January 2007 Archives

Jellyfish.com's popular reverse auction, the Smack Deal of the Day, is doing a smack-a-thon today, with multiple deals all day long!

So far, some of the deals have included a Circulon 10-pc Cookware Set for $104.85 after rebate (the auction started at $199.99!), an iPod Nano 4GB for $125.35 (down from $179.99), an Audiovox 7" Portable DVD Player for $48.38 (down from $94.95), and a Movado Museum Ladies' Watch for $91.45 (down from $169.98)...and many other great deals!

You can't play if you're not registered! Sign up here and then head to the Smack Deals section of the site to get in on these, and other, great deals!

I thought this was an interesting article about how Nordstrom rewards their most loyal customers. They throw some really nice private parties, champagne included, for their biggest spenders. The article has an interesting remark from a Macy's rep, who says they prefer to be more inclusive, a very different approach. It shows in the public's perception of those two stores, though, IMHO -- Nordstrom is seen as a snooty, upscale store that caters to the rich, where Macy's is just a higher-priced version of JCPenney or Kohl's.

Would you rather have fewer wealthy customers, or more middle- to upper-middle income customers? That's what sets the two stores apart.

During yesterday's regularly scheduled Smack Deal of the Day on Jellyfish.com, members were treated to a sneak peek of the new features that will officially be unveiled on Tuesday's Smack-a-Thon.

Members will be allowed to vote, from the end of the last daily deal until the next regularly scheduled Smack begins, on the item that will be reverse-auctioned first. The rest of the day's auction items will be Jellyfish's choice.

Also, the member who guesses the best percentage at which an item is sold, without going over, will be allowed a spin on a prize wheel to win items such as a Jellyfish hat or t-shirt, $5, $50, a Smack Pass (allowing the member to buy any item at the lowest price it was sold), or a Wii. There is also an option where Smack Daddy, the chat administrator, will be able to choose the prize.

The first run-through of the new features yesterday revealed a few glitches that Jellyfish's tech guys are working hard to get fixed before Tuesday's Smack-a-Thon. You want to be sure to be there at 1pm Eastern on Tuesday, because they will be selling one item after another for an unknown time -- last time it went way into the evening.

More info on how the Smack Deal works is here. You definitely want to join before Tuesday -- click here. And if you have any other questions about how Jellyfish or the Smack Deal works, please feel free to email me here!

I got a postcard by snailmail today from Upromise, urging me to download and install their toolbar. I want to warn rewards program members to avoid this if you intend to shop through programs other than Upromise.

I also found this article about the toolbar interesting.

Avoid toolbars, people, unless you're going to use one and only one rewards program.

Updated, 1/17:
Beginning at 1pm ET on Tuesday, January 30th, Jellyfish.com will be offering an extended version of their weekdaily reverse auction, the Jellyfish Smack. "Dozens" of deals will be available and the site will also be unveiling some new features. The Smack-a-Thon has been postponed from 1/23 to the 30th to ensure those features will be running smoothly.

One new feature is that winners of the guru guessing game (members who guess closest to the best deal percentage without going over) will get to spin the Smack Daddy Wheel for prizes, which will include Wiis (more than one!) and Smack Daddy's choice (so let the sucking up in chat begin!). Another new feature is "community voting on smack deals" (whatever that means... more details as they become available...stay tuned!).

More information on how the Smack Deals work is here. Click here to join if you haven't already, so you won't miss out on all the great deals!

[originally posted 1/15]

First Betty Crocker points are discontinued, and now this? (sigh) It's a sad year in the loyalty program biz.

Kraft Foods has a note on their website saying, "Use your KOOL-AID points for great KOOL-AID items. But don't delay, because these items are only available while supplies last or until June 30, 2007, when the Kool Points program ends."

Update, May 2009: By popular demand, Kool-Aid will allow you to redeem any accumulated points using this form, until June 30, 2010! They also say the 800-367-9225 is still the number to call if you have questions or concerns.

Some would say this program has been dying a slow death for years, with the items available for points redemption getting fewer and have required a greater amount of cash in addition to the points. I've had members posting complaints on my review of Kool-Aid Points since 2004.

Kraft says to call 1-800-367-9225 for more information on this, or to contact them here.

