One of the banks I do business with gives away as a premium for opening a checking account a benefit where they’ll rebate you $10 per quarter in exchange for submitting grocery or gas receipts.
People usually think this is a way for a marketing company to understand your buying habits. The bank does nothing to dissuade that belief. But that’s not the idea at all.
You have to remember to request rebate forms, they don’t automatically send you more. You have to save your original receipts and mail them in. And then you have to hope they actually process it and mail you the check.
In other words, they get a top line benefit to market that they’re giving you $40. But most people never get anything, or if they do they get $10 per quarter for a couple of quarters and then forget or give up. I have to imagine that on average the benefit really costs them a couple of bucks per accountholder, there are a few people who get their $40 per year but most people get zero.
When making the decision to be a customer, though, people hear $40 rather than $0.
That’s part of the principle at work with the SkyGuide Executive Privilege Club which will reimburse $600 per calendar year for 12 airline lounge visits plus $300 per year for 12 gym visits. And since membership is on a 12-month cycle but reimbursement caps are per calendar year, you can actually get $1800 in reimbursements … for a $20 trial membership.
And the folks signing up for this program, highlighted on my blog and on forums like Milepoint, are much more likely than average to actually put in for their reimbursements. (It also helps that a club lounge pass is going to be $50, not $10, so the incentive to bother submitting the claim is higher.)
SkyGuide also sells their mailing list of high-end clients and makes quite of bit of coin that way as well.
Another similar program came to my attention yesterday, Feecation.
Here’s how it works:
- There’s a 1 month free trial, then it’s $14.97 a month. So about $180 per year.
- They will reimburse most any airline, hotel, rental car, and wireless internet access fee — up to $10 per instance.
- They will reimburse up to $500 in air fees, and $250 each in hotel, car, and wifi, in a year.
- It’s possible to get $1250 in reimbursements for the $180 in membership fees — doing so would take a minimum of 125 submissions.
- Break-even is 18 submissions during a year.
Clearly at $10 per submission, the incentive is lower than if they were reimbursing the full cost of fees. But it looks like reimbursement requests can at least be processed electronically rather than having to mail them in.
The company’s business model strikes me as similar to the grocery and gas reimbursement that my bank offers, most consumers will join and not use the benefit, maybe they’ll submit a couple of claims and then forget they’re signed up while they’re being billed $15 per month. They make money on a concept similar to breakage.
Feecation offered me a free one-year membership to try it out in hopes I’d review the site, that’s not my style, so I declined but asked whether I might give away a free one-year membership instead. They were game, though I’m not sure how appealing the concept is, I’d love feedback. Should I do a giveaway of a one-year membership to Feecation? It’s worth ‘up to’ $1250 in reimbursements, of course, and would save the $14.97 monthly fees for someone.
Here’s their FAQ, they do a 30 day free trial, the question folks need to figure out is whether they’re likely to have a minimum of 18 fee submissions per year to break even (and even then it’s not worth it, because you’re not recouping the value of your time to process the submissions). And whether you’re likely to stick to it. There’s a lot of potential here, even more than as I’ve outlined because you can presumably get reimbursements during your 30 day free trial and it doesn’t appear that you’re limited to a certain number of reimbursements per month, you could conceivably max out on your reimbursements long before a year is up and then cancel. But will you really have $250 in wireless access (e.g. Gogo) fees, $10 at a time? And 50 instances of airline fees, 25 instances of hotel extra fees, and 25 instances of car rental fees? Definitely ‘your mileage may vary’.