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By Evan Schuman  |  Posted 2006-08-10 Print this article Print

The software behind this program is owned and managed remotely by a Portland, Ore., company called ChockStone. ChockStones CEO, Jeffrey Lipp, agrees that the cardholders name is not that valuable a piece of information, other than for e-mail campaigns. "From a figuring out the transaction pattern and history perspective, we dont really need the name in order to decide what that person may do in the future," Lipp said.
Lipp said that its the tight integration with Subways POS network that makes this deployment intriguing. "We grab all of the information that is rung up in that sale. It could be the 6-inch turkey, the 21-ounce soda, the Frito-Lay chips, all of that information with the timestamp, its all sent to us," he said. "Theres then analytics on our system. Its taking data from the POS in real time, and its into our systems and into our logic. Were trying to figure out if it triggers a specialized offer to be printed on the back of the receipt."
For the most part, all of the data is crunched and analyzed on ChockStones servers and then reviewed online by various Subway managers. But the data is also sent back to Subway so that it can also be merged with other data, Lipp said. Subway "gets nightly data feeds to feed into other packages that they might want to use to complement the tools that we have. Theres virtually no data on that magstripe on the card. All of the data, all of the history, everything that is related to that profile resides on our system." ChockStone is working with various retailers and vendors, including the Tullys coffee chain and movie firm TicketMaster. The cost of the program varies with the customer, Lipp said, but it usually involves a flat transaction fee ranging from 5 cents to 15 cents per transaction, along with the cost of the cards themselves. RFID-enabled contactless cards—such as ones being used by Tullys—cost a lot more than the magstriped versions that Subway deployed. "The cost of a dumb basic magstripe card is significantly lower than a card with an RFID chip in it. For a program with tens of millions of cards, that adds up, especially for a system like Subways where the franchisees have to pay for everything," Lipp said. "Its in the 10 to 20 cent range for magstripe and $1-plus for the RFID cards, so its quite a jump." Although value and gift cards have been popular since the mid-1990s, Lipp said he expects to see a sharp increase in not just the quantity of retail usage, but the sophistication of them as well. "Were seeing most major retailers who have gone through the first cycle or two on gift cards penetrating maybe 2 to 4 percent of their base. Its become a big item, and yet its still kind of a niche item when its only hitting a couple percent of your customers," Lipp said. "Now most large retailers are saying, Whats next? What else can I do with this card? Hey, how about turning this payment card into really a marketing card? They need to figure out how they go from 4 percent of customers using it to 40 percent. If you use the data, you can really get a good payout." Lipp cited a deal between Tullys and Yahoo as an example of the kind of creative arrangements that are possible. "In Santa Monica, Calif., Yahoo resides in a building where there is a Tullys on the ground floor. Yahoo, instead of building their own coffee shop, they said, OK, why dont we have a program where we make Tullys our corporate coffee shop?" All Yahoo employees associated with the program have special coding that signals that they get 20 percent more benefits than other customers. "When they go online and load up another $20, they get a 20 percent [bonus], so theyll get $24. Thats subsidized in a deal between Yahoo and Tullys." Retail Center Editor Evan Schuman can be reached at out eWEEK.coms for the latest news, views and analysis on technologys impact on retail.

Evan Schuman is the editor of's Retail industry center. He has covered retail technology issues since 1988 for Ziff-Davis, CMP Media, IDG, Penton, Lebhar-Friedman, VNU, BusinessWeek, Business 2.0 and United Press International, among others. He can be reached by e-mail at

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