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?
JM: No.
