STORES Magazine - October 2008 - (Page 70)

NUTS AND BOLTS / CREDIT C-Store Buys Loyalty with Bank Rewards Test program boosts PIN BY PATRICIA A. MURPHY oyalty programs can be costly propositions that require longer commitments than many smaller companies are comfortable making. L “You don’t want to set up something that you can’t get out of,” says Jon Stewart, president and CEO of Tri Star Marketing, a third-generation family-owned chain of gas and convenience stores headquartered in Champaign, Ill. “We need something we can go into and pull back out of when we want to.” That’s why Tri Star jumped when its lead bank asked it to help test drive a new bank-directed rewards program. The test offered bonus points to customers who used PIN authorization with their Busey Bank debit cards when making purchases at any of the 50 Super Pantry convenience stores Tri Star operates in Illinois and Indiana. PIN authorization is an option commonly available on bank-issued debit cards. Although most are prominently branded as Visa or MasterCard prod- “We were hoping we could induce people to use their debit cards,” Stewart says. “We figured if we could change behaviors and also get a larger spend from our existing customers, that would be ideal.” Urbana, Ill.-based Busey Bank mardebit usage and spend keted the program with statement stuffers, e-mail messages and messages on the rewards website. The promotion ucts, they also feature ATM network drove a 27 percent increase in customers logos. The majority of PIN-authorized using the debit card PIN feature at least transactions are cleared and settled four times during the test month, resultthrough these regional ATM/POS neting in a $53,000 spike in spending at works (Star, NYCE, etc.) for less than Super Pantry stores by this group of “acmost credit card payments. tive” debit cardholders. Stewart was eager to see if he could Traditionally, the interchange on PIN debit transactions has been priced at a shift more credit card payments to these flat fee that is substantially less than the lower-cost PIN debit payments at Super interchange on most credit card payPantry pumps and stores, and Busey ments, which can run from 1.15 percent Bank was seeking to boost usage of its to more than 2 percent MasterCard debit U.S. financial institutions of sales at some gas card product. will spend stations. Tri Star agreed to Some processors, foot the bill ($10) for however, have been 100 Busey Rewards on rewards by 2010 revamping their price points for each cusSource: Aite Group sheets, charging a flat tomer who used PIN fee plus a percentage debit at least four times at Super Pantry of each debit card sale stores during the in interchange, demonth of April. The pending upon the netbonus points were sufwork used to clear and ficient to qualify cardsettle a transaction. holders for awards Gas stations and like binoculars or convenience stores PIN debit promotion hammocks. like Super Pantry have at Super Pantry been especially hard resulted in hit as interchange payments on credit and spending spike signature debit cards have spiraled upward in tandem with prices at the pump. “We wanted to see if we could get more customers to use their debit cards because it saves us money,” Stewart says. (In recognition of the rising cost of interchange fees on fuel sales, Visa plans to restructure and reduce interchange on those purchases beginning this fall.) $18.4 billion $53,000 70 STORES / OCTOBER 2008 WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents Feed for the Digital Edition of STORES Magazine - October 2008

STORES Magazine - October 2008 Contents Executive Editor's Page President's Page Force of a Different Collar What Shoppers Think Bagging the Competition 10 Things You May Have Missed Numbers Worth Counting Full Price/Markdown Retail People Favorite 50 Sticky Strategies for Retention Concept2Watch Kiosks Online Business Intelligence RFID NRFtech Wrap-up E-Commerce Credit Warehouse Systems Logistics Selling Tools Supply Chain LOEB Retail Letter Arts Update Point of View NRF News Retail Crossword Retail Industry Calendar Last Laugh

STORES Magazine - October 2008

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