Discount Cards: Finding the Right Deal

A fundraiser gaining popularity with parent groups allows local merchants to show their support for schools while tapping into a powerful market. Discount cards are plastic-coated cards the size of a credit card that can be used for discounts at local businesses. Parent groups generally purchase them for $5 apiece or less, then sell them for $10.

Discount card programs appeal to parent groups because they are simple, the sales cycle is short, and the advertised gross profit is high—50 percent or more per card. Do they work? For many parent groups, discount cards are a huge success. But others find the program less than a perfect match. The keys to success include:

1. Choosing your discount card provider wisely
2. Ordering a realistic number of cards
3. Creating a sales program that gets the cards in the hands of kids and provides them with motivation to sell.

How They Work

The standard discount card can be used at 10 to 20 local businesses. Each business provides a discount, usually a two-for-one offer. Businesses participate because the cards help them reach new customers or build business among existing customers. Generally, cards are good for a year and can be used over and over at each business.

There are many companies that market these cards to parent groups. These companies sell you the service of setting up the cards and printing them. Who contacts the local businesses is the major difference in card packages. In some programs, the discount card company contracts with local businesses and national chains; in others, you contract with the businesses yourself. Many discount card companies offer both options.

With the first option, your PTO provides the card company with the names of businesses you'd like as participants, including the major chain/franchise companies such as McDonald's. The company approaches these businesses and gets a signed contract from each sponsor. If you choose a plan in which you contact the businesses yourself, the card company provides all of the paperwork you need, including the contracts to be signed.

The first option is easier for you but also costs more. At one company, the do-it-yourself cards worked out to $1.50 apiece, while the company-does-it cards were $2.50 each. Because you set the selling price of the card, you can compensate for the fee by raising the price, but most cards sell for $10, regardless of cost.

There are plenty of card companies to choose from. A quick check of the ptotoday.com Yellow Pages should net you at least 10 different options. The websites offer card samples, profit calculators, and program descriptions.

Not all cards and card companies are the same:

• Most companies allow you to personalize your card with your school's name and logo. Many will request the artwork as a camera-ready, black-on-white logo.
• Most card companies have a minimum order, anywhere from 75 to 1,000 cards. The smaller the minimum order, the higher the cost per card.
• Most companies allow you to order any number of additional cards after you've sold your first order (and met their minimum).
• Not all companies accept returned cards. Some accept returns only beyond the minimum order. In exchange, you receive credit against your bill for a percentage of the cost. (One company charges $2.50 per card and credits $2 for returns. Another that charges $5 per card credits $3.50 for each return.) Some companies accept returns of "generic" cards (without your school logo) but not of personalized cards.
• All card companies extend credit to PTOs and other groups. The billing differs, but expect to pay the bottom line within 15 to 30 days. Every company offers a bonus of free cards, sometimes up to 20 percent of the order, if you pay cash on delivery.
• Some companies offer sales assistance. Win Win Discount Cards provides a "success manual" with tips to prepare for the sale. Varsity Gold staffers come to your school and hold "Blitz Days," during which they issue brochures to students and build excitement for the sale. The company also distributes the cards and accounts for the money, making it an especially inclusive program.

Which company is right for you? You must consider price, service, minimum order, and reputation. Different programs work for different PTOs. One red flag to watch for: When choosing a company, ask your candidates if they receive written contracts from the sponsors. (If the sponsor is a national chain, make sure the local franchise, not just the corporate office, gives permission.) If there are no written contracts, the sponsors could back out after they have already committed and the cards are sold. Also, check return policies. You can use a company that doesn't accept returns, but order conservatively if you do.

One thing you should do with any company you're considering is to check with the Better Business Bureau. As service organizations, card providers deal with countless clients. Solid companies will have clean reports.

How To Order

Once you've chosen a card company, you need to pick your sponsors and place your order. Keep variety in mind when choosing sponsors. Offer something for everyone; you want all of your potential customers to find at least a few businesses appropriate for their needs. Consider fast-food outlets, pizza parlors, hair or beauty centers, tanning centers, oil change shops, movie theaters, bowling alleys, and local attractions.

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When you've set up the card, it's time to place the order. Many card companies push you to order around 30 cards per student. Their logic is that 30 per student means that each person in the household (based on an average of three people per residence) has only 10 cards to sell. The way the card companies see it, during a two-week sales cycle, this breaks down to less than one card per person per day.

Don't believe it, says Karen Stallings, vice president of sales for America's Fundraising, a company that offers discount cards as well as more traditional fundraisers. Stallings, who is a mother and has ordered and sold cards for her PTO, advises caution. "You really want to be careful about not over-ordering, especially if you personalize your cards or can't return them," she says. "If you have a small school of 500 to 600 kids, not everyone is going to sell them. Order perhaps five cards per child and no more than 10 per child."

Jack Atwell, president of Annah Marketing Group and Win Win, agrees with limiting the number of cards distributed. "If this is their first sale of discount cards, we like the groups to start each seller with five cards," he says.

