A new program in Minneapolis rewards residents for supporting locally owned businesses and volunteering at local nonprofits. Developed by CHC Data Inc., the new Community HeroCard enables residents to earn rebates by shopping at more than 40 local stores. The rebate doubles if the cardholder volunteers at a nonprofit organization.
The card looks like a credit card with a magnetic data strip that works in a standard debit card machine. Swiping the card accesses the customer’s account and enables merchants to add and subtract rewards.
The card functions in part like a loyalty card program, similar to those offered by many national chains, but with the added advantage of allowing customers to spend rebates earned at one business at any of the participating stores. Each business decides how much of a rebate to provide. Rebates range from 5 to 20 percent, and average just over 10 percent.
In a typical transaction, a $50 purchase would generate a rebate of $5 from the merchant. CHC Data would collect $1 to fund the program and cover marketing costs. The cardholder would earn a $2 credit that could be spent at any of the participating stores. The remaining $2 would also be credited to the cardholder if s/he volunteers at a local nonprofit. If not, then the $2 is donated to the cardholder’s chosen nonprofit.
The Community HeroCard grew out of a two-year pilot program started in 1997 and funded largely by foundation grants. The original paper-based system generated interest among local businesses, but was too cumbersome and time-consuming. CHC Data spent the next few years developing an electronic system compatible with standard debit card technology.
The first cards were issued in January. About 1,300 are currently in circulation. A full roll-out and extensive marketing campaign is planned for the fall. CHC Data hopes to have 40,000 cards circulating by the end of the year.
Part of the marketing effort will be undertaken by nonprofit organizations, which plan to sell the cards at fund-raisers. They will receive a portion of the $10 purchase price, plus the opportunity to earn rebate dollars and volunteer hours. About two dozen organizations are participating, including the Green Institute, Lyndale Neighborhood Association, Asian Media Access, and Hennepin County social service agencies.
Other components of the marketing effort include print and bus-stop advertisements, direct mail, and window and cash register decals displayed at local stores.
To participate, local businesses must buy a second debit card machine or upgrade to a machine capable of handling two channels at a cost of $250 to $575. Aside from this and the rebates themselves, there are no other costs.
One of the major benefits for local businesses is the ability to offer customers a sophisticated incentive card similar to cards offered by many chains, but normally too costly for a small business. Additional advantages include reaching customers of other local stores, being listed in all Community HeroCard advertisements, and, of course, contributing to a stronger community.
CHC Data plans to expand to other cities, with Atlanta, Boulder, and St. Louis currently topping the list of potential sites.