During my last trip back home I got to catch up with Pegmo, a company I’ve been following for a little while now.  They’re brand new, entering the social goods market on a few different fronts, and have the quintessential startup office in a giant loft space, overlooking Chicago’s loop.  I stopped by Pegmo’s office last week, hoping to catch up on the latest developments in their exploratory prototype.  They’re working on a few things, and am hopeful these recent updates can push them through the obstacle-riddled execution phase.

What is Pegmo?

Pegmo is a tricky concept to describe, because it combines so many current “features” that are of interest.  They’ve got a certain amount of appeal to a range of emerging industries, including social media marketing, gaming, virtual rewards and hyper-local marketing.  Pegmo’s network consists of local business pages that offer rewards to users.

Rewards are earned in exchange for a peg, which is the action taken by the users. They’re customizable on both ends for the business, in terms of the action and the reward.  It’s not like Foursquare, where creating a physical check-in is an auto-fill process, to a large extent.  Rewards and pegs can be anything, exchanging a free product for making a new dish with the Spice House’s secret ingredient. The whole process feels something like a treasure hunt.

The biggest benefit is that it transcends the physicality of a check-in.  Rewards are given any where, in any form, and that encourages an organic level of interaction between businesses and users, who don’t even have to be customers to participate or reap the rewards.

Rewards are set up on a value system–a Facebook Like peg won’t get you the biggest reward.  You’ll sometimes have to do several, or one big action, in order to get the goods.  This is designed to pull users in at deeper levels of engagement, which can be difficult at times.  The majority of your users are lazy.

The problem with too much freedom

The problem with this is its fluffy cuteness.  It sounds wonderful, but can be difficult to scale.  It boils down to the classic problem of gaining traction with  both users and businesses–which do you focus on first?  For Pegmo, the users won out.

Looking through Pegmo’s site you can catch tiny glimpses of its evolution.  Some businesses’ pegs are highly interactive, others more generic.  Some are a mix of physical and virtual, while others stick to one format.  Right now, Pegmo’s a soup of different social media marketing tactics, all looking for their rightful place.  Pegmo’s been working very closely with the businesses featured on its site, having the advantage of direct access to its primary resource.  That doesn’t diminish the value of the user base–analyzing their behavior will also give Pegmo clues as to how its own system must be tweaked, as well as how a business can tweak campaigns.

The next level

Pegmo’s done two things to kick start the next phase. They’ve added raffles, and business profiles for companies they’re not directly working with.  The raffles allow Pegmo to run their own promotions, instead of waiting for a business to initiate or update one.

Adding business profiles without working directly with them lets Pegmo expand rewards around their own raffles.  You can still like a Starbucks profile page and earn points, which can now be converted into raffle tickets, and earn a prize given by Pegmo.  With both updates, Pegmo finds new ways to work independently of direct business participation, creating new points of interaction and engagement for the user.

The best part about the raffle is that it allows the users to customize their rewards.  Winning a raffle means a user can pick their reward of choice, applying it to a range of options across any business they’re currently following.  Clearly Pegmo is looking to keep a fluid experience for businesses and users, which is what makes Pegmo such an inspired space.

But Pegmo’s not shifting away from an organic level of engagement just because its adding business profiles on its own.  The team is putting a lot of thought into each profile it adds, taking the users into consideration as well.

“As for the additional businesses we’ve added, we basically selected some of the top local businesses, organizations and brands that we felt would be interesting to our users and created a basic peg for users to complete even with no specific reward,” says Jordan Ho, co-founder of Pegmo.

“We’ve seen lots of users share and tweet their thoughts on their favorite businesses as a result. We plan to keep adding businesses, especially ones that want to work with us to create deeper campaigns that will engage their customers in more meaningful, creative and fun ways.”

It’s all about the data

Now Pegmo gains more points of analysis for the user as well.  That’s something Pegmo can present to businesses, encouraging them to engage with users through its virtual market. Already businesses have extended their interest in sponsoring raffles, which gains Pegmo another point of interaction with the business.  Pegmo will need to be able to closely analyze its user and business data if it wants to successfully emerge from the execution phase.

So Pegmo established its first priority around transcending physical check-ins, and has determined its next as a fluid space for marketing campaigns.  That provides a powerful series of data sets once Pegmo solidifies the right balance of user/business interaction and analysis.