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Collingswood's Business Relief Plan

Free Money

James Maley Cass Y. Duffey
By James Maley, Mayor, Collingswood
Chair League Economic Development Task Force
& Cass Y. Duffey, Director of Communications
Borough of Collingswood

Collingswood free money

Toward the end of 2008, the business district of Collingswood, like other main streets across America, looked gloomily toward the approaching holiday season. With the economic climate, there would be fewer packages bursting with wrapped gifts, decreased foot traffic and a decline in holiday cheer on what is typically a bustling shopping and dining season in the town’s three business districts.

For the past decade, the shimmering light displays and small-town “It’s A Wonderful Life” feel of Collingswood’s quaint downtown lured shoppers—those looking to bypass the typical mall crowds and mundane department store fodder—to pick up unique baubles, antiques, jewelry and more. However, shoppers held their wallets close to their chests as 2008 wrapped up and it was clear that more than the annual schedule of cheery carolers and carriage rides was needed to get customers to the streets of Collingswood—and even more to get them to put their cash in the registers.

The Collingswood Business Improvement District (BID)—also known as the Collingswood Partners—recognized that swift and early action was needed. Holiday shoppers were holding on to cash for the best possible holiday deals, which often meant a purchase at the malls or online.

At the end of October, the BID executive board—comprised of BID employees, Borough representatives and business owners—discussed what they foresaw as serious problems with the slowdown.

“We knew that we needed something big and the key was that everyone was looking for a bargain,” said Collingswood Mayor James Maley. “We decided there was no bigger way to get attention than to give away money.”

The solution was in Collingswood Cash—the borough’s equivalent to a mall gift card that can be used as cash at any borough business. Typically the cash is sold year round at face value, but last November, Collingswood gave shoppers an extra $20 of Collingswood Cash for every $50 purchased to entice people to shop in town. They would give “free money” to those willing to do their shopping in the borough. The promotion came with a shopping bag filled with Collingswood merchant coupons, deepening the discounts and offering specials all over town.

tree lined sidewalk in business disrtict
Some businesses in town have redeemed well over $20,000 in cash by offering multiple incentives and using e-mail lists and other marketing tactics to let their shoppers know they can get more bang for their buck at their store.

To finance the bonus money, Collingswood trimmed much of its holiday advertising budget (with the hope that the incentive was sensational enough to garner press coverage, making up for paid placements) and delayed hiring a replacement for the BID manager who left mid-year.

fficials also placed some limitations on the sale to help control overzealous shoppers. Customers were limited to a max of $2,500 for the first phase—meaning those that purchased the maximum amount would get $1,000 in bonus cash for free.

The incentive was a hit. A huge hit. Borough officials allotted $40,000 to give away with $100,000 sold. The November incentive sold out in less than four days. Collingswood was flooded with potential shoppers that could only spend the money in local stores and people were clamoring for more.

“We expected a big response because we were essentially giving away money, but the buzz around Collingswood Cash was incredible,” said BID President and President of 1st Colonial National Bank, Gerry Banmiller.

Praise for the promotion was universal and overwhelming both in town and by media. Articles, editorials and word of mouth hailed Collingswood’s “innovative” plan guaranteeing that Borough merchants would have shoppers through the holiday season. Television crews came in to town to get reactions and cover the promotion. Ads touted “New math for shoppers: $50 = $70” to make it clear that money would go furthest for shoppers along Collingswood’s main strip, Haddon Avenue.

“It’s really working. It’s a smart thing. It really stimulates people to shop in town at Collingswood retailers and restaurants. Our customers are invigorated and looking forward to shopping,” said Nunzio’s Ristorante Rustico co-owner Maribel Patruno.

After the November incentive ended, the calls continued for more bonus money. Officials decided to hold a second phase of the promotion starting December 1 to flood the town with an additional $140,000 of potential revenue for businesses. To back the bonus cash for phase two, the BID utilized a portion of the 2009 budget.

The borough advertised the second phase of the promotion but changed some of the guidelines. Customers that bought the max amount during phase one were not eligible to purchase any more bonus money and the limit was reduced to $500, giving a max buyer a bonus of $200.

“Lowering the limit helped spread the money around,” said Commissioner Joan Leonard. “We wanted to give as many people a chance to participate as possible.”

When the doors opened at the three selling locations (local banks Sun and 1st Colonial National and Borough Hall) on December 1 for phase two, crowds lined up to buy Collingswood Cash and lines went out the doors. Even with reduced limits, the cash went fast, selling out completely; all $140,000 gone in less than three hours.

“Turns out free money is a good promotion,” according to Mayor Maley.

There was now $280,000 in the hands of consumers that had to be spent in Collingswood. Since the bonus cash expires March 31, at least $80,000 of the $280,000 that was sold will be returned to the hands of the businesses within a few months.

By the end of December, more than $80,000 worth of the cash had been redeemed by merchants. Another rush of certificate spending came in January from shoppers that received Collingswood Cash as a holiday gift. More than 80 stores have redeemed certificates and bargain hunters are buying more than just dinners along Haddon Avenue.

“One woman told us she was buying Collingswood Cash to pay for orthodontics. After she saw that she could save up to $1,000 she decided to come to town rather than get the work done in a neighboring town,” said BID secretary Terry Seeley.

People also bought vacations, paid for remodeling projects, hosted office parties, got work done on their cars—even paid a taxidermist to stuff a moose head. The buying power that the bonus cash gave made the difference for some people in where they would shop over the next few months. Many got creative by combining the extra Collingswood Cash with incentives already in place at stores, restaurants and services in the town.
An added bonus of the program

was the exposure of not just the Collingswood Cash incentive, but its availability year round. Customers that were unfamiliar with Collingswood Cash before the promotion now streamed in to buy it as a gift (at a $1 to $1 exchange)—even after the bonus money had sold out. The borough sold more than its usual amount for the holidays—$20,000—well after the second phase sold out.

As the cash finds it way to back to boutiques, hairdressers, florists and others in town, it is those merchants that took extra steps to reach out to their customer base and made the most of the program that are coming out on top. Some businesses in town have redeemed well over $20,000 in cash by offering multiple incentives and using e-mail lists and other marketing tactics to let their shoppers know that they can get more bang for their buck at their store.
“We put this money out on our streets and it is up to the business owners to get people in their doors to spend it,” said Maley.

It was inventive leadership that kept several downtown businesses in Collingswood from suffering what seemed to be a national trend of bottoming out at the end of 2008. The most common question since the program ended for Borough officials is “Are you giving away Collingswood Cash in 2009?”

Even if economic troubles don’t abound next holiday season, the Collingswood Cash giveaway promotes sustainability in a time when main streets are looking for savvy ways to compete for customers. Luckily for Collingswood, creativity among owners, staff and officials is in large supply and collaborative ideas like “free money” are part of what make Collingswood a success.

This article was originally published in New Jersey Municipalities magazine. Vol. 86, No. 3, March 2009

 

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