the underlying purchase.

0005In addition, the particular features of the Internet and other computer networks allow for so-called viral marketing opportunities. Viral marketing broadly encompasses methods and systems for taking advantage of the unique capacities of the Internet. For example, certain viral marketing schemes use an entity's own customers to distribute its marketing message or advertisements to others. For example, Hotmail is the largest provider of free, web-based e-mail in the world. It gained its enormous customer share by appending to every customer's outgoing mail an offer, directed to the recipient, to sign-up for a free e-mail account. Therefore, the customers' use of Hotmail's service causes its marketing message to proliferate similarly to a digital virus.

0006Given the relatively recent widespread acceptance of the Internet as a commercial avenue, however, the methods of exploiting the unique features of the Internet discussed above merely scratch the surface of the realm of possibilities.

0007SUMMARY OF THE INVENTION The present invention provides a rewards based viral marketing system for use over a computer network. The present invention contemplates that the computer network includes at least one client computer associated with one or more users, at least one server associated with a provider of goods or services, and at least one server associated with a referral site, the referral site receiving a commission from providers of goods and services based upon sales corresponding to referred users. The method comprises (a) providing, at a client computer, to a first user of the referral site the option to send to other users of the computer network a sign-up offer from the referral site; (b) providing the first user the opportunity to receive compensation for sending the sign-up offers by associating the other users of the computer network who accept the sign-up offers with the first user; (c) creating a pool comprising a predetermined portion of the total of the commissions received, during a predetermined time period, by the referral site; and (d) distributing to the first user a percentage of the pool, the percentage based on the number of other users of the referral site attributable to the first user over the sum of the total number of users attributable to every other user of the referral site. As used herein, "first user" merely distinguishes one user of the referral site from the other users of the referral site, since the present invention contemplates providing every user of the referral site with the option to designate others to be sent sign-up offers and receive compensation as outlined above. In other embodiments of the present invention, users only receive credit for validated users that they have referred to the referral site. Accordingly, this embodiment of the method further includes (d1 ) validating all users of the referral site, wherein the validating step is performed by reference to at least one predetermined criterion; (d2) distributing to the first user a percentage of the pool, the percentage based on the number of other users validated according to step (d1 ) attributable to the first user over the sum of the total number of validated users attributable to every other user of the referral site. For example and in one preferred embodiment, the predetermined criterion is a purchase by the user within a predetermined period. A preferred embodiment of the present invention only associates referred users to the referring user down to three levels. According to this embodiment, the method comprises (a) providing to a first user of the referral site, at a client computer, the option to send to other users on the computer network a sign-up offer from the referral site; (b) providing the first user the opportunity to receive compensation for sending the sign-up offers by associating the other users who accept the sign-up offers with the first user; (c) creating at the referral site server a pool comprising a predetermined portion of the total the commissions received from the provider of goods and services, during a predetermined time period, by the referral site; (d1 ) associating at a first level with the first user the other users who signed on to the referral site as a result of a sign-up offer sent by the first user; (d2) associating at a second level with the first user the other users who signed on to the referral site as a result of a sign-up offer sent by the other users associated at the first level in step (d1 ); (d3) associating at a third level with the first user the other users who signed on to the referral site as a result of a sign-up offer sent by the other users associated at the second level in step (d2); and (e) distributing to the first user a percentage of the pool, the percentage based on the number of other users of the referral site associated with the first user over the sum of the total number of users of the referral site associated with every other user of the referral site.

0008More specifically, at the end of a settlement period, the pool is distributed among the users of the referral site by (e1 ) summing the number of other users associated with the first user at the first, second and third levels; (e2) repeating the associating steps (d1 )-(d3) and (e1 ) for all other users of the referral site to yield the sum of the total number of users associated with every other user of the referral site; and (e3) distributing to the first user a percentage of the pool. The percentage is based on the number of other users of the referral site associated with the first user over the sum of the total number of users of the referral site associated with every other user of the referral site. In preferred form, the pool is distributed based on the number of validated users associated with each user of the referral site. In this preferred form, the pool is distributed by (e1 ) validating all users of the referral site, wherein the validating step is performed by reference to at least one predetermined criterion; (e2) summing the number of validated users associated with the first user at the first, second and third levels; (e2) repeating steps (d) and (e1 ) for all other users of the referral site to yield the sum of the total number of validated users associated with every other user of the referral site; and (e3) distributing to the first user a percentage of the pool. The percentage is based on the number of validated users of the referral site associated with the first user over the sum of the total number of validated users of the referral site associated with every other user of the referral site.

