roundtable 2004 chandler

The decisive competitive advantage!

more knowledge l better advertising l increased loyalty l more sales

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competitive edge

affiliated sponsors: The Denver Post, The Rocky Mountain News beneficiaries: Mile High United Way and The Children’s Hospital

Competitive success today requires:

• better consumer data

• accurate customer profiling

• and more targeted marketing products

Add large volume weekly advertising and achieve a

quantum leap in consumer participation

Rainbow Rewards delivers every aspect in one

state-of-the-art, integrated local area marketing

system giving neighborhood merchants a decisive

competitive advantage

Rainbow Rewards is a true pay for performance system

where you only pay when we deliver customers


affiliated sponsors: The Denver Post, The Rocky Mountain News beneficiaries: Mile High United Way and The Children’s Hospital


• Uses unique proprietary techniques to collect data on large numbers of

individual consumers based on identifying their past and likely future behavior

and spending habits

• This data is then mined to obtain the knowledge needed to perfect unique

advertising strategies in a micro market

the database


This database drives for the benefit of

member merchants:

• Geographically zoned & psychographically

targeted catalog magazines

• A precision direct marketing operation to

secure new customers

The loyalty program then solidifies the

habits of new customers. The result is a

substantially improved return on investment

by cutting the excessive waste in traditional

neighborhood marketing

data analyzed


Exclusive - local trade area exclusivity = competitive advantage

Free - no joining fees and no capital expenditure

Knowledge - customer profiles & monthly tracking reports

Advertising - substantial promotions in local trade area

Loyalty - simple reward proposition attracts customers

Targeting - data-refined direct marketing programs

Members Club - ability to make confidential offers

Cost - a viable marketing fee on actual sales to RR members

Profitable - more customers and less price competition

Time - minimal time involvement. no staff training

To join - it’s simple! just register your existing POS terminals

the merchant advantage

data analyzed

merchantsmarketing

muscle forWeekly Sustained Advertising - Targeting All Consumers

• Weekly catalog magazine with 24 neighborhood editions

• Geographic targeting and ad designs increases impact

• Inserted in Denver Post & Rocky Mountain News with a minimum 600,000 print run every week

• Multi-media advertising – Press, Radio, Internet and TV

Precision Data-refined Direct Marketing

• Merchants gain a decisive competitive advantage to secure long-term new customers

• We specialize in low volume high success direct marketing


merchants


Simple Loyalty Reward

• Shifts market share to member merchants

• Increases return purchase loyalty and average transaction values

The Exclusive Members Club

• Member merchants may make password secure confidential offers

• 24 local information websites mirroring the 24 catalog editions

• Consumers participate with personal information to ensure communications are relevant to their interests

Expertise - A Rainbow Rewards marketing consultant will help you maximize your return from using each of these sophisticated marketing tools

how it works

2*An advertising fund of $600,000 per annum for each of the 24 zones is targeted for 2005**The marketing fee pays for running the entire system, the only extras are the creative and the delivery costs incurred for the direct marketing campaigns

One Third 33% Operating Costs 19%

Advertising Fund * 10% Sponsors Beneficiaries 4%

50 centsTwo Thirds 67%

Consumer's Rainbow Rewards Points Account Worth

$1.00 cents

Electronic Statement

Merchant marketing fee 5% = $1.50

(will vary to suit each merchants economics)


$30 Purchase

web.email.text

Member consumers use

any MasterCard or Visa

credit card registered with

Rainbow Rewards on any

existing POS terminal at a

member merchant

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• Local trade area exclusivity negotiated then guaranteed

• No joining fees. No capital expenditure

• Merchants determine their own transaction marketing fee rate to suit their business and gain consumer interest. Rate may be changed with 90 days notice

• Bonus reward points may be offered

• Higher reward points may be offered for large transactions

• Transaction fees are invoiced electronically every day with audit trail

merchant exclusivity and fees

Merchants selected from all the Business to Consumer categories in the yellow pages

Catagories per yellow pages

Low margin: Food, gas

Weekly: Liquor, pharmacy

Standard: Books, flowers

Services and other retail

Restaurants, entertainment, etc.

Transaction fee examples

1%

3%

5%

5-10%

10-15%

4

marketing automationTiered Segmentation. Fast Processing Speeds. Flexible Reporting. Target eXpress

* System used by Gannett, New York Times, Denver Post, Hearst etc

Cleanse - Standardize Integrate - Enrich

• Loyalty Transactions

• Members Club

• Demographics

• Delivery Preference

• Communication Preference

• Merchant Files

• Consumer Files

• Special Offer Sales

• Call Center Information

• Online Registrations

Inte

rnal

/ E

xtern

al

Data

Planning & Reporting

Segmentation & Analysis

Modeling & Data Mining

Campaign Management & Tracking

more knowledge l better advertising l increased loyalty l more salesmore knowledge l better advertising l increased loyalty l more sales

ASTECH DATA

CENTER

marketing process


Merchants

$ and Marketing Instructions

$ Transaction

Data

$ Rewards

Loyalty

Knowledge Databases

Sophisticated Segmentation

Marketing

Customers

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6

consumers will love it


• It’s simple and compelling

• Easy registration process

• No joining or annual fees

• Cash rewards every 3, 6 or 12 months or on 14 days demand

• Special offers via the Members Club

• Average reward $325 per year

• Diverse mix of merchants

• Less intrusion, privacy respected

• No extra card - register any MasterCard or Visa credit card to join

• Earn credit card loyalty points as well

• Support for local charities

7

launch process

Timetable

The launch to the consumer in the five Denver counties is in October 2004 and in

Boulder County six months later. We seek to enroll as many merchants as possible prior

to launch to ensure consumers will have sufficient member merchants to shop at for all

their regular needs on joining

Consumer participation

Target - 320,000 consumers enrolled by July 2005, secured by 12 months of sustained

advertising, direct marketing and one million sponsor-endorsed invitations to join

Rainbow Rewards

Option on exclusivity

The merchant invitation to join Rainbow Rewards is valid for 30 days. During that time

the exact nature of the exclusivity arrangement can be negotiated



Technology

• Vital Processing Services Inc GRS division (Visa USA own 50%)

• Vital GRS is Visa CISP security certified

• ASTECH InterMedia of Denver (marketing automation)

Affinity Beneficiaries

• Mile High United Way, The Children’s Hospital

• United Way will select charities to support in each zone

• We will work in partnership with the beneficiaries to invite their community to join Rainbow Rewards

Media Sponsors

• Denver Post and the Rocky Mountain News

• Will invite their subscribers to join Rainbow Rewards

credible partners


executive team• Dr Ed Sutton Manners FCA, Chairman and

Publisher, is the architect of Rainbow Rewards. He has worked in the media for 30 years

• Rick Chandler, President and CEO, is a successful strategic marketer. He has years of experience in the high technology sector ranging from F 500 companies to start ups

• Tom Ratkovich is President of ASTECH InterMedia Inc and has 20 years experience in data-driven marketing automation

• Vere Spandow is a hands on experienced technical manager of loyalty programs. He is a former Vice President of Cendant Corporation

• Stuart Graham, Vice President Sales, is an expert in registered card loyalty programs and an experienced CEO

• Gene McConnell, Treasurer, is an experienced Financial Controller and a Tatum CFO Partner. Our Auditors are Clifton Gunderson

credible partners

Rainbow Rewards Colorado, Inc is owned by Rainbow Rewards USA, Inc. The ultimate majority shareholder is Ed Sutton Manners and his family

The decisive competitive advantage!


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