Grabbing Consumer Loyalty

Thanks Again L.L.C.
Owners: Marc Ellis, Ed Puckhaber
Location: Atlanta
Number of full time employees: 9
Founded: 2004
What it does: Provider of consumer loyalty rewards programs in industries that include air travel, restaurants, dry cleaners, and day spas
2008 Revenues: $200,000
2009 Revenues: $200,000
2010 Revenues: $650,000
2011 Revenues: $1.85 million
2012 Projections: $4.5 million

How they made it: Recent deals with major airlines and airports across the country have positioned the company as an important player in the loyalty rewards industry. Thanks Again plans to soon begin offering hotel points as another reward option.

For professionals who spend much of their time traveling above the clouds–or en route from terminal to terminal–nothing says “thank you” better than loyalty rewards programs that offer frequent flier miles for flying or shopping. Thanks Again L.L.C. (www.thanksagain.com) does just that.

A provider of merchant-funded consumer loyalty rewards programs, Thanks Again links customers and their favorite merchants through an incentive program. Customers earn rewards such as airline miles, cash back, or gift cards when they make purchases at participating retail establishments. The company currently has a presence in 168 domestic airports and more than 25,000 local merchants in all 50 states.

CEO Marc Ellis, 41, a former vice president at Wachovia Securities and Chase Manhattan Bank, co-founded Thanks Again in 2004. In the past seven years, the company has seen tremendous growth, having recruited merchants in industries such as airport retailers, golf courses, dry cleaners, day spas, restaurants, and limousine services. It has also formed partnerships with major airlines such as Alaska Airlines, Continental, Delta, United, and US Airways. Thanks Again employs nine full-time and three part-time employees and also provides consumer data analytics to its business partners, showing them how their customers spend and the best ways to engage them. The company generated revenues of $650,000 in 2010; it is expected to reach $1.85 million for 2011.

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But its flight to success hasn’t been without some turbulence. In its early days, Thanks Again struggled with undercapitalization because some airlines required that it prepay for miles. “We had to raise upward of $3 million, and it took about three years to do it,” says Ellis. To recruit merchants for the rewards program, he went door to door to small businesses in so-called fragmented industries–”industries in which there’s no dominant player,” says Ellis. Thanks Again was particularly successful recruiting dry cleaners: Ellis once managed Madison’s Bag, a branded promotional vehicle for dry cleaners in select metropolitan areas.

Ellis, who graduated from Morehouse and earned an M.B.A. from the NYU Stern School of Business, says that soliciting business was a nonstop process. The company eventually got the attention of American Airlines, with its network of millions of rewards members. Thanks Again developed a way to have those members earn extra miles when they patronized its network of dry cleaners–and offered the dry cleaners access to a powerful marketing platform.

It wasn’t long before other airlines followed suit. “The minute we provided that solution to American Airlines, about five of their competitors immediately called us and asked for a similar solution,” says Ellis. “We came up with the registered card platform, which linked small businesses to the airline’s world-class rewards program. When consumers enroll their debit or credit card, we track their usage and rewards on the back end. There’s no tracking or administrative hassles for the merchant, and for consumers it’s a completely secure environment.”

Delta Air Lines also partnered with Thanks Again. “One of the things that’s

attractive about Thanks Again is that they’re local, they’re in the airport, and their platform is a way of keeping our customer base engaged,” says Scott Miller, general manager of partnership marketing for Delta. “This happens not just when customers are flying on the plane, but when they stop to buy their coffee or their magazine, they can pick and earn miles for that transaction as well.”

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Thanks Again seized upon the opportunity to expand its rewards program to merchants in the airport space, inking deals with airports in Atlanta; Houston; Tulsa, Oklahoma; Portland, Oregon; Seattle; and New York City.

Merchants pay Thanks Again a small monthly administrative fee plus 3% of each reward-earning transaction. Merchants also pay Thanks Again to analyze consumer-level spending data, and are charged a monthly retainer for these services.

The company’s revenues are directly tied to the number of members it has enrolled, since it generates sales when customers make purchases. Thanks Again currently has 200,000 members but needs 500,000 to realize profits. “We project we’ll hit profitability on a month-to-month basis by the middle of next year,” says Ellis, who projects that the company’s membership will reach 1.5 million by the end of 2012.

Although Thanks Again seems to be on stable ground with its growing revenues and partnerships, Leonard Greenhalgh, director of programs for minority- and women-owned businesses at the Tuck School of Business at Dartmouth, says Thanks Again’s growth depends on two factors: whether it has the cash flow to sustain its business model, and whether or not a competitor can duplicate that model. “The problem is that somebody else can decide to become an intermediary between the mileage programs,” Greenhalgh says. “What they do have going for them, though, is first-mover advantage. If they were first with Delta, Delta is not likely to substitute them with another vendor.”

But Eric Gilkesson, senior vice president of partner development for Thanks Again, says the company’s growing reputation in the loyalty rewards industry and unique value proposition for airports and local neighborhood merchants put it ahead of potential competitors. “It’s been a heck of a journey, but we’ve been laser-focused and dedicated to reaching [our] destination,” Gilkesson says. Entrepreneurship is not for the faint of heart. “You’ve got to have the vision and conviction to see it through.”