When a company calls itself FreeMonee, you've got to be at least a little suspicious, right?
Jim Taschetta, the company's CMO, joked that even he was a bit skeptical when he joined the firm a few years ago, but ultimately decided that FreeMonee's promise was so compelling it deserved its provocative name.
No, FreeMonee doesn't just throw cold, hard cash at consumers. But it does connect financial institutions with nearly 100 retailers and restaurants to give consumers free gifts, in the form of credits to their debit and credit cards. For the consumers, it means the opportunity to redeem the cash "gifts" for items of their choosing at the retailer offering the gift; for the merchants, it means a way to beef up sales without resorting to steep price cuts. (Of course, FreeMonee and the banks get a piece of the action, too. When a customer uses the gift for a transaction, FreeMonee charges the participating retailer a 5 percent to 10 percent "success fee" that it splits with the bank facilitating the deal.)
"It's the first tool I've ever seen that would drive profitable incremental sales at scale without discounting," Taschetta said.
Calling itself the first "national gift network," the San Mateo, Calif.-based company, which is led by a team of seasoned tech veterans, launched last May with $11 million in funding. Since then, it's been piloting the service with a set of national and semi-national retailers and banks. But today it publicly announced that it has been working with U.S. Bank since November. FreeMonee also said it's expanding the network to three other top five U.S. financial institutions that are not yet ready to disclose their participation.
Given the pounding the banking industry has taken of late in the court of public opinion, as well as the recent privacy flare-ups in the tech world, it’s possible the others are more reluctant to announce their partnership in the service, which relies heavily on mining transaction data.
The way it works is that FreeMonee's proprietary Adaptive Matching Technology analyzes anonymized transaction data from financial institutions to match merchants' gifts with the consumers who are algorithmically determined to be the most likely to redeem them based on their purchase history.
For example, Taschetta said its technology has found direct correlations among golf, charitable contributions and travel. So you could imagine that someone whose past purchases include plenty of airline tickets and nonprofit donations might be in the market for a new driver, and offered a credit to Sports Authority. At every step of the transaction, FreeMonee emphasizes, information is accessed and analyzed anonymously and securely.
Notification of the gifts, which range from $2 to $50, are delivered by the bank via communication channels like email, and consumers have a week to redeem the credit before the offer expires. But Taschetta said 50 percent of the visits occur within the first 72 hours.
Unlike coupons or daily deals that discount the price of an item, FreeMonee says its gifts are "cash forward" incentives that lift retail sales seven to 10 times (when compared to a control group that did not receive the FreeMonee Gifts) and generate a return on investment of 500 percent-800 percent. For every $1 spent on a FreeMonee campaign, the company says brands' return in sales is $5 to $8.
Those returns are possible, Taschetta said, because of "the power of the gift."
"The gift card is 10 times more effective at driving new store sales," he said. "It's more attractive at bringing people to the store than anything else."
In a statement, Hans Seidenberg, director of partnership marketing at 1-800-Flowers.com, said, "“We like the potential of the FreeMonee Gift program…[It] represents a whole new approach to direct marketing."
MyPublisher and Buca di Beppo also agreed to publicize their partnership in the program. But perhaps signaling a recognition of the sensitivity around using consumer data, the company said none of the other merchant or financial partners was ready to announce its participation. While FreeMonee says it’s created its service in accordance with “Privacy by Design” principles, it may take time for consumers to feel comfortable with their banks and third parties accessing and analyzing their shopping data.
Since January, FreeMonee said more than 3 million gifts have been delivered to consumers in more than 10 merchant categories.