Buzz Points is a feature-rich loyalty and rewards program targeting local merchants, and can be easily integrated into the existing card offerings of large and small financial institutions. We speak with Dwayne Spradlin, CEO at Buzz Points to get his perspective on what 2015 has in store for the loyalty and rewards market, along with discussing the best practices for financial institutions and merchants looking to increase consumer spend.

Kevin Xu: What do you bring to the table that attracts such interest from financial institutions?

Dwayne Spradlin: I think it begins with our basic focus. Unlike other merchant-funded loyalty programs that target national/global banks and national chain retailers, Buzz Points focuses on community financial institutions and local merchants to build a unique ecosystem between the financial institution and the local merchant community that engages mutual customers. We begin with the financial institution that already understands the dynamics of the community. The focus on community financial institutions and local independent merchants is unique and has benefits that go beyond the typical swipe and earn loyalty model.

Here are the basics of the program:

Cardholders can opt into the program for free and they earn points every time they use their card, but they earn more points for shopping with local merchants.

The financial institution earns additional non-interest revenue. On average, Buzz Points cardholders swipe their card an additional 7 times per month and spend $250 more per month, yielding $3-5 more per customer of new monthly income to the financial institutions.

Furthermore, Buzz Points creates a currency that allows for FIs to incentivize behavior. Here is a recent example:

One of our FIs offered 2,000 Buzz Points for every member who applied and was accepted for an auto loan. Each accepted application cost $10 in points to the FI. The total for the loan campaign ended up being 63 loans for $1.127 million so at 1.99% over 24 months, the interest would be approximately $23,500.

Another common example is incentivizing account holders to adopt digital statements. Paper statements can cost FI’s approximately $24 per year per cardholder. Rewarding an account holder with 1,500 Buzz Points gives the account holder a compelling reason to enroll in e-statements and locks in savings for the life of the account.

Local merchants receive a turnkey marketing program and they see an increase in local spend. I’ve included more on the merchant benefits in answer to your question about the merchant pitch.

What are some of the best practices to incorporating a loyalty & rewards program?

In an age of daily deals and email overload, the barrage of messaging to consumers is formidable. Customers know that marketers gather and use their data to target them and they are looking for alternative programs, which offer a crystal-clear benefit.

With Buzz Points the benefit is two fold: earn rewards for everyday purchases and keep money in the community. This adds an emotional dimension to the program that we believe is a key driver of our success.

Buzz Points not only delivers relevant, personalized offers using the latest technology—email, social media, the web, mobile app—making it extremely easy to earn and redeem points but by focusing on local first, we give users the ability to make a very personal choice about how and where they want to spend their money.

How scalable is Buzz Points? What’s your pitch to the FI and the business looking to offer rewards?

The program is designed to scale and encourage redemption. Many loyalty programs typically lose profitability as they reach a 50-
60% redemption rate. In contrast, Buzz Points is based on a 100% redemption model that does not rely on breakage and encourages participants to redeem. On average, participants are eligible to redeem points every 65 days.

Additionally, the program is designed to welcome participation by multiple financial institutions within the same community. An increased density of Buzz Points cards in a given community leads to more opportunities for engagement, more transactions and more business within the Buzz Points merchant network. Buzz Points network profits are split among financial institutions based on a ratio of their card spend.

For both the financial institutions and the local merchants looking to offer a loyalty and rewards program, Buzz Points is completely turnkey and gives small banks and small business owners access to technologies, insights, and customer segmentation tools that would otherwise be out of reach in terms of cost (both the cost of the technology and the cost to employ staff to read the data and create targeted offers for customers).

These are the same types of sophisticated marketing programs based on data collection and analyses used by the largest corporate chains. Simply stated, it helps them compete.

Merchants also gain marketing program support as well as insights into local market trends and can track performance through an online merchant portal. The pay-per-play model is very affordable and allows merchants to choose from multiple tiers of service to fit their needs and budget.

How important is the mobile device in 2015 for the loyalty and rewards space?

Mobile is extremely important in the loyalty and rewards space. Consumers are becoming more and more comfortable with all kinds of technology and we are living in an increasingly mobile world.

Given that our program is designed to encourage redemption, we launched a mobile app that makes the process of discovering and buying local more accessible and intuitive than traditional web-only portals by placing the power to explore, purchase, manage and redeem right in our users’ pockets.

The app is another example of how we provide the financial institutions we serve with sophisticated, user-friendly technology that enhances their customers’ banking experience and gives them an additional competitive advantage.

There is also a clear benefit to our ever-growing merchant network. The app is geo-aware, which allows it to pop up notifications based on the users location, making it easier to shop and redeem local. For example, if you saved a coupon for “Jake’s Coffee” and are walking by, it can remind you that you are nearby to a local business where you have an offer.

Dwayne Spradlin, CEO, Buzz Points

Mr. Spradlin is a dynamic leader with substantial experience in technology driven and high growth organizations and was most recently the CEO of the Health Data Consortium in Washington DC. At the invitation of the White House, the US Department of Health & Human Services, and the Robert Wood Johnson Foundation, Mr. Spradlin launched an organization to drive data transparency, accountability, and improved data sharing in order to fundamentally improve the US healthcare system.

Prior to the Health Data Consortium, Mr. Spradlin served as CEO of InnoCentive Inc. InnoCentive is an internationally recognized company and the pioneer in online open innovation and R&D crowdsourcing. InnoCentive links important problems from organizations like NASA, Boeing, and P&G to a global network of problem solvers from over 200 countries in a highly successful business model. It also provides online enterprise solutions that enable organizations to tap the best ideas of its own employees and partners.

As President of Hoovers (a Dun & Bradstreet Company), an Austin, TX, based leader and innovator in online business information, Mr. Spradlin grew the company to over $100MM in annual revenue. Hoover’s customers were both SMBs and larger global customers and products included business information, online marketing, and sales support products. Other positions held by Mr. Spradlin include President of StarCite; Senior Vice President of Corporate and Business Development at VerticalNet; and Director of Emerging Technologies at PricewaterhouseCoopers. Mr. Spradlin holds an MBA from the University of Chicago as well as a BA in Applied Mathematics.