0009In yet another preferred embodiment of the present invention, the levels of association between referring and referred users factors more heavily into the distribution scheme. According to this embodiment, each user associated at the first level represents a first credit amount; each user associated at the second level represents a second credit amount; and each user associated at the third level represents a third credit amount. For example and in one preferred embodiment, a user receives one credit for a validated user at the first level of association, one-half credit for a validated user at the second level, and one quarter credit for each validated user at the third level. Under these rules, the pool is distributed by (e1 ) validating all users of the referral site, wherein the validating step is performed by reference to at least one predetermined criterion; (e2) summing the number of credits corresponding to all validated users associated with the first user at the first level; (e3) repeating step (e2) for validated users associated at the second and third levels to derive the total number of credits for the first user; (e4) repeating the associating steps (d1 )-(d3) and steps (e1 )-(e3) for all other users of the referral site to yield the sum of the total number of credits for every other user of the referral site; and (e5) distributing to the first user a percentage of the pool. According to this embodiment, the percentage is based on the number of credits corresponding to the first user over the sum of the total number of credits corresponding to every other user of the referral site. DESCRIPTION OF THE DRAWINGS

0010Figure 1 is a block diagram illustrating the flow of communications in a commissions-based referral system for use in the present invention.

0011Figure 2 is a block diagram showing the information flow involved in the event of a customer referral. Figure 3 is a functional block diagram illustrating the application of the present invention to the Internet.

0012Figure 4 is a flow chart diagram illustrating a method for adding a referred user to the system of the present invention.

0013Figure 5 is a tree diagram illustrating, for didactic purposes, a hypothetical set of customer referrals.

0014Figure 6 is a table showing the users attributable to all users of one preferred system of the present invention under the hypothetical set of user referrals illustrated in Figure 5.

0015Figure 7 is a table showing the users associated with all users of another preferred system of the present invention under the hypothetical set of user referrals illustrated in Figure 5.

0016Figure 8 is a table showing the number of credits corresponding to all users of a preferred embodiment of the present invention under the hypothetical set of user referrals illustrated in Figure 5. DETAILED DESCRIPTION OF THE INVENTION

0017Figure 3 illustrates a preferred embodiment of the present invention as applied to the Internet 60. Of course, one skilled in the art will readily recognize that the present invention can be applied across any computer network.

0018As Figure 1 shows, the method and system of the present invention generally involves a referral site 30, at least one merchant site 40, and at least one client computer 20 associated with one or more users. As Figure 3 illustrates, an embodiment of the present invention has application to the Internet 60.

0019In one preferred embodiment, a user 20 accesses an account stored on a master user database 34 operably connected to servers 32 of referral site 30. Servers 32 authenticate users and receive and process requests submitted by users in a conventional manner. According to this embodiment, the user's account includes a user name, and a password or an encrypted representation thereof. The database can be any database known in the art. In preferred form, the database is implemented in hardware including a collection of computer programs enabling the storage, modification, and extraction of information on the database. Database hardware may range from personal computers (for small systems) to mainframes (for large systems). Servers 32 may be implemented in hardware or software, or preferably a combination of both. In preferred form, the server is implemented in computer programs executing on programmable computers each comprising at least one processor, a data storage system (including volatile and nonvolatile media), at least one input device, and at least one output device. In one preferred embodiment, servers 32 are web or Internet servers operably connected to the Internet 60.

0020As is conventional, merchant site 40 is supported by web or Internet servers 42, which receive requests submitted by users and transmit files and other documents to users. In one preferred embodiment, servers 42 are connected to the Internet 60.

0021As Figure 3 shows, one embodiment of the present invention works in conjunction with a conventional computer 20 having Internet Browsing Software and a connection to the Internet. The user's computer can be any conventional personal computer known in the art. In one preferred embodiment, the user's computer is connected to the Internet via a dial-up connection or through a network line. Such communication could also be wireless. Additionally, suitable Internet browsers for use with the present invention include NETSCAPE NAVIGATOR or MICROSOFT INTERNET EXPLORER . The browser implemented on client computer 20 preferably includes the functionality required to support the SSL ("Secure Sockets Layer") protocol, the S-HTTP ("Secure HTTP") protocol, or any other similar protocol for transmitting confidential or private information over an open computer network. In one preferred embodiment, communication of passwords and sensitive data, for example, between referral site 30 and client computer 20 employs the SSL protocol.

