"Rewards" Marketing??

Anyone at TT had experience with using the “rewards” marketing companies like IDINE? They recently contacted my son to become affiliated with them. The way they explain it (I did a little research online too) is that they will market your business to their membership ( claimed to be like 3 million ), and when a member uses their credit card at your place the member gets either cash back or airline miles, and you pay them a fee of like 17.5% of the charged amount. Their claim is that you will pick up lots of new customers—there is more to it, including feedback reviews by members, etc., but basically thats the deal.

It seems to me that it would only be a matter of time before your existing customer base would pick-up on this and simply become members of IDINE so that they would suddenly get cash back (looks like IDINE rebates like 15% of the amount charged on the credit card to the members/our customers). So our businesses would then be paying not only 17.5% for all new customers, but would also have to suck up 17.5% of sales to those existing customers that were savy enough to start getting the same free ride.

The whole thing seems to be counterintuitive to sound business strategy to me—what do you think??

That’s completely INSANE!

counterintuitive??? lol.

Happy New Year.

There are a lot of schemes out there that for a “modest” fee or percentage claim that they can provide significant sales boost. Always remember, you can not pay your mortgage, put the kids through school, or retire with the gross sales number. At the end of the day what matters to you as an owner is are you taking home enough money to make it worth the effort. Volume only matters when it contributes to profitability. I used to work for a nuclear services company and that business started getting really cutthroat in the late 90’s to the point that our sales staff would sell jobs well below what we told them we needed to ensure profitability. One of my coworkers described this philosophy as “Sell it at a loss and make up for it in volume”
I would not be willing to pay 17.5% of sales as a marketing expense unless I was able to raise my prices by at least 20%.

Rick G

With the percentage of people using smartphones climbing over 50% this year, if you are looking for Rewards marketing I would suggest trying Foursquare frequency based or wildcard specials.

From FourSquare:

Use our tools to create a variety of foursquare Specials, customized just for your venue and for your customers:

[list] * Mayor Specials: unlocked only by the Mayor of your venue. Who’s the Mayor? It’s your single most loyal customer! (the user who has checked in the most in the last 60 days)
(“Foursquare has deemed you the Mayor? Enjoy a free order of french fries!”)
* Check-in Specials: unlocked when a user checks in to your venue a certain number of times.
(“Foursquare says you’ve been here 10 times? That’s a free drink for you!”)
* Frequency-based Specials: are unlocked every X check-ins.
(“Foursquare users get 20% off any entree every 5th check-in!”)
* Wildcard Specials: always unlocked, but your staff has to verify some extra conditions before awarding the Special.
(“Show us your foursquare Swarm badge and get a free drink!”)
* And more to come![/list]

If you are looking for a cost effective way to market, did you look into Google’s Free service. Google Places: http://www.places.google.com/business. You can list your Restaurant’s website and even post coupons.

It doesn’t have the Rewards piece, but another option for Free Marketing tool!

Foursquare sounds really interesting.

How do you prevent people from abusing? i.e. FREE drink, so they come back and get another for their friend, then come back and get another for another friend, rinse and repeat.

Seems like you can’t be too aggressive with the specials because of abuse.

I was recently at a bar where they did give away a free drink every time you checked in - the special instructed you to show the doorman for your free drink chip and they had you back out of the special there - to my knowledge it only shows the special once. This seemed to work well for them because one person was in charge of the entire free drink special so they could keep track of what was happening.

This bar is one of the only places I have actually seen trending on FourSquare near me and it was more packed than I had ever seen it so I would say it was a pretty successful special for them.

We also have a gas station near us which gives you a free fountain drink every 5th time you check in - I figure even if people abuse it a little they have to be near your place 5x and think about your business enough to actively check in to receive this special. I see this as a way to put your business into the forefront of their minds, repetitively, so that next time they are hungry your business comes up in their first set of choices.

Saw a link to this Foursquare marketing blog post this morning on an NRA discussion group: