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The Business Builder Alliance Inc.'s new loyalty initiative eschews sharing customers with other businesses in favor of program specific to individual merchants. Consumers use their own payment cards rather than receive a loyalty card for the merchant. Launched last month, the closed-loop loyalty system instead creates a database of participants for each merchant. Some loyalty programs group merchants based on geography or similar factors, Walter Dubowec, chief marketing officer for the Rancho Santa Margarita, Calif.-based company, tells CardLine sister publication ISO&Agent Weekly. Those groups, which Dubowec labels as "coalition"-based, may include a merchant's competitors. "A restaurant is not going to join a program because the owner knows there are four other restaurants down the street that belong to the program," Dubowec says. With the Business Builder program, consumers enroll via a Web site that features the merchant's logo by registering up to 20 payment cards. Each time participants use one of their cards at a merchant, they earn reward points. At certain point levels, Business Builder issues gift cards that consumers can use only at that merchant, Dubowec says. Merchants pay $299 to join the program plus a $599 monthly fee. Early testing of the program at one merchant, which saw invitations containing a gift card sent to 50 potential customers, resulted in 20 new customers attracted to the business over one month, Dubowec says. Independent sales organizations can resell the program and earn money from a portion of the merchant's sign-up monthly fees, Dubowec says. He would not disclose the specific percentages but says the monthly fee revenue could be as much as $140 per month, depending on the contract between the Alliance and the ISO. Also, ISOs continue to generate recurring revenue from individual payment card transactions, known as residuals.