0022Operation Figures 1 , 2 and 3 illustrate the operation of the present invention. In operation, a user initiates a purchasing session by directing the browser on client computer 20 to referral site 30, as is conventional (Figure 1 , step 1 ). In preferred form, server 32 prompts the user for a user name and a password to authenticate the user. Numerous authentication protocols are known in the art. The particular authentication protocol used is not critical to the invention. In one preferred embodiment, the records corresponding to each account contain the user name, a unique user identification number, and a salted one-way hash of the user's password. Therefore, each user is authenticated by hashing the inputted password with the "salt" and comparing the result to the hash value stored in the user's record. If there is a match, the user is deemed to be authentic. According to the invention, each user record may further include the user's full name, delivery and/or payment address, and preferred payment information.

0023Upon proper authentication of the user, server 32 provides the user a list of participating merchant sites. In one embodiment, the list of merchants includes hyper-links to the participating merchants web sites. In one preferred form, an HTML page containing "affiliate links" to various participating merchants is sent to the user's browser (Figure 1 , step 2). An affiliate link is a HTML link tag that contains a URL (Universal Resource Locator) that denotes the origin of the link, such as an affiliated business. Hypertext links are a common part of most HTML pages. Affiliate links are merely hypertext links that encode or identify the originating web site. When a user clicks on a URL link supplied by an affiliate, it sends the user to that merchants site (Figure 1 , step 3). The merchant site that receives the affiliate link can identify the originator of the link and, according to the invention, pay a referral fee or commission for bringing the user to the merchant site. According to the invention, the affiliate link identifies referral site 30 as the entity that referred user 20 to merchant site 40. There are several ways known in the art to implement affiliate links. However, the exact method used is not critical to the invention. First, the identity of the originating web site can be encoded directly in the URL. Second, the identity of the affiliate originator can be encoded in a field of an HTML form. Lastly, the identity of the affiliate can be encoded using the HTTP header referral property. However, the first two of the above-described approaches are preferred since many browsers do not implement the referral property correctly.

0024If user 20 ultimately makes a purchase or otherwise performs some desired action at the merchants web site, referral site 30 receives a commission or referral fee from merchant 40 (Figure 1 , step 4). Referral site 30 also receives a designation of user 20, who made the particular purchase. In one preferred embodiment, user 20 receives an award from referral site 30 for such purchase; however, the presence such an award is not critical to the present invention. Such award is typically a predetermined portion of the referral fee received by referral site 30 from merchant 40.

0025According to the invention, referral site 30 creates a pool comprising a portion of the referral fees or commissions actually received during a predetermined period of time ("the settlement period"). At the end of the settlement period, this pool is distributed to users as is more fully described below.

0026Figure 2 illustrates a preferred user referral system for use in the present invention. According to the invention, referral site 30 provides each user 20 with the option of designating others to receive offers to join referral site's membership. In one preferred embodiment, the user selects this option by simply clicking a button provided in any or all of the HTML documents sent and displayed on the user's browser. When the user selects this option, server 32 sends to client computer 20 a form asking for the name and e-mail address of the person to be sent an offer e-mail. In preferred form, the form also includes a text box in which the user may enter a personal message to the intended recipient. Figure 4 illustrates the sign-up procedure for referred users. After an existing user

