Jennifer Reynolds describes her dogs as a pair of “dog-food-guzzling machines.”
So when the Denver resident goes shopping for Henry, a Bernese Mountain dog, and Albert, a Newfoundland, the smallest savings add up quickly.
That’s why Reynolds sought out Sixth Avenue Pet Source. The independently owned store is affiliated with Rainbow Rewards, a Denver-based loyalty marketing program that rewards members when they use their credit cards.
Every time Reynolds buys dog food or makes any other purchase at a Rainbow Rewards merchant, she earns a few cents on the dollar. Even better, Mile High United Way gets a tiny cut from the sale.
The innovative program has built a niche by connecting small businesses with prospective customers and charging them for the service only after a purchase has been made.
Stores pay Rainbow Rewards a marketing fee of 3 percent to 18 percent of the purchase price, two-thirds of which is refunded to the customer quarterly. The company keeps the remaining third for operating and marketing expenses but donates 4 percent of its total receipts to Mile High United Way.
Rainbow Rewards signed its first merchants in August 2004, and the first customers came aboard a few months later. Since then, its customer base has grown to 350,000 and Mile High United Way has received more than $37,000. Company leaders plan to launch the program this spring in Northwest markets, including Seattle and Portland, and in Colorado Springs.
Rainbow Rewards is backed by private investors from the United States, Australia and London and employs 35 people, including a sales force that pitches merchants on the program.
Targeted marketing
Customers can register any credit or debit card they already have. In addition, some financial institutions have started automatically enrolling their cardholders.
Rainbow Rewards chief executive Ed Manners, previously a newspaper publisher in Australia, dreamed up the concept while contemplating ways to provide companies with a more targeted form of marketing.
Registered cardholders receive neighborhood-specific mailers that promote the Rainbow Rewards merchants in their areas. The company also began publishing a holiday shopping guide and has a website directory of retailers that provide rewards.
Merchants pay only when a customer makes a purchase in their store, which is what has many retailers hooked.
“It’s a pay-for-performance type of advertising,” said Shana Judd, owner of Gustavo’s Market, a Fort Collins gourmet market. “You know what you’re getting, so it’s very valuable that way.”
Judd estimates that 15 to 30 Rainbow Rewards members pass through her doors each month. At least a portion of them might not otherwise visit her store, she said.
Ray Burke, owner of Old Vine Liquors in Littleton, said he has seen a bump in business since joining Rainbow Rewards after a sales representative visited him six months ago.
“I’m always looking for something that will bring more people in the door,” said Burke, adding that the program’s relationship with Mile High United Way was also a major selling point.
Rainbow Rewards’ growth spiked about a year ago when it struck deals with financial institutions, including Bellco Credit Union and the Barclay’s Group, which provides the Frontier Airlines Master Card.
The banks agreed to automatically enroll their cardholders in the program, giving Rainbow Rewards the mass of customers it needed to attract more retailers.
“People have so many cards in their wallets these days, we wanted to give our members another reason to choose the Bellco card,” said Sandra Sagehorn-Elliott, vice president of customer relationship management at Greenwood Village-based Bellco Credit Union.
After 10 months, 21 percent of the credit union’s members have received rebates, Sagehorn-Elliott said.
Rainbow Rewards has so far refunded $331,460 to its members, with one member earning a quarterly rebate of $1,200. While Reynolds estimates her rewards at only about $30 to date, she said she is still pleased with the program, noting that “every little bit helps.”
She also likes the fact that the program supports local business.
“I love the idea that it’s the small guys who are benefiting,” Reynolds said.
Staff writer Kristi Arellano can be reached at 303-954-1902 or karellano@denverpost.com.
