FRANKLIN — Franklin Savings Bank has become the first financial institution in New Hampshire to introduce a rewards program designed strengthen the regional economy by encouraging its customers to patronize local, independent merchants, while at the same time providing these businesses with the means to expand their markets and increase their sales.
"As a community bank with strong ties to the communities we serve, we understand the importance of supporting families as well as our locally-owned businesses to enhance the economic viability of the markets we serve," Jeffrey Savage, president and chief executive officer, said of the Buzz Points program.
Buzz Points rewards its members with points each time they make a signature transaction with their debit cards. But, unlike similar programs, members earn more points — four times as many — when they shop with a local merchant rather than a national chain. Points earned can be redeemed for gift certificates honored by businesses enrolled in the program or used to make a donation to a favorite charity. All these transactions can be conducted using the Buzz Points web interface or mobile app that enables consumers to track, manage and redeem their points.
Studies indicate that between 45 percent and 58 percent of the profits of local businesses circulate within the community, compared to just 13 percent to 33 percent of the profits of national firms. "We're only as successful as our community is successful," said Ron Magoon, executive vice president and chief operating officer. "The whole local angle is what is so appealing to us."
Businesses are charged $25 per month for "preferred" membership in the program. In return, their advertising will be featured on the bank's website, Facebook page and radio spots. Buzz Point carries targeted advertising of promotions and sales through mobile devices and e-mail accounts as well as on-line to the accounts of consumers enrolled in the program. Buzz Points provides its preferred members with reports that enable them to track the activity the program has generated for their business.
Jay Valanju, the chief executive officer of fisoc, the firm in Austin, Texas, that created Buzz Points, claims that businesses typically find their revenues increase between 20 percent and 30 percent after joining the program.
Heidi Beaulieu of the Blooming Iris, a gift store on Main Street in Tilton, described the program as "phenomenal." She said the bank has promoted her business on its Facebook page while she can advertise sales and promotions through her Buzz Points account. She explained that consumers enrolled in the program will receive an alert of any special offer at the Blooming Iris on their smart phones whenever they come within three miles of the store. Beaulieu said that she is displaying a bee in her window, along with slogans like "what's all the buzz about" and "buzz in here" to promote the program "It's just outstanding," she said.
Since the program began in July, 542 businesses within 25 miles of the bank's headquarters have enrolled in it.
"There are tons of reward programs," Magoon said, "but this is truly different. It provides value to all parties — the consumer, the business and the bank. It's a program where everyone wins." He noted that Buzz Points has deployed teams to enroll merchants in the program, sparing banks the burden and expense. "If you go to a coffee shop in Moultonborough that doesn't offer points, you can let Buzz Points know and they'll designate it a local business," he said. "Local is local regardless of where it is," he added, explaining that a customer of Franklin Savings Bank consumer enrolled in the program will get four points by trading with an independent business in Florida.
The bank receives an interchange fee on all debit card transactions. A study conducted by Discover Financial in 2013 found that banks exempt from caps on interchange fees — those like Franklin Savings Banks with less than $10 billion in assets — earn nearly $100 per card per year from debit transactions. Valanju told the American Banker magazine that one bank reported earnings of $5.35 per card per month.
Magoon said that Franklin Savings Bank has approximately 9,000 debit cardholders. He said that the source of fee income was welcome in an environment where low interest rates squeeze earnings on loans and the proliferation of technology has expanded services at little or no costs to banking customers.
Buzz Points was introduced in 2013 and aimed at community banks and credit unions that generally lack the resources to offer their rewards programs or to engage heavily in marketing by social media. Last year Discover Financial invested $19 million in Buzz Points to enroll more banks in its network.
"This is driving people to rethink shopping locally," Magoon said. "It's changing behavior."
The busy bee in the window of the Blooming Iris on Main Street in Tilton invites customers not only to shop in the popular gift but also to join the buzz by enrolling in Buzz Points, the debit card-based rewards program offered by Franklin Savings Bank that encourages consumers to patronize the independent businesses in their communities and beyond. (Laconia Daily Sun photo/Michael Kitch)
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