Selling the Cards

Choosing the correct card company or creating your own cards is a great first step, but getting an excellent price on the cards is no guarantee of success. Many PTOs struggle to sell the cards. At Hawthorne Elementary School in Columbus, Ohio, the card program suffered from lack of involvement.

"We had about 700 students in our school and we had hoped to sell two cards per student," says organizer Carrie Preece. "We sold only about 200 cards, but we did not lose money. We came out $20 ahead." The PTO ordered 920 cards, received a bonus of 50 for paying cash on delivery, and was able to return 240 for full credit.

Unfortunately, Preece's story is not uncommon. She recommends doing plenty of research before you commit to a card sale. "Talk to parents to see if they would buy the card," she advises. "Also, talk to the teachers. If the teachers will buy it, you just sold 40 cards. Our teachers didn't buy." If you get a good response from your informal poll, it's time to move ahead with the sale.

You need a great selling campaign to get those cards moving. How are you going to do it? The technique stressed by card companies is to get the cards in the hands of the students. You need to send the cards home with the kids or they will not be sold.

There are definite drawbacks to this plan. The biggest concern is that you will not receive the cards back and they will not be paid for. For that reason, Atwell at Win Win recommends frequent check-ins. "You should not just hand the cards out and tell students to bring the money back in three weeks," he says. He suggests sending the cards home and then having a quick check-in, no more than two days later. Collect money and unsold cards, and then redistribute cards. "To those who have sold all five of theirs, give an increased number. To those who have not sold any, give maybe only two or three cards," he says.

Stallings at America's Fundraising recommends a plan her parent group uses. They first send a letter home telling the parents about the card program. To cut down on expenses, the parent group asks all of the teachers to mention the cards in their weekly work report (instead of sending a separate letter).

Each child is then sent home with two cards and a permission slip to be signed. "It's best to send cards home on a day when there is an open house or something that gets the parents to the school, but if you can't schedule that, that's fine," says Stallings. The permission slip explains the program and asks for permission for the child to sell the cards. The slip gives four check-box options:

• I don't want these cards and am returning them.
• I will sell these cards and return the money by (fill in the date for them).
• Here's my money for these two. I don't want more.
• Send me (blank) more cards.

The kids are expected to return the signed slip the next day. The PTO provides a prize, such as a lollipop, to kids who return the slips on time.

Stallings feels the most important element to creating strong sales is to have an incentive program for the kids. "You need to offer prizes for the kids, even if it comes out of your own profit," she says. She recommends using a broad prize schedule, including rewards for selling just one card, instead of focusing on the overall winners.

Jennifer Rodr at Charles Haskell Elementary School in Edmond, Okla., sends home order forms instead of the actual cards. This is a popular plan with groups that don't want to send home cards, but it doesn't usually get as good a response. Her school has a well-rounded rewards program for its ongoing card sale. Every child selling two or more cards gets a hat. All of the students participate in a rewards week. "They will have long recesses with Popsicles, no-homework day, hat day, and throwing pies at the principal," she explains. "The families that sell our goal of eight cards also get their names in a drawing for gift certificates for places around our city. Then the top three teachers get gift certificates for the classroom, too. The top two sellers get an additional prize."

Ask your card company for sales advice. Win Win's success manual takes the group through something of a Sales 101 course and also offers helpful suggestions for gearing up for sales. Among the recommendations:

• School PA announcements. "Teaser" announcements preview the upcoming program.
• Posters and flyers. Place them at the school and other potential sales areas, including at area businesses and on public bulletin boards. Use teaser flyers before the sale and flyers showing sample cards and listing a sales contact during the sale.
• Prospect lists. Have each member of your parent group make a prospect list. This gets everyone thinking about who else could use the card. You can even take these orders in advance.
• Buttons. Each member of your group could wear a button that is a teaser for the sale or a sale promotion.

Another tip to consider is soliciting group or multiple sales. Think of local businesses that might buy a large number of cards to use as rewards for employees or as promotional items (car dealers, real estate brokers, and insurance agents are three possibilities).

Using a discount card company may make this an easy-to-organize fundraiser, but to make it a success, you need to work hard and be creative.

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Doing It Yourself

Do you need to use a card company? No. You can go it on your own. Whether it makes sense depends on your resources. It takes time to approach businesses, get signed contracts, and procure the necessary artwork. It also takes time to design, print, and laminate the cards.

The first step is to write a letter to businesses on your PTO or school letterhead explaining the program. Create a sponsorship contract, including what the business is offering, when the card expires, and a signature line for the owner or manager. Get a logo from each sponsor to reproduce on the card. To avoid hassles, you can also opt to list the companies in type only.

If you don't have anyone on your team with a scanner and design capabilities, you can contract with a local copy shop to put together your artwork (scanning the logos, composing the offer copy, and formatting the card) and print and laminate the cards. Ask the shop to trade its services for free ad space on the card and in your newsletter.

A price quoted by one national copy chain to copy and laminate 1,000 cards was just under 25 cents a card. The cards were black-and-white, printed on one side only, and laid out eight to a page. By far the largest cost, $200 of the $245 total, was for laminating. A two-sided card, one side color and the other black-and-white, increased the cost to nearly 42 cents a card.