0027(the "referring user") specifies the name and e-mail address of a referred recipient, referral site 30 transmits an e-mail to the referred user (Figure 4, step 102). The sign-up e-mail contains a link to a sign-up page located on server 32. Appended to the link is an encrypted representation of the referring user's identification number. To join the membership of referral site 30, the referred user simply clicks on the link and the sign-up page is downloaded to the user (Figure 4, step 104). The referred fills out the sign-up page interface and submits it to referral site 30 (Figure 4, step 106). The server 32 receives the form and parses out the encrypted identification number corresponding to the referring user (Figure 4, step 108) and adds the referred user's account to the master user database (step 110). According to one embodiment, the referred user's account includes the referring user's identification number or an encrypted representation thereof. Accordingly, and in one preferred embodiment, the master user database 34 stores user's accounts as records, one field of which points to or contains the identification number of the referring user. In addition, a preferred embodiment of the present invention features a table stored in the master user database 34 comprising records uniquely identified by each referring user-referred user pair. Each record may contain additional fields, such as "type of referral," or date of referral. Each referring user-referred user record is created and added to the table upon completion of the sign up process discussed above. So, for example, if 100 users signed up based on referrals be existing users, the table in the database would contain 100 records. This table is preferred since this architecture provides the flexibility to construct the referral tree forwards or backwards from a particular user and add additional qualifying characteristics to the referral/signup event as necessary.

0028According to the invention, each user is credited with referrals that result in actual membership sign-ups. In preferred form, each user receives a portion of the pool based upon the number of all "validated" users attributable to that user during a particular settlement period. More specifically, a percentage of the pool for each user is based on the total number of users attributable (in an absolute sense in one embodiment) or associated (defined by rules, such as how many levels deep associations are permitted, in another embodiment) to a particular user over the sum of the total number of users attributable to every other user. In other words, the attribution or association step is performed for every user of the system individually and then summed. This sum becomes the denominator in the percentage calculation, while the individual attribution total for a particular user is the numerator in such calculation. As discussed above, preferred embodiments of the present invention validate users in the calculation of what share of the pool each user is to be awarded. A user is validated by reference to at least one predetermined criterion. For example, and in one preferred embodiment, a user is "validated" if he or she has made a purchase for which referral site 30 received a fee within the settlement period. In other preferred embodiments, the predetermined criterion could be purchases totaling over a predetermined amount within the settlement period.

0029Figure 5 graphically illustrates a hypothetical set of user referrals, where each box represents a user or member of referral site 30. An "x" in a particular box indicates that such user is "validated" for a particular settlement period. In one preferred embodiment, each user is credited with user referrals down to three levels. According to the situation illustrated in Figure 5, the number of validated users attributable to user #1 down three levels is 8, while the sum of the total number of users attributable to every other user is 32. Therefore, user #1 receives 25% (8/32) of the pool. Under the same rules, user #2 receives about 9.3 percent (3/32) of the pool. See Table 6. Table 7 illustrates the number of users associated with all other users in an absolute sense (without regard to levels). Under this scheme, user #1 receives about 27.3 percent (9/33) of the pool. In yet another embodiment of the present invention, the levels of association among users factor more heavily in the pool distribution. According to this embodiment, the amount of credit a referring user receives for referred users depends on the level of association. For example and according to one embodiment, at the end of the settlement period, each user receives (a) one credit for all validated users directly attributable to that user (L1 ), (b) one-half credit for all validated users at the second level of association (L2), and (c) one-quarter credit for all validated users at the third level of association (L3). Of course, any number of levels and any credit ratio could be used. To calculate each user's share, all credits for all users are summed. Therefore, each user's share of the pool is based on the credits attributable to that user over the total number of credits for all users. According to the hypothetical association scheme illustrated in Figure 5, the total number of credits for all users is 22.75. Therefore, the share of the pool corresponding to user #1 is approximately 17.6 percent (4/22.75). Similarly, every other user's share can be calculated by dividing the attributable credits shown in Table 8 by the total number of credits for all users (22.75).

0030Lastly, at the end of the settlement period, referral site 30 sends each user notification of his or her share of the pool. In preferred form, this notification is accomplished by sending an e-mail containing a link to a page on server 32 of referral site 30 providing the user with notification of his or her share and of the options with respect to it. According to one preferred embodiment, each user is given the option to receive his or her share of the pool in cash or credit. In preferred form, each user is also given the option to donate his or her share of the pool to a designated charitable organization.

0031SUMMARY With respect to the above-provided description, one skilled in the art will readily recognize that the present invention has application in a variety of contexts. The foregoing description illustrates the principles of the present invention and provides examples of its implementation. For example, although the preferred embodiment is described as working in conjunction with an Internet browser, the present invention may be used in connection with any suitable software application for accessing files throughout a computer network. Accordingly, the above-provided description is not intended to limit the scope of the claims o the exact embodiments shown and described.