Jackpot Rewards CEO Jim Miller Explains (Mostly) the Company’s About-Face on Weekly $1 Million Prizes

4/8/08Follow @wroush

Newton, MA-based customer-rewards startup Jackpot Rewards says it will still hold a $1 million prize drawing every week. But as we reported yesterday, the company no longer promises that it will actually give the money away—removing one of the major incentives to join the company’s cash-back rewards program and making some existing members angry enough to cancel their memberships.

Jackpot Rewards didn’t return our calls inquiring about the change until after our story went to press yesterday. But later we were able to reach CEO Jim Miller, who says that the company is scaling back its jackpots mainly in order to spend more money subsidizing the product discounts it provides through its “Deal of the Day” offers. According to Miller, customers have been telling the company that they value these discounts more than they value the chance to win $1 million every week.

To be fair, the company’s earlier scheme was almost too good to be true, offering much better odds of winning than most other million-dollar sweepstakes. All members had to do to clinch the million-dollar prize was match two of the six balls in a thrice-weekly lotto-style drawing, then be the lucky person selected from all of the those qualifying—a group that included only 464 people in the company’s first drawing and 1,726 by its third.

Winning is now far more difficult. Under the new rules, people who qualify in the thrice-weekly drawings are assigned a number between 0 and 249,999, and win only if their number comes up in a random drawing. The company promises that during weeks when nobody wins—the likely outcome the vast majority of the time—it will hand out a $1,000 prize.

My conversation with Miller started out focusing on the reasons for the company’s change of heart—which is seemingly a major one, given that the company’s marketing message centers not just on giving away part of its own profits, but on encouraging people to “dream big” about the things they could do (including donating to charity) if they won a big jackpot. But after covering that—as you’ll see from the following transcript—we moved on to a discussion about the real value of the cash-back rewards Jackpot Rewards members can earn.

Xconomy: A former member of Jackpot Rewards sent us a copy of the customer newsletter from last week in which you announced that you are doing away with the guarantee that someone will win a $1 million prize every week. Can you please explain the thinking behind that decision?

Jim Miller: We wanted to stick with [offering] the best odds anywhere in the industry. Looking at us compared to other sweepstakes in the space, we are still doing that. We think that in that regard, the value proposition is still there. We are still leading in that category. And we are going to be implementing more prizes at various levels.

But what we’ve already found in the feedback from our customers is that the place where they really feel like we are spreading the wealth around is the “Deal of the Day” that we offer to customers. You can see that with [deals like] the trip to the Masters’ Tournament for 75 percent off, or exclusive tickets to sold-out events like Bruce Springsteen and Seinfeld. We are really responding to what we’re seeing as what motivates our customers.

X: The weekly $1 million prize was one of the company’s key marketing messages when you launched in February. In fact, in our interview, you told me that it was one of the things that differentiated you from other companies like Publishers Clearinghouse, which in your words would spend six months talking about giving away a million dollars before they actually gave it away—whereas, you said, Jackpot Rewards was going to go out and actually give away a million dollars, every week. This seems like a big change to that message.

JM: We see it as keeping the commitment to having the best odds. If you look at [Publishers Clearinghouse] as a comparison, it’s one that we still think is a welcome comparison, because their odds are 1 in 699 million. You’re talking about very good odds, with what we think is a very good value proposition, but also enabling us to provide increasingly attractive deals of the day to our customers— spreading the wealth and having people experience that in multiple ways.

X: Are you saying that the money you save by paying out less often on the million-dollar jackpots is going to be shifted over to providing more discounts?

JM: We’re shifting our priorities, and we’ll be implementing in the next few weeks things that we think our customers will find even more attractive. We’ve found that they are engaging with the site in ways that probably even exceeded our expectations on the shopping side. We think it’s good to enable people to save, especially as we head into what by all accounts looks like a recession. This enables us to have a little broader latitude to provide even better deals elsewhere on the site. And the third leg of the stool is the giving side. I think [members] will see in the coming months that we’re doing interesting stuff there, and that we’re remaining as committed as ever.

X: When I asked you in February whether Jackpot Rewards would have enough money to fund the weekly $1 million jackpots, you said that even if you were not able to recruit members as quickly as you predicted, you would still … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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  • Stacey Malay

    Hi,

    Below is my email to Jackpot rewards and their response. Just seems like they are not getting the numbers they need to sustain a 1 million/week giveaway. I will cancel my membership soon since my odds of winning, now, are not as good.

    Oh and I joined only for the million giveaway, I have good rewards programs with my credit card companies!

    Dear Stacey,

    Thank you for your inquiry. Like any new business, we are constantly looking for ways to bring more value to our customers. The Sunday $1 Million Jackpot drawing will continue to have the best odds of any $1 Million sweepstakes – it just may not have a winner every week. In the coming weeks, we will be introducing more ways for consumers to win cash and other prizes. These new opportunities will give our members even more chances to win, and will create even more winners than before. We apologize that this wasn’t clear in yesterday’s newsletter.