Thanks to Cathie for the heads-up on this.

On Tuesday, a new rebate site was launched called MyTroops.com. It was founded by an Army Reserve soldier formerly deployed to Iraq. The idea is that any military personnel can sign up to the service (you have to have a .mil email address and provide a picture). Then, friends and family can shop through the site and their designated troop will receive the rebate. If you don't have a military person in your circle of friends or family but would just like to support one, you can choose from one of their Featured Troops.

Rebates are paid in the form of points, and rewards are all online gift certificates -- the idea being that the soldier can use these to buy things for their family back home.

They started with 17 merchants but will be expanding this as they can. Shoppers don't have to register to support their troop; they just have to be sure to click through the site's link to the merchant to be sure their troop's account is credited. While they're in beta, individual troops must email them if they're interested in creating an account.

The MyTroops.com FAQ did a great job of answering my questions about the program. The site also has a blog.

Rebate/rewards programs are nothing new...but what is unique about this program is that it allows the combined purchasing power of many people to accrue rewards into one person's account. Very few programs allow this (the kids' education rewards programs like Upromise do, and Greenpoints...but their rebate percentages are low and their rewards are mostly merchandise), and when they do, they require all parties to register for an account with the site.

This is simple, it's streamlined, and it's for a good cause -- supporting the guys who are out there giving their all for our country. Good luck, MyTroops!

Related Articles: 2007 Shopping Rebates Comparison Chart

I always pictured Alessandro Isolani, the founder/CEO of Ebates.com, to be an older guy, in his 60s, with a lot of dark hair and too much gold jewelry. He was on TV yesterday on San Francisco's KGO Channel 7 in a short consumer segment about rebate programs, and I was surprised that he didn't look anything like that! Not that he's Brad Pitt, mind you...just that he looks like a regular computer geek, not the head of a multi-million dollar corporation.

The video of the segment is here. The content of it should be pretty elementary for my site visitors ("HUH? You can earn cash back for shopping through a rebate site? NO WAY!"), but I thought it was worth sharing just to see what Sandro looks like. :)

Hallmark is offering 100 bonus points to existing Gold Crown Club members who update their email address, or for new members who join, at the following link: http://www.goldcrowncard.com/EmailOffer/emailoffer_temp.cfm

Existing members will need their card handy, so they can enter their membership number.

Once you give them your email address, you can go here to create an online account. It just takes a second, and then you'll be able to earn Gold Crown points for online purchases and view your balance and available promotions online. They also have free e-cards and a free reminder service for important dates.

Here is a run-down of all of the benefits of signing up for a Gold Crown Club membership if you don't have one already.

According to this story in today's Ann Arbor News, stock analysts are unhappy with the performance of Borders Bookstores and they think part of the problem was the Borders Rewards program unveiled last year.

Credit Suisse analysts said, "(Borders') results suggest that the rewards program failed to deliver the anticipated results..." Analysts for Merrill Lynch said they didn't believe customers really understood how the program worked, which explained why the program didn't increase customer traffic as expected. Analysts for Goldman, Sachs, & Co. said, "We believe...that the company will significantly change the details of its loyalty program in 2007."

Borders said changes to Borders Rewards are "likely." Their CEO will be announcing his new strategy for improving the company's performance in March.

Wow, 2006 was a busy one in the rewards program biz. Not a lot of new programs last year, but we saw a lot of old ones fail... and a couple of big ones change ownership.

How well do you remember the big stories of last year? And will last year's events foreshadow more of the same this year? Let's recap 2006, The Year of Change. Click Continue Reading!

This morning I came across an article on Forbes.com called "The Lowdown on Customer Loyalty Programs." It discusses the findings of a couple of studies by two business professors (one from Wharton, one from USC's Marshall School of Business) regarding loyalty programs -- what motivates people to use them and as a result, how to best structure them.

Some of the authors' assertions:

- They feel that people would prefer a redemption that involves points plus cash over just points. Their example uses airline points, and they say a consumer would prefer to pay $400 plus 5,000 miles for an airline ticket than either $500 (all cash) or 25,000 miles (all points).

My comment: Really? Ask Betty Crocker how well that worked for them. Oh, that's right...you can't! They shut down! The reason people wouldn't prefer the miles-only option is because so many programs make their cashout levels seem insurmountable. Maybe instead they should provide lower level redemptions at a fair point value. And make the point value consistent -- if not one set value for points, at least don't change point value just because you're having a bad quarter financially.

- They find that people would prefer miles (points) over cash as a reward. The logic is that cash would be viewed as something people would just use to pay a bill, whereas miles are "something special," something they'd use to take a trip and make memories. "People don't consider miles or points to be the same thing as money," says Xavier Dr�ze, co-author of the study.

My comment: Maybe there's a difference in mindset between airline miles and rewards program points. But I'd take the cash over the points any day of the week, because cash has a fixed value...and who knows what those points (or miles) will be worth tomorrow. I can make my memories just fine with cash, thank you.

- A program that is structured to make it appear that you are given a head start toward reaching the reward is more attractive to consumers than one that starts them out at square one. Their example: given a choice between "buy eight get one free" and "buy ten get one free and we'll start you out with two", people would prefer the latter, even though both require eight purchases.

My comment: I agree with this -- people like the idea that they're getting something for free. See the number of online rewards programs that give you a signup bonus...although you still have to do some sort of activity in order to cash it out.

- In the right setting, points can be motivating even if they have no value except bragging rights. Their example is the popularity of Yahoo Answers, which awards points to members that provide the best answer to submitted questions. These points have no real-world value yet many members are active in accumulating them.

My comment: Ah, yes -- "social currency." It's the semi-tangible pat-on-the-back that you get in various forms: Reputation points on a message forum, your Ebay feedback rating, the number of friends you have in your MySpace network, Microsoft Achievement Points... If a business can create loyalty with unpaid points, more power to 'em, but if you ask people which would motivate them more, unpaid points or paid rewards, what do you think they'd choose?

- Members of loyalty programs spend more than non-members, they say. But it's unclear whether the loyalty program motivates them to spend more, or whether they were already big spenders and they're simply a member of the loyalty program to get rewards for what they were already doing.

My comment: I've predicted this before, and I'll say it again -- well-known national merchants are going to find that they no longer need to pay out commissions to get people to shop. The benefits that rewards programs offer the big merchants are dwindling. People who shop at JCPenney will do so regardless of whether they can earn a percentage rebate by shopping through a rewards program, and JCP is losing money by participating in one. They don't need the marketing -- aside from already having name recognition, the big retailers already allow customers to sign up for their own email marketing promotions. Where rebate sites and other loyalty programs will succeed is in introducing and building sales for lesser-known merchants. These merchants need the marketing assistance, and the commissions they offer (a portion of which rebate program members receive in the form of a rebate) are an enticement for shoppers to try them out.

- The article describes the necessity for loyalty programs to segment their members if they want to survive.

Comment: I agree with this entirely. Gold members care more about being gold members if there are silver members below them (they are given some level of prestige). In addition, consumers in different segments have different characteristics and can be motivated differently. Infrequent shoppers need an incentive to shop (they are your punch-card market -- buy 6 bras, get one free). Frequent shoppers might be more attracted to status perks (special discount days, giveaways to status members only, etc.).

Picking on JCPenney again because they are doing some things right: Their standard charge card is black. If you charge over $500 in a year, you get their Gold Card; over $1000 and you get the Platinum. This chart shows the varying perks each card offers. Bigger spenders get more perks, but even the less frequent shoppers (black cardholders) get frequent incentives to shop.

I think this same concept could, and SHOULD, be used with online rewards programs. Members who shop infrequently would receive weekly promotions and standard rebate rates. More active shoppers would qualify for bonuses, higher rates, or special events such as giveaways, combined with some manner of social currency to convey status (for instance, a monthly top rebate-earners leaderboard).

Currently, there is little loyalty among loyalty program members -- many people just shop where they'll receive the highest rebate, or if they do stick with one or two programs, it's because they want to ensure that they'll reach the minimum payout. Rewards programs are missing the boat when it comes to creating member loyalty. Treat members fairly, offer competitive rates, and BEYOND that, give members a reason to stick with your program and yours alone.

As always, I welcome your comments.