Redemption Plus Celebrates Two Decades As Value-Added Supplier

LENEXA, KS -- By skillfully tracking the hottest merchandising trends and creating value for its family entertainment center customers, Redemption Plus is celebrating its 20th anniversary on a high note. The Lenexa, KS-based supplier's key to success goes beyond providing high-quality product. True success is achieved by providing the right product to the right customer through data-driven insights. For Redemption Plus, this added-value strategy has helped improve the leisure experiences for FEC patrons and sales for its operator customers.

KANSAS FACES:The Redemption Plus team gathers for an anniversary portrait in lobby of company's Lenexa, KS, headquarters. Redemption Plus officially opened for business on April 1, 1996, as an incentive distribution company and has evolved into a premium prize picker over the ensuing two decades. It was the first supplier to create a tagging system and digital packing list for FEC redemption programs. Today, Redemption Plus regards itself as a value-creation company.

"It's very simple: added value equals added sales for our customers," said Redemption Plus's Tabatha Bender. "Our goal is to help FECs help their customers have a good experience. We offer a high-quality product, along with the right product at the right time. We see ourselves as a value-creation company that partners with amusement facilities."

After all, a redemption prize that holds no appeal to FEC customers, no matter its cost, is of little value. The company's effort to identify value began several years ago with a tagging system that helped FECs maintain smart inventory levels by tracking product by means of barcodes. The technique evolved, and now Redemption Plus collects and analyzes data that its FEC customers can use to better understand players and build their own consumer knowledge bases.

Playing At The Margins

As it turns out, one size does not fit all. As consumers have grown more discriminating, prizes now have to be merchandised in a manner that more resembles a retail store than a carnival. They don't expect a cluttered display of shopworn consumables. In other words, FECs need to cater to the tastes of their players and local communities with great precision.

"We analyze prize mixes, make adjustments of ticket values to suit the needs of the customers and reward loyalty," explained Redemption Plus's Eric Johnson. "If they are using Embed or Intercard POS systems, we can look at usage reports to see how quickly a product is moving. Based on that data, we can determine what customers are spending and suggest a markup rate to suit the customer base."

This capability gives prize buyers greater flexibility. For example, if an FEC is experiencing lower customer spending rates, Redemption Plus can create a product package with fewer high-end items and lower markups.

This capability places the company into a consultancy role, since it's required to analyze ticket values and profit margins to tailor customized product mixes for different location needs. As a result, Redemption Plus not only offers specific products with appealing themes, but applies to those offerings prize and price tiers ranging from the least expensive to the most desirable.

"For instance, a small FEC with an average spend per customer of $5 would see players mostly cash in their tickets for small impulse items," Johnson said. "In this case, we might suggest a slightly larger assortment of merchandise at the very next price tier to incentivize players to spend that little extra. The goal is to get them to take one more trip back to the games to spend another $2 to $5 for that next tier prize."

This strategy creates viable goals for players -- baby steps -- by moving them gently up the spending ladder. "With some standard pricing strategies everything is exponentially more expensive at the next level," he said. "So often players perceive the next tier as out of reach. The idea is to keep driving gameplay and reward repeat business. Ultimately, your goal is not to make a high margin off that one purchase -- rather, your goal is to get the customer to come back because you provided a superior experience."

Redemption Plus typically sets up a customer with a basic mix of different price tiers, and then fine tunes the mix and suggests margins as data comes back. As Johnson noted, a key element to this strategy is rethinking the profit margins on merchandise at every tier level. In many cases, he explained, margins should decrease as the customer moves up the price tiers. This rewards the most loyal customers with better-perceived value.

Additionally, this pricing strategy serves to move higher-tier merchandise out the door faster. A side benefit to this rapid turnover of high-priced goods, such as electronics, is that it prevents obsolescence. Players, particularly younger millennials, are keenly aware of the latest and greatest when it comes to electronics and other highly desirable swag. A single generation behind the newest product on the market can substantially degrade its desirability, along with player motivation. Left on the shelf long enough, it even runs the risk of being perceived as "ironic."

Another Redemption Plus strategy involves the use of high-end product in promotional campaigns. A picture of a winner with his or her prize posted near the redemption counter is recommended, as are announcements of winners over the FEC's public address system. By extension, Johnson pointed out, placing winners' photos on the location's Facebook page, tweeting them and using other social media are great ways to promote a location's prize portfolio. These actions promote the venue and boost the perception of prize values.

"Most importantly, you don't want customers to have a low perceived value of merchandise at redemption counter, because the counter is the last stop before they leave," Johnson said. "Winners make players, but big winners make big players."

DATA MINERS:At left, Eric Johnson drills down into data to match product and profit margins for FEC buyers. The goal is to make players happy winners. At right, Tabatha Bender sees Redemption Plus adding value to merchandise by understanding the end consumer. No fooling.