    In response to member feedback, we are also enhancing the Deals of the Day to provide members deals they cannot find anywhere else. As members, you are winning in small ways every day with these great savings.

    And, as always, if you refer your friends, you increase your chances to win the $1 Million Jackpot by earning bonus entries. We will also be introducing a much easier way for you to use the Refer-A-Friend program soon.

    We value you as a Jackpot Rewards member and look forward to bringing you more great shopping deals and new and exciting ways to win. If you have any questions or comments, please let us know.

    For additional information regarding the $1 Million Jackpot Rules, please visit:
    http://www.jackpotrewards.com/company/sweepsrules/

    Regards,

    Steve Melanson
    Director PMO

    —–Original Message—–
    From:
    Sent: Monday, March 31, 2008 10:42 AM
    To: membersupport@jackpotrewards.com
    Subject: Probably going to cancel my membership since you

    Contact Us Topic: Rewards Membership

    are changing your rules about a guaranteed winner every Sunday. That is the whole reason I joined. Pretty disappointed with this decision, why did you make this decision?

    I don’t understand how doing this will create more winners as you state in your newsletter. Please explain.

    Thanks,
    Stacey

    Stacey Malay

  • ralph

    I actually didn’t know that the website had pulled the ‘guarantee’ out of the $1M drawing until a friend of mine had seen an article in the paper about it. I never received a newsletter, and the site is only listing the winning number for the prize, which obviously doesn’t apply to me.

    Someone commented on the bait and switch idea, and I agree. I canceled my membership this afternoon.

    Great article, BTW.

  • curt spaulding

    Just as one would expect, get all the hype, then take it all away. I still think they are missing the boat unless they don’t have the resources to pay up each week. It sounded to good to be true, maybe so. I’ll ride the wave for just a little bit, but they took the real fun out. quarter million odds is still pretty hefty, 400 to 2000 much better.

  • Matt

    The change in rules was buried at the bottom of the March 31st newsletter. And how on earth can they claim that their little deals of the day is a better incentive than a guaranteed million a week. Do they think the consumer is that stupid?!? This is obvious example of an over-hyped marketing scam that didn’t get the ridiculous membership that they had hoped for. Instead, they refuse to provide any real information on their website and boast million dollar winners from the previous period where they guaranteed it. Guess what… they haven’t had a $1 million winner since!!!!

    Death to Jackpot Rewards!

    No wonder the financial sector is in crisis… guys like Jim Miller and his backers have no financial/marketing savvy, except for rhetoric and empty promises.

  • Ethan

    This is a major Bait and Switch scam. I’d just found out about the new rules right now. I’m going to cancel my membership.
    p.s. Anyone every notice that mostly all the winners are from MA? That’s pretty fishy also.

  • ralph

    To Ethan – The company is based in Massachusetts and was relying on word-of-mouth to get started. (Don’t ask me why.) If anything, all the MA winners show that the website didn’t get the type of viral, national exposure that they’d expected.

    Either way, Bait and Switch sure sounds like the case here.

  • Sarah

    I also just found out about the “guarantee” being taken away today. Didn’t see the rule changes buried at the bottom of the newsletter. Anyway, like Ethan above, prior to reading this article, I had just emailed Jackpot Rewards questioning them on the majority of winners being from MA. I, too, found this fishy. Haven’t cancelled yet, will probably hold off for another month to see what happens.

  • john

    I believe the company was started and is based in massachusetts and therefore there probably are a lot of members from Massachusetts. That probably explains why a lot of the winners are from there.

    As of June 30, 2008 it looks like they brought back guaranteed prizes each week – this week it is an African Safari trip.

  • Roberta

    They just sent me a check for $10 saying I won it. Don’t know if I shouls cash it. Am I getting myself into something I don’t want if I do?

  • Brent

    It’s money Roberta, something that is going to be in short supply soon so take what you can!

  • Roberta

    Thanks Brent. I didn’t want to cash it if I was unknowingly signing my life away.

  • Rebekkah

    i was a member 2 months 30 days free. I won Grand Prize Trip to Serengeti Africa for 8 days valued at 11,500 and i am in Pa not Ma
    I love Jackpot Rewards

  • Ken Biastock

    We do not want to be on your mailing list; I have unsubscribbed 10x per day for 1-2 weeks and still keep getting e-mails-please remove me

  • Alicia

    My husband signed up for this using my credit card i kept it for a lil bit but than canceled the membership because we werent winning and i didnt use the deals. I canceled it over a month ago and yet their still billing my credit card. so just be careful with this company. I have to call my credit card and stop payment and i hate dealing with those people :/

  • http://www.lacretadoty.scent-team.com Lacreta Doty

    I won a $1000.00 here last year and recently $10.00. I hope someday I win the million dollar prize, but don’t we all:) I love this company, but I’m not sure if all my store credits are showing up lately. I do like the prizes and the deal of day when they have them.