e-commerce, philanthropy, shopping
Jackpot Rewards CEO Jim Miller Explains (Mostly) the Company’s About-Face on Weekly $1 Million Prizes
Wade Roush 4/8/08
(Page 2 of 2)
have enough money to cover the jackpots for “as far as the eye can see.” Was the sweepstakes change a cost-cutting measure?
JM: It’s more just a way of utilizing all our resources as wisely as possible to serve our members as best we can. In terms of looking at other models, I think we are growing faster than Paypal or Netflix did.
X: I also wanted to ask you about the cash-back rewards offered to Jackpot Rewards members. When we last spoke, you said the rewards would amount to 12 percent of members’ spending at your affiliated sites. But from looking at some of the featured merchants and the actual cash-back percentages, very few of the percentages are that high. Rebates of 3 percent, 7 percent, or 9 percent seem much more common, which would mean that members would have to spend a lot more money to earn back their membership fees.
JM: It’s an average of 10 percent. We’ve been consistent on that message. You can look at somebody like Target, which offers 10 percent. At Land’s End, it’s 12 percent. Those are two sites that see a lot of traffic and have very loyal customers. The people that come to those sites through Jackpot Rewards convert [i.e. purchase something during their visit] more than almost any other retailer. We’ve used those as examples. We don’t use the more aggressive examples such as the flower places that are offering 20 or 25 percent cash-back. And we are completely transparent on what the percentages are.
X: I’m sorry, but looking at the percentages listed on the website today, there is no way they average out to 10 percent. [Author's note: After speaking with Miller I did some math, and for the 91 Jackpot Rewards featured merchants listed as giving cash back to members on a percentage basis as of April 7, the average discount was 7.3 percent.] How are you calculating that? Is it the average amount returned to customers across all their purchases at all these sites?
JM: I don’t know the exact methodology used there. I know that it’s based on averages around the amount historically spent with services like this. I don’t have that methodology in front of me. [Addendum April 9, 2008: Miller called later and explained that the average cash back percentage, across all 550 of Jackpot Rewards' affiliated merchants (including those not listed on the company's website as featured merchants), is 9.6 percent.]
X: We spoke with one former Jackpot Rewards member who canceled her membership in the program after she received the newsletter last week. She said she felt that by heavily publicizing the weekly million-dollar jackpots and then changing the rules, Jackpot Rewards was basically engaging in a bait-and-switch. I wanted to ask you to respond to that.
JM: We notified all of our customers. We think our customers are by and large very happy with the service, and if they aren’t we enable them to leave with three clicks of a button. They can leave and they get a full refund on their membership for every day that hasn’t been used. We couldn’t be more transparent. We also couldn’t be more customer-friendly in terms of if people aren’t happy, making sure they’re able to leave us and move on.
X: What will be the visible signs that you’re shifting resources from the jackpots to the discounts?
JM: In the next few weeks [members] will see more and more ways in which they’re able to see savings and engage with the site and earn more dollars. [They'll] see deeper discounts and more ways to win. I think that’s wise for people to keep their eye on the site. People are happy with it, and we see people coming back every day to see if the deal of the day is something they want. And people have paid for their membership for the full year based on the savings they’ve realized from engaging in that. We think that’s a very powerful part of the story, and we intend to dedicate more resources to that. We know that’s what our customers are buzzing about.
X: Can you publicly share your membership numbers so far?
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4/9/08 9:15 am
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
4/14/08 1:46 pm
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.
4/15/08 4:29 pm
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.
4/27/08 11:08 pm
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.
5/26/08 8:09 pm
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.
6/2/08 1:16 pm
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.
6/30/08 5:43 pm
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.
7/2/08 3:06 pm
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.
10/14/08 9:31 pm
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?
10/15/08 11:53 pm
It’s money Roberta, something that is going to be in short supply soon so take what you can!
10/16/08 9:22 am
Thanks Brent. I didn’t want to cash it if I was unknowingly signing my life away.