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Monday, March 20, 2006

One (thousand) in the hand is better than Two (hundred more) at Starbucks

While using turbo tax to do a friend's tax return, an offer was made to plus up their refund by 20%. All she had to do was agree to allocate $1000 of her refund to a specific retailer. The idea being, you're going to spend crazy amounts of dollars at any particular retailer anyway, so why not get bonus money to do it.

Spend $1000 at Starbucks, we'd like to say thanks and give you an extra $200. Knowing that my friend probably spends at least $1000 in Starbucks annually anyway, it's probably the economically judicious decision to make, but alas, she optioned against it, deciding instead to continue contributing to Starbucks world domination $4 lattes at a time.

I would be curious, however, to see any success stories on this. The timing makes as much sense as any, as the only time one would be willing to make that level of commitment to a specific retailer is with money that they don't already have. Some retailers (Lowe's) make much more sense than others (AMC movies - Jake Gyllenhaal made a persuasive speech at the oscars, but it would take a while for even avid movie goers to burn off $1200 in movie tickets), but a big sum of money does not a rational person make.


Adrian said...

so wait, was it "your friend" or you?

Anyway I saw this too and wondered if anyone would spring for it. It feels a bit like ambulance chasing to me. I don't know what it says about the brands that participate.

AKI SYSTEMS 2600 said...

yeah, a bit desperate as a brand, sort of like the greasy salesman who heard you've got a dying rich uncle and conveniently is here to offer you a great pricing opportunity...or like the salesmen who show up when the news of your lotto win is announced.

but this is a potential new wellspring of dough to tap earlier. is somebody really gonna blow their refund at the Red Lobster, though? people never fail to amuse. maybe vacations and spa reward sites are a good look for this. maybe they need a whole catalog, kinda like credit reward points catalogs, with everything from an iPod to a mountain bike to a ski getaway.

i'm interested to see how this one turns out, though. the strategy has some insight - the first thing people do with the tax refund is go spend it- big. is it impolite to show up knocking?

eferch said...

Yeah, this friend of mine has an itch, and, uh...a likely story. Alright, lattes on me all next week. Really, it wasn't me, my taxes are too complicated to use Turbo Tax.

I don't think it has any negative equity for any of these uber brands, although I agree that there is a certain desperation for many of the brands - any mid tier restaurant looks really pathetic.

To Aki's point, I think it can be positive good will for many brands in certain "indulgent" industries, and big ticket purchase retailers. Don't know that they all need to be so greedy though, how about $100 gets you $120?, or you choose the amount, we bump it up by 20%. More takers, I'd guess.