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Brands go to great lengths to forge deeper relationships with their customers through points, miles, coupons, offers, badges, loyalty cards and the like. If entrepreneur Barry Schneider has his way, quite a few will soon be offering something more valuable: company stock.
Loyal3 launched last spring with a pretty simple, if revolutionary, proposition: enable brands to sell their own stock directly to consumers--in $10 increments via Facebook, or directly via their own sites, without a broker or financial institution.
A handful of brands now plan to either directly sell or offer shares as a reward for their best customers, through a mechanism that Loyal3 calls CSOP, or customer stock ownership plan. Direct-stock-purchase plans have been around since the 1970s, but corporations haven't used them much because the cost of compliance and administering millions of tiny shareholders wasn't worth the expense.
Loyal3 has built a scaled platform to make it inexpensive for a brand to sell--or give away--stock in small increments. Theoretically, stock ownership at even a small level would build a class of owners who are then invested in the brand's success.
"The truth is people care more about things that they own than things they don't," Mr. Schneider said. "We set out to modernize a system to make it cost effective for brands and made it as easy for consumers as buying a book on Amazon."
In addition, Loyal3 has spent the past year